What happened
Nio (NIO 0.27%) stock plunged this morning, crashing 11.2% within two minutes of the market's opening. The hot electric vehicle (EV) stock gained some ground quickly thereafter, but was still down 5.2% as of 10:30 a.m. ET Monday.
Investors dumped Nio shares fast and furiously in response to the company making two announcements they absolutely didn't want to hear.
So what
For some weeks, speculation was ripe that Nio's growth could decelerate in the wake of surging coronavirus cases in China that's put several cities, including financial hub Shanghai, under a complete lockdown. Tesla suspended operations at its Gigafactory in Shanghai on March 28, and while the EV giant expected to restart operations within four days, there are no signs of it reopening yet.
Although Nio's headquarters are located in Shanghai, it didn't report any production hiccup until this weekend. On April 9, Nio stated via its app that it has suspended production after several of its supply chain partners in China had to shut down operations under lockdowns, according to CnEvPost.
Nio, in fact, reported record deliveries for the quarter ended in March -- its deliveries surged 37.5% year over year and 63% sequentially. Suspending production now, however, will mean delayed deliveries in the near future, and that could jeopardize the company's plans for 2022, including the launch of its SUV ES7 that's already been postponed by a month to late May. Meanwhile, Nio just started deliveries of its flagship sedan ET7 on March 28. Barely weeks ago, Nio hinted it received more orders for ET7 than the 15,000 units the media speculated.
Image source: Nio.
In another big development that's making investors in Nio even more nervous today, the EV maker announced via its app that it'll hike prices of its vehicles as well as its battery-as-a-service (BaaS) program beginning May 10, according to CnEvPost.
This announcement in particular may not have gone down well with investors today as until March 25 on the company's fourth-quarter earnings conference call, Nio's CEO William Li insisted the company had no plans to increase prices of its products.
Li now says Nio has no choice but to increase prices given how dramatically prices of key raw material have surged in recent weeks after the conflict between Russia and Ukraine broke out.
Now what
Nio investors have had a pretty rough ride in recent months. From the threat of the stock getting delisted from the U.S. to rising costs and competition, there were plenty of concerns to take stock of. The market's hopes got a lift after Nio's record first quarter in terms of deliveries, only to get dashed today.
