NIO Slashes Prices of All Models, Ends Free Battery Swapping
Nio Inc. NIO has lowered prices across all its models, including its revamped ES8 and ES6 SUVs (sports utility vehicles), effective Jun 12, 2023, amid a deepening EV price war in the country. Additionally, the company is encountering growing difficulties attributed to widening financial losses and lackluster sales. Notably, NIO delivered 43,854 vehicles in the first five months of 2023, dwarfed by Tesla's TSLA China sales, which were more than five times that of NIO.
In a bid to rev up demand for its offerings, China-based electric vehicle (EV) maker NIO announced a price cut of 30,000 yuan ($4,200) across all its models. With this, the price of Nio’s cheapest model comes down to 228,000 yuan ($32,000).
Starting this year, EV behemoth Tesla slashed the prices of its models quite a few times in China and elsewhere, registering a record number of quarterly deliveries. The price cut by Tesla propelled local automakers in China to undercut prices to retain their market share. Over 40 automobile brands, including BYD Ltd. and Volkswagen, have entered a price competition initiated by Tesla in China this year. At first, Nio refused to enter the price war, but the widening loss left the EV maker with no choice.
Nio also announced to end its free battery swapping services for new buyers. According to an article published by Reuters, it had been offering the swapping services for free at least four times each month to existing owners.
In February, Nio announced its intention to expedite the expansion of its battery-swapping network in China. The company aimed to construct 1,000 swapping stations within the country by the end of this year, thereby increasing the total count to 2,300.
Nio's investments in battery swapping stations, when the company is witnessing widening losses, raise concerns. During the latest reported quarter, the automaker incurred a loss of $690.1 million, which widened 18.1% from the preceding quarter. Also, the vehicle margin declined to 5.1% from 6.8% reported in the preceding quarter.
As Nio faces these difficult circumstances, it is crucial for investors to closely monitor whether these strategic changes have the potential to increase its sales and strengthen its position in the market.
Zacks Rank & Key Picks
NIO currently carries a Zacks Rank #3 (Hold).
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