Chinese electric vehicle (EV) maker NIO Inc (蔚來汽車) plunged the most on record after it lowered its first-quarter delivery outlook and canceled its plan to build a manufacturing plant in Shanghai.
The shares fell 21 percent in New York on Wednesday, after rising 62 percent through Tuesday since the firm’s initial public offering in September last year. The stock dropped to US$8.01, the lowest since Feb. 21.
NIO, vying to be China’s answer to Tesla Inc, said that deliveries of its ES8 SUV tumbled more than expected last month.
It is more evidence of deteriorating demand in the world’s largest car market, which last year contracted for the first time in two decades as the economy slowed and a trade war weighed on consumer spending.
The guidance cut prompted at least one analyst to downgrade the stock.
Bank of Americal Merrill Lynch analyst Ming Hsun Lee (李明勳) lowered his rating on NIO to “underperform” from “neutral,” noting lower-than-expected sales growth for the ES8 and a “rich valuation.”
While Tesla has lowered prices for its cars, Lee said that NIO does not have plans to do the same.
However, he said that he believes the company would have to eventually offer some discounts.
“We believe NIO would have to offer some incentives or more features on ES6/ES8, amid peers’ new product launch/price discount, and the electric vehicle purchase subsidy cut later this year,” Lee said.
Tesla has also repeatedly struggled with meeting delivery targets in the past. It has recently started delivering its Model 3 sedans in China, a market that is leading the charge in getting buyers to give up gas guzzlers and go electric.
NIO’s lackluster guidance flagged a key issue that has also dogged Tesla over the past few recent months.
Alliance Bernstein LP senior analyst Robin Zhu (朱鑌) said that while NIO’s fourth-quarter numbers were on the soft side, its demand concerns might actually prove more damaging for investors’ long-term outlook on the company.
NIO’s fourth-quarter release pointed to deliveries last month of just 811 units, Zhu said, adding that lower capacity utilization is expected to weigh on gross margins in the first quarter of the year.
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