What happened

When widely followed electric vehicle maker NIO (NIO 5.16%) reported its monthly deliveries for October, investors were surprised at the sudden drop versus prior months. But it looks as if the company took a step back last month in order to move two steps forward. Investors interpreted November delivery results in that light, and the stock popped more than 4% in early trading today. At 10:10 a.m. ET, some of those gains had faded, but shares remained up 2.5%.

So what

Last month, October deliveries of only 3,667 vehicles surprised many investors. That figure represented a decrease of 27.5% year over year, after NIO's electric car shipments over the first nine months of 2021 marked an increase of more than 150% compared to the prior-year period. But there was a reason for the October results, and today NIO confirmed that they represented a one-time drop after it reported record monthly deliveries in November.  

rear view of white Nio ES8 SUV destined for sale in Norway.

NIO began shipping its ES8 SUV to customers in Norway this year. Image source: NIO.

Now what

The sharp drop in October deliveries came as the company undertook "restructuring and upgrades of manufacturing lines and the preparation of new products introduction." That was in preparation to double its capacity as well as for production of its new ET7 luxury sedan, scheduled to begin in early 2022. Next year, NIO will also begin shipping the new model to Norway, where it has already established a presence and begun sales of its ES8 SUV. 

The bounce back in November deliveries seems to confirm NIO's claims and to show there was no underlying issue related to supply chain constraints or demand. NIO has now delivered 80,940 vehicles in 2021, which is a jump of more than 120% from the same period in 2020. 

Investors today are showing a bit of relief that the prior month's results were merely a sign that the company is progressing in its expansion plans. The EV market has plenty of room to grow, and NIO expects to be a meaningful part of it in both China and Europe in the year ahead.