Nio’s Perfect Storm: Weak Deliveries, Price Wars, and Analyst Downgrades Spell Disaster | Markets

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The electric vehicle (EV) market slump continues to overwhelm EV producers worldwide. Nio (NYSE:NIO) stock is one of the up-and-coming China-based EV startups that has been gravely affected by weaker demand in the burgeoning car market. Nio’s share price has fallen nearly 33% on a year-to-date perspective. As the company continues to falter, investors who are still holding the stock should really reconsider their judgement.

Below are three reasons why I believe NIO stock is still a strong sell.

Deliveries continue to underwhelm

The Chinese EV maker, NIO, has also experienced sluggish delivery growth in respective to its competitors. EV deliveries in 2023 came in at 160,038, up only 30% on a year-over-year basis. BYD (OTCMKTS:BYDDY), NIO’s key competitor in China, saw a 62% surge in full year EV deliveries.

In January, Nio delivered 10,055 vehicles, which was a 44% decrease from December. Similarly, in February, the EV maker delivered 8,132 vehicles, down 19% from January.

Not to mention, China is still going through an economic recovery, and folks are feeling risk averse in terms of spending. This will affect all EV makers operating in China, but it will likely impact the smaller, lesser-known players the most.

EV market price war will undermine NIO’s growth

Slumping demand for new electric vehicles has resulted in another phenomenon: a price war. To cushion the slowdown in sales, Nio, BYD and other EV competitors have pursued price cuts in their expensive models. For example, BYD’s Yuan Plus SUV has a price tag of 119,800 yuan, approximately $16,642, which is nearly 12% less than where it was before. NIO stock also announced a host of price cuts last year. This price war will likely intensify, especially as the EV slump…

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