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Why Nio Shares Are Sinking Today

What happened

U.S.-listed shares of Chinese electric vehicle maker Nio (NYSE: NIO) are sinking a day after the company reported its monthly vehicle delivery figure for July. The company said Monday that its vehicle sales grew by 125% year over year. But there were also signs of a slowdown compared to competitors, and that may be what investors were reacting to Tuesday morning. As of 12:15 p.m. EDT, Nio's U.S.-listed shares were down by about 3% after having been down by almost 5% earlier in the session.

So what

Nio's Chinese competitors Li Auto (NASDAQ: LI) and XPeng (NYSE: XPEV) also reported their July data Monday, and their growth outpaced that of Nio. Li actually delivered more vehicles outright than Nio in July, and its deliveries grew by 11.4% month over month and 251.3% year over year. Xpeng also had a record month with more vehicles delivered than Nio, and growth of 228% versus the prior-year period.

Nio electric SUV destined for sale in Norway. Image source: Nio.

Now what

In the first-quarter financial report that it released in late April, Nio had said that while demand for its vehicles remained strong, the company's production was being negatively affected as "the supply chain is still facing significant challenges due to the semiconductor shortage."

The company will deliver its second-quarter update on Aug. 11, and investors will be watching for more information related to those production impairments. Additionally, Nio has shipped its first delivery outside of China to Norway, and has a new luxury electric sedan scheduled to be available early next year.

The Chinese automotive market is the world's largest, and electric vehicles still only make up a small portion of it. Investors will likely be content next week if Nio expresses optimism on its growth progress inside and outside its home country, regardless of whether its domestic competitors also continue to grow quickly.

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Howard Smith owns shares of NIO Inc. The Motley Fool owns shares of and recommends NIO Inc. The Motley Fool has a disclosure policy.


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