What happened

Shares of NIO (NYSE:NIO), a Chinese premium electric vehicle manufacturer, popped as high as 25% Monday afternoon before giving back some gains, after releasing October delivery totals.

So what

Investors who have watched shares of NIO shed over 70% of their value year to date finally received some welcome news: It delivered 2,526 vehicles in October, which was good for a 25.1% increase from a strong delivery in September. The impressive totals were recorded despite a seven-day National Day holiday in the beginning of October. Deliveries broke down to 2,220 ES6 models and 306 ES8 vehicles.

"Our solid sequential improvement in deliveries continued in October, mainly driven by the hard work and strong execution of our sales teams," said CEO William Li in a press release. "We appreciate the support from our users and believe in the power of word of mouth as our vehicles and services continuously evolve and optimize." 

NIO's ES6 electric SUV

The NIO ES6. Image source: NIO.

Now what

Despite today's share price pop, let's be clear that NIO faces major challenges in a highly competitive auto industry. It is in serious need of a helping hand: The company burned roughly $620 million in cash during the second quarter, which left it with only $503.4 million as of June 30. Some analysts at the time went as far as to say it could be broke within weeks.

There was a brief glimmer of hope mid-October when it was reported that the company was close to a deal with the Government of China's Wuxing District, but later the government entity chose to walk away due to heavy risks. By most accounts, NIO makes an impressive premium electric vehicle, but it's burning through cash and, with China's overall vehicle sales struggling in 2019, it seems safer to watch this from the sidelines even after today's spike. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.