What happened
Investors in Nio (NIO 8.72%) couldn't decide whether to start off the final week of the year bullish or bearish. After initially jumping 2.6% early in the session, the American depositary shares of the China-based electric vehicle (EV) maker were down 1.2% as of 11:40 a.m. ET today.
So what
Followers of Nio have been bombarded by news surrounding the company and its stock this month. That included the company's Nio Day event held on Dec. 18, and rumors of a deal with the largest Chinese automaker. And today's trading action comes after Ford said it began selling its electric Mustang Mach-E SUV in China on Sunday.
Nio's ET7 sedan should begin deliveries March 28, 2022. Image source: Nio.
Now what
Anderson Chan, Ford's international communications manager, told the Detroit Free Press, "These are the very, very first customers to get a Mach-E in China." And Ford is replicating Nio's approach to using dedicated stores for direct-to-consumer transactions rather than the traditional dealership model used in the U.S.
This news highlights the increasing competition coming for Nio and other Chinese EV makers. But Nio has its own plans to hold, and gain, market share in the country. It is potentially working on a partnership with BYD, China's largest automaker, according to industry follower CnEVPost.
The report says that local media are reporting that the two EV companies are far along in talks to create a sub-brand for Nio to help create a mass market for its product. It noted that Nio itself confirmed general plans for a sub-brand when it reported its second-quarter results in August. William Li, Nio's CEO, said, "The Nio brand has a similar relationship with this new brand as Lexus has with Toyota and Audi has with Volkswagen."
Investors seem to be caught between the fears of increasing competition and Nio's plans to expand both in China and abroad. Today's market action reflects that balance.
