Chinese Tesla Rival NIO Reports Higher EV Demand, Stock Soars 40%

resource from: Reuters   

The NIO ES6 electric SUV.

Chinese electric vehicle startup NIO, which is going up against rival Tesla in its home market, beat its quarterly revenue estimates due to rising demand for its electric vehicles. The news sent NIO's share price up around 40% on Monday.

NIO's revenue jumped nearly 22% to 1.7 billion yuan from a year earlier on sales of 4,196 units of its ES6 compact SUV model in the quarter and 603 units of the pricier and larger ES8, a seven-passenger sport-utility electric vehicle, which is as a rival to Tesla's Model X, costing about half the price.

The Model X starts at 809,000 yuan ($115,000) in China, while the ES8 starts at 448,000 yuan ($62,952). 

NIO started delivering the smaller ES6 to customers in June.

NIO is among a new group of Chinese electric automakers looking to break into the world's biggest auto market, as the country looks to become the world's leader in electric vehicle adoption.

NIO was the first Chinese EV startups to go public in the U.S., listing its shares on the New York Stock Exchange in Sept, 2018. The company was incorporated in 2014 and led by Chinese entrepreneur William Li, who is often referred to as the "Elon Musk of China". Li serves as the company's chief executive.

Today's announcement reflects a big jump for NIO.

In September, NIO's stock fell to record lows after the company reported a significant drop in vehicle sales in its home market.

At the time, NIO reported that its 2019 Q2 losses nearly doubled, and its U.S.-listed shares tumbled nearly 25% after the report was released NIO said its vehicle sales fell nearly 8% in Q2 to 1.41 billion yuan ($198.40 million) from 1.54 billion yuan in the preceding quarter.

The company said that it delivered 4,799 vehicles in the quarter ending Sept. 30 compared with 3,553 deliveries in the second quarter of 2019. 

NIO cited a cut in government subsidies and weaker demand. 

According to data from China Association of Automobile Manufacturers (CAAM), electric vehicle sales in China fell 4.7% in July from a year earlier, representing the first drop in more than two years. 

"The electric vehicle sector experienced substantial softness in the second half of 2019 after the reduction of EV subsidies in China. Despite the challenges, NIO's sales improved solidly since September," said Li.

NIO debuted on the New York Stock Exchange on Sept 12, 2018.

NIO is also facing increased competition at home from California-based Tesla, as the first China-made Model 3 sedans began rolling off the assembly line at Tesla's new Shanghai gigafactory last week. 

CEO Li, however, sees little threat from Tesla. "If you compare the Model 3 with our products, we believe our product is still very competitive," he said to Reuters.

Tesla's Shanghai gigafactory is the first wholly-owned factory by a foreign automaker in China, after China relaxed rules that limited overseas automakers from owning more than 50% of any joint venture with Chinese automakers. 

NIO is betting that its luxury ownership experience and advanced electric vehicle models, which include AI and autonomous driving capability, will set it apart from Tesla and the many other Chinese electric vehicle startups.

NIO is backed by big investors, including internet services company Tencent Holdings and Hillhouse Capital Group.

resource from: Reuters

Eric Walz

Originally hailing from New Jersey, Eric is a automotive & technology reporter covering the high-tech industry here in Silicon Valley. He has over 15 years of automotive experience and a bachelors degree in computer science. These skills, combined with technical writing and news reporting, allows him to fully understand and identify new and innovative technologies in the auto industry and beyond. He has worked at Uber on self-driving cars and as a technical writer, helping people to understand and work with technology.