Chinese luxury electric vehicle maker Nio delivered 15,959 vehicles in November, up 12% from November 2022, although the numbers were slightly lower compared to the previous quarter. While Nio didn’t detail what was driving its growth, the company likely benefited from higher sales of the updated ES6 SUV that launched in May, while price cuts implemented in the second quarter also likely helped boost demand to some extent. In total, Nio has delivered 142,026 vehicles so far in 2023, an increase of 33% compared to the previous year. Nio’s growth rates continue to lag well behind its competitors, which have seen even stronger monthly deliveries. For example, Li Auto shipped a record 41,030 units, up about 2.7 times year-on-year, driven by strong demand for its three L-series models that combine gasoline generators to provide the To extend the range of their electric vehicles. Xpeng also sold a record 20,041 units, a 2.4x increase from November 2022.
NIO stock suffered a sharp 85% decline from a level of $50 in early January 2021 to around $7 now, while the S&P 500 has seen a rise of around 25% over this roughly three-year period. It is noteworthy that NIO shares have performed worse than the overall market in each of the last three years. The stock’s returns were -35% in 2021, -69% in 2022 and -27% in 2023. In comparison, the S&P 500’s returns were 27% in 2021, -19% in 2022 and 20% in 2023 – indicates that NIO underperformed the S&P in 2021, 2022 and 2023. Indeed consistently beating the S&P 500 – in good times and bad – has been difficult for individual stocks in recent years.
In contrast, the Trefis has High Quality Portfolio with a collection of 30 stocks outperformed the S&P 500 every year In the same period. Why this? As a group, the stocks in the HQ Portfolio offered better returns with lower risk compared to the benchmark index. Less of a roller coaster ride, as the HQ portfolio performance metrics show.
Given the current uncertain macroeconomic environment with high oil prices and elevated interest rates, could NIO find itself in a similar situation as in 2021, 2022 and 2023? perform worse than the S&P in the next 12 months – or will there be a recovery?
Nio stock has been the worst performer compared to its peers, down about 25% year-to-date and remains over 88% below all-time highs set in 2021. There are also concerns about global demand for electric vehicles among most mainstream automakers , including Volkswagen, Mercedes, Ford and GM, suggesting a weaker recovery than expected. Automotive chip suppliers also reported weaker-than-expected demand for automotive semiconductors in the fourth quarter. However, demand in China does not appear to be a problem at the moment as total automobile sales increased by 10% in October, with battery electric vehicles accounting for almost 26% of total automobile sales. However, competition is increasing, leading to significant price wars. Investors were concerned about Nio’s price cuts, which impacted average selling prices and reduced gross margins in recent quarters. In the June quarter, gross margins were just 1%, compared to over 13% in the year-ago quarter, although it appears that things could improve as the third quarter progresses due to higher volumes. Nio, for its part, expects a double-digit gross margin in the third quarter and a margin of 15% in the fourth quarter. There have also been reports that the company may cut its workforce by about 10% to reduce costs, although this could be partially offset by increased marketing spending as the company promotes new vehicles. The stock also currently trades at less than 1.3 times estimated 2023 sales, which is well below other EV players like TeslaTSLA and Li Auto. Check out our analysis Nio, Xpeng and Li Auto: How do Chinese EV stocks compare? for a detailed look at how Nio stock compares to its competitors Li Auto and Xpeng.
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