NIO, China’s bellwether electric-vehicle start-up sees sales slump as Tesla’s cut-price Model Y steals its thunder

04-Mar-2021 Intellasia | South China Morning Post | 6:54 AM Print This Post

Sales of China’s bellwether electric vehicle (EV) start-up, NIO, slowed in February as it faced the challenge of Tesla’s Shanghai-made Model Y in the world’s largest car market.

Shanghai-based NIO, founded by William Li in 2014, delivered 5,578 units last month, 22.8 per cent down from sales of 7,225 cars in January. In February 2020, NIO delivered a scant 707 units owing to sales and production disruptions by the Covid-19 pandemic.

“Tesla offered a sharp price cut in their Model Y and created strong demand,” Li told an earnings conference call on Tuesday. “But we are chasing long-term growth and are not looking to trigger a hefty sales jump via price reductions.”

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The carmaker reported a loss of 1.39 billion yuan (US$212.8 million) in the fourth quarter of last year.

Launches of new models by conventional carmakers this year are set to fuel competition in the lone bright spot of the global automobile industry.

Li said NIO is targeting sales of 20,000 to 25,000 units in the first quarter of 2021.

On January 1, Tesla, the global leader in the field, began selling its locally built Model Y sport-utility vehicle (SUV) at a price 30 per cent lower than what it offered to customers in June last year during pre-order sales. It sold 1,641 Model Ys in January.

Tesla delivered 13,843 Model 3 sedans, its first car produced at the Shanghai-based Gigafactory 3, in January, up 461.4 per cent from a year earlier, according to data from the China Passenger Car Association.

“The market will see cutthroat competition in the premium EV segment as all carmakers including established brands and start-ups are aware of the huge potential and will try to lure more wealthy Chinese drivers through new model launches and promotional campaigns,” said Tian Maowei, a sales manager at Yiyou Auto Service in Shanghai.

“Tesla still enjoys the advantage in branding awareness, and Chinese start-ups and conventional carmakers such as Volkswagen will play a catch-up game.”

NIO, along with Li Auto and Xpeng, has been dubbed a Chinese Tesla challenger as it builds smart electric battery-powered cars that use technologies to enhance navigation, improve in-car entertainment and link up with other cars or mobile devices digitally.

The company emerged from the brink of bankruptcy in the first half of 2020 after receiving government funding worth $1 billion, while its share price surged, buoyed by the rosy outlook for China’s EV market.

NIO said its per-share loss narrowed to 14 US cents in the fourth quarter of 2020, compared with analysts’ forecasts of 7 US cents in loss. In the same period a year earlier, the company posted losses of 2.86 billion yuan, or 39 US cents per share.

Revenue soared 133 per cent to 6.64 billion yuan, in line with analysts’ expectations gathered by Benzinga, a financial information provider.

NIO’s New York-listed shares gained 8.7 per cent to $49.76 on Monday, but were 27.6 per cent shy of their recent high of $64.6 on February 10.


Category: China

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