As electric vehicles continue to spread widely in China, Tesla’s (NASDAQ: TSLA) momentum in Asian countries seems to be weakening, and NIO’s (NYSE: NIO) stock undoubtedly has a huge opportunity.
The company can fundamentally improve its performance in the medium to long term. What is also good for Nio stock and its owners is that the company is expected to expand into Europe, which is another huge electric vehicle market. But in China and Europe, despite Tesla’s difficulties, Neo is still facing increasingly fierce competition. The semiconductor shortage may also affect the company’s performance for a period of time. Nio’s latest results do show that these negative factors have already had an impact on the company’s business.
CNBC recently reported that China’s electric vehicle industry is booming and showing “explosive growth.” According to financial news media reports, fund manager Jian Shi Cortesi said that Chinese consumers are looking for non-Tesla electric vehicles. In fact, Elon Musk’s car company suffered a major slowdown in China last month. Delivery of electric vehicles produced at the Shanghai plant fell 27% from the previous month to 25,845. According to the South China Morning Post, the reason for the decline was that Tesla “was strongly opposed by Chinese customers’ social media on safety and quality issues last month.” In 2020, Tesla’s Model 3 is China’s best-selling electric car, so Tesla’s failure seems to provide Nio with a great opportunity to win share in this field. At the same time, NIO has hired sales staff to target Europe, which is the world’s largest electric vehicle market. For the automaker, the African continent should be a fertile land, which has been very successful in China.
Neo’s difficult threat On the contrary, this Chinese car manufacturer has some problems. The most important of these is that two new popular electric vehicles have recently entered the Chinese market. Since its launch in July last year, the Wuling Hongguang mini-electric car, a small electric vehicle jointly produced by General Motors (NYSE: GM) in China, has been selling very high in Asian countries. Specifically, 112,000 electric vehicles have been sold by 2020. Although the $4,500 EV may not be able to directly compete with Nio’s high-end cars to a large extent, GM’s joint venture has launched more high-end versions of its Mini EV. The latter’s cars may take some market share from Nio.
Geely Automobile (Neo), China’s largest automaker, has brought greater challenges. Geely (Nee) began to sell high-end electric vehicles in China, and Ford (NYSE: F) began to sell its new Mustang Mach-E crossover in the country. World electric vehicles. As I pointed out in a previous column, the sales of electric vehicle startup Xpeng (NYSE: XPEV) are growing rapidly, while reviews of its electric vehicles are strong. Finally, Nio recently stated that the company’s supply chain still faces “major challenges due to semiconductor shortages.” These challenges, coupled with increasingly fierce competition in China, are likely to cause the company’s first-quarter profits and deliveries to be lower than analysts’ average expectations. In addition, the automaker expects revenue for the quarter to grow by only 2% to 6.5%. Since the sales of Nio stock in the past 12 months are still nearly 13 times the company’s sales, this is not very impressive.