[ad_1]
The reasons for the pessimism are varied and, even if the start-up has many objectives, its way forward will be difficult. However, next year could help clarify NIO's direction. For investors who want to live with a lot of negativity – and who does not fear extreme uncertainty – the time may be well chosen to intervene.
Automotive manufacturing problems and economic problems
To understand the direction of NIO, let's first look at its recent evolution. The electric vehicle manufacturer (EV) has had an outstanding start to the year with the delivery of its first premium consumer SS8 SUV. But his deliveries have already started to decline.
|
Period |
ES8 Deliveries |
|---|---|
|
Q3 2018 |
3,268 |
|
Q4 2018 |
7,980 |
|
Q1 2019 |
3,989 |
|
First two months of Q2 2019 |
2,213 |
Data source: NIO.
<p class = "canvas-atom web-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "The management said that the slowdown of the l & # 39; Chinese economy – The Beijing government also cut its VE subsidies by 50% in March and plans to gradually reduce them further in the coming year. the way to ownership of an electric vehicle in China is still much easier and generally cheaper than buying a traditional combustion engine vehicle, but the reduction in government financial incentives has been a short-term barrier. https://www.fool.com/earnings/call-transcripts/2019/05/28/nio-inc-nio-q1-2019-earnings-call-transcript.aspx?source=isesitlnk0000001&mrr=1.00 https://www.bloomberg.com/news/articles/2019-03-26/china-scales-back-subsidies-for-electric-cars-to-spur-innovation"Data-reactid =" 18 "> Management said that the slowdown in the Chinese economy – exacerbated by its trade war with the United States – was at the root of the drop in sales. Is however only part of the story, but the Beijing government has also cut its subsidies on electric vehicles by 50% in March, and plans to phase out them next year.It is True, the road to electric vehicle ownership in China is still much easier and generally cheaper than buying a traditional combustion engine vehicle. Reducing financial incentives from the government has nonetheless been an obstacle. in the short term https://www.fool.com/earnings/call-transcripts/2019/05/28/nio-inc-nio-q1-2019-earnings-call- transcript.aspx? source = isesitlnk0000001 & mrr = 1,00 https://www.bloomberg.com/news/articles/2019-03-26/china-scales-back-subsid ies-for-electric-cars-to-spur-innovation
And as if that were not enough, investors have also begun to worry about NIO's liquidity rate, and rightly so. During the first quarter, the gross profit margin on vehicles sold was negative 13.4% (which means the company loses money every time it makes a sale), and the losses net totaled $ 395 million. She has not yet reached a profitable scale and the fact that she entrusts manufacturing to JAC Motors, China, does not help. NIO's plans for its own plant (as well as its first sedan option) are unresolved, which leaves little visibility as to when these heavy losses on its vehicles will cease.
The NIO ES6 SUV is displayed in red with a black border.
The NIO ES6. Source of the image: NIO.
The immediate road ahead
But here's the good news: in June, NIO began delivering the ES6 – its compact and more affordable SUV – to its customers. During the first quarter teleconference, the company reported receiving more than 12,000 pre-requisites for ES6. That could mean a rebound in sales is just around the corner.
Although we lack details of when a NIO-owned plant could be put online and its sedan is on hold, a third vehicle option would be in preparation. It will be based on the ES8 platform (involving another SUV), and management said it should go into production in 2020. Given the recent decline in its electric vehicle sales, it seems likely that reduce costs for customers The company's current focus is to encourage more orders and help NIO out of the red.
In addition, its efforts to engulf market shares make sense. Even as it reduces subsidies, the Chinese government continues to encourage people to buy EVs while keeping the costs associated with the lowest. Some forecasts estimate that by 2025, electric vehicle sales will account for about 50% of the entire Chinese auto industry. (In 2018, 23.7 million passenger cars were sold in the country.) The NIO could be in a prime position to take advantage of this long-term trend.
So, although dark clouds have gathered around this company in 2019, where the sky was clear, before, in a year, much of the uncertainty could disappear. By 2020, NIO is expected to have three models from which Chinese drivers can choose, and factory projects (and lower manufacturing costs) should also be specified.
However, even though 2020 seems to be more promising than 2019 so far for NIO, this does not necessarily mean that investors have to hurry up and buy stocks. Only those who have the courage to endure serious volatility and the ability to gradually position themselves in this automaker over time – so as to take full advantage of what will surely be a roller coaster ride – should even think about investing in stock NIO.
<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = " More from The Motley Fool "data-reactid =" 42 "> More from The Motley Fool
<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Nicholas Rossolillo& nbsp; and its customers have no position in the actions mentioned. The Motley Fool has no position in the mentioned actions. The Motley Fool has a disclosure policy."data-reactid =" 50 ">Nicholas Rossolillo and his clients have no position in the mentioned actions. The Motley Fool has no position in the mentioned actions. Motley Fool has a disclosure policy.
[ad_2]
Source link