Chinese Electric Vehicle Manufacturer Nio Lowers Q1 Delivery Projections Due to Weak Demand
BollywoodFever, March 27: Chinese electric-vehicle manufacturer Nio (9866.HK) announced a reduction in its delivery outlook for the first quarter on Wednesday, amid challenges of waning demand and an ongoing price competition in China.
The reduction led to a near 4% drop in the company’s U.S.-listed shares during premarket trading.
In China, which is the largest automotive market globally, Nio has been facing declining interest in electric vehicles as fierce competition forces down prices and economic downturn prompts consumers to cut back on expenditure.
This scenario has been exacerbated by a price reduction strategy initiated by Tesla (TSLA.O) last year, aimed at addressing the drop in demand but which has, in turn, impacted the profit margins of local electric vehicle makers.
As a result, Chinese electric vehicle manufacturers like Xpeng (9868.HK) and BYD (002594.SZ) are looking towards international markets, including Europe, where they anticipate the ability to command higher prices than in the increasingly competitive Chinese market.
A report by Reuters in October indicated that Nio was exploring the establishment of a dealer network in Europe to accelerate its sales growth there.
However, European authorities are planning investigations into Chinese automakers to determine if their lower-priced electric vehicles are unfairly benefiting from state subsidies.
Nio now anticipates delivering approximately 30,000 vehicles in the first quarter of 2024, a downward revision from its initial projection of 31,000 to 33,000 vehicles. This follows a delivery count of 31,041 vehicles in the same quarter of the previous year.
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