China is the world’s largest passenger vehicle market. The premium segment in this largest market continues to take market share from the entry and mid-range segments and is expected to continue to grow at a CAGR of 12.4% from 2017-2022, according to Frost & Sullivan. The SUV segment in China is also expected to outpace industry growth in the next 5 years, reaching ~17M units in 2022, representing a CAGR of 9.4% during the same period. $NIO
$NIO This Chinese Electric Car Maker Has Just Heaped Even More Pressure On Tesla NIO
Nio (NIO) shares advanced after the Chinese Tesla (TSLA) rival posted better-than-expected Q1 earnings. The firm also increased deliveries of its ES8, despite a fall in subsidies.
The strong delivery data heaps further pressure on its American rival, which is battling to get Chinese expansion plans off the ground amid waning investor sentiment. Tesla stock has plunged more than 50% since early August 2018.
Nio had adjusted per share loss of 36 cents, better than the 47-cent per-share loss expected by Wall Street analysts, according to Yahoo Finance. Revenue of $243 million was also higher than views.
Management said ES8 deliveries totaling 3,989 had exceeded the company's expectations even in the face of EV subsidy reductions, slowing macroeconomic conditions, increased competition, and seasonal factors related to the Chinese New Year holiday. However, it pointed to a challenging environment going forward.
"Looking ahead to the second quarter, we expect an even more challenging sales environment and anticipate overall sequential demand and deliveries to decrease, as competition continues to accelerate and the general automobile market in China remains muted," CFO Louis Hsieh said in a press release. "Against this backdrop, NIO is focusing on rolling out our ES6 nationwide, and at the same time, improving overall network utilization and operating efficiencies."
Nio also revealed a 10 billion yuan investment due to a joint venture with Beijing E-Town International Investment & Development.
Nio stock was up 5% at 4.05 on the stock market today. Since its U.S. listing in September last year, the stock has plunged by around 70% from its all-time high of 13.80. Tesla stock was down 0.7%. General Motors (GM) and Ford (F), which are big U.S. sellers in China, were down 0.7% and 0.1% respectively.
China Auto Sales Stagnate Nio turns five years old in November and began selling the ES8 in June. The ES8 is a seven-seat SUV with a base price of 448,000 yuan. In March, Tesla cut the price of its Model X to 778,200 yuan from its previous price of 952,500 yuan. Nio unveiled the ES6 crossover SUV in December.
The Chinese market is a key expansion opportunity for Tesla, which in January became the first foreign automaker to break ground on a wholly-owned China plant. Tesla's China factory could erode a crucial cost advantage for local players like Nio.
However, auto sales in China look to be stagnating. On Sunday China's state news agency Xinhua reported automobile sales will reach around 28.1 million units this year, unchanged from 2018 levels.
But there was a silver lining for EV manufacturers like Nio and Tesla. Sales of new energy vehicles are expected to remain strong. They are seen growing about 27% to 1.6 million units from 1.26 million units in 2018.
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