Tesla's rival, Nio, plummets after disappointing deliveries

(Reuters) – US-listed shares of Tesla Inc. (TSLA.O) rival NIO Inc (NIO.N) fell by more than 18% on Tuesday after China's electric car maker recorded a decline in its quarterly sales of vehicles, due to reduced subsidies and weak demand.

China is gradually reducing subsidies to new energy vehicles, with phasing out projects after 2020, following criticism that some companies have become too dependent on funds.

Nio said the subsidies for his ES8 car had been reduced to 11,520 yuan ($ 1,620.87) as of June 26, 2006, from 67,500 yuan last year.

"Investors have understood the reduction of subsidies granted to China. All Chinese EV producers are therefore facing a weak 2H19, "said Craig Irwin, an analyst at Roth Capital.

The company, whose losses in the second quarter almost doubled, also canceled its earnings-based conference call scheduled for 8 am ET.

According to Refinitiv data, the company reported an adjusted loss of $ 3.11 per share, exceeding analysts' expectations of a loss of $ 1.29 per share.

Nio, which has the Chinese Internet giant Tencent Holdings (0700.HKand Hillhouse Capital Management as shareholders, raised $ 1 billion last September in a $ 6.4 billion initial public offering. At Monday's close, Nio was valued at $ 2.9 billion.

"In an environment of weaker macroeconomic and macroeconomic conditions, we continue to work tirelessly to increase our market penetration," William Bin Li, Managing Director, said in a statement.

Nio also plans to reduce its global workforce to 7,800 by the end of the third quarter, compared with nearly 10,000 in January.

The company said its vehicle sales fell nearly 8 percent, from 1.54 billion yuan in the previous quarter to 1.41 billion yuan (198.40 million US dollars).

Nio sold 3,140 ES8 cars in the quarter, compared to 3,989 cars in the first quarter. The ES8 is a fully electric seven-seater SUV, considered a rival of Tesla's X model.

He sold only 413 cars of his cheaper ES6 model.

In addition to Tesla, Nio competes with a large number of young Chinese electric vehicle companies such as Byton and Xpeng Motors.

Although Tesla does not disclose country sales, LMC Automotive estimates 23,788 Tesla vehicles sold in China in the first seven months of this year, nearly double the number of cars sold a year ago before.