What happened
After dropping more than 5% on Thursday, the American depositary shares of Chinese EV maker Nio (NIO +4.87%) fell almost another 6% today before recovering some of those losses. As of 11:45 a.m. ET, the shares remained down 4% today.
NYSE: NIO
Key Data Points
So what
Yesterday's drop came after the company reported its August EV sales results. While deliveries rose more than 81% year over year, that increase came off a low base when supply chain issues stymied production in August 2021. But Nio has grown sales year to date by 28.3% versus the prior-year period.
It has been helped by the introduction of new vehicles, including the new ES7 mid-large size SUV that has just begun ramping up production. Nio shipped almost 400 of the new SUV model in August. But many challenges remain, including continued supply chain snarls and COVID-19 restrictions hurting both supply and demand.
Nio delivered 398 of the new ES7 SUVs in August. Image source: Nio.
Now what
Investors are also reacting to new restrictions the U.S. government has placed on semiconductor chip sales in China. There shouldn't be any immediate impact on Nio or other Chinese EV makers, however, reports CNBC. The chips used by Nio and others for driver assistance technology systems are not part of the new decree.
But that doesn't mean that can't change, and investors might be seeing a new vulnerability for these EV makers that do rely on some chips from the U.S. Additionally, COVID-19 lockdowns continue to pop up in different cities throughout China. Even if that doesn't directly impact production through supply chain issues, the lockdowns lower consumer demand. Investors aren't viewing the current environment as a good one for Chinese manufacturers like Nio.
