What happened
Nio (NIO +0.32%) shares are starting off the week on another down note after a more than 7% decline last week. Today, Nio shares were down 5.6% as of 11:30 a.m. ET as concerns mount over COVID-19 cases in China and economic conditions elsewhere.
NYSE: NIO
Key Data Points
So what
Investors are counting on the fourth quarter being a pivotal time for Nio's electric vehicle (EV) sales. Nio delivered 31,607 EVs in the third quarter after averaging just about 25,000 for the prior three quarterly periods. Management expects unit sales to soar to between 43,000 and 48,000 in the fourth quarter with its new models in China and as the company's expansion into Europe gets traction. But concerns are growing about the spread of COVID-19 cases in China and recession fears elsewhere.
Image source: Nio.
Now what
Nio produced its 300,000th vehicle last week since it began production in 2018. The company shipped a record number of EVs in November, and expects that pace to continue after new model introductions and investments to increase production capacity. The pivot away from China's "zero-COVID" approach may be bringing a slowdown, at least in the near term, however.
After recent protests along with disappointing economic data, China's government seemed to completely reverse its strict containment policies. That has led to reports of a quickly growing wave of cases and citizens staying off the streets.
For investors, that could realistically mean that Nio won't have the strong sales that it expected in December and into early 2023. But a recovery in the Chinese economy could give Nio and other EV makers a boost in the longer term, and investments should always be looked at with that time frame.
