What happened
Chinese EV maker Nio (NIO -5.00%) has a plan to expand both inside and outside of China. But a recent update on EV sales has its stock dropping today. Nio shares were down by 5.5% as of 10:45 a.m. ET on Tuesday. Investors have EV leader Tesla to thank for that.
So what
Nio first began shipping its EVs outside of China to Norway in 2021. It then started exporting to other European countries last year as it worked to also grow sales in China. The latest data from China and Norway show that Tesla is gaining market share in both countries. That is at the expense of Nio and other smaller Chinese EV makers.
Image source: Nio.
Now what
Nio chose Norway as its first export market for a reason. Consumers there were expected to be early adopters, and that is proving to be the case. Citing the Norwegian Road Federation, Barron's reported today that of the more than 19,000 new passenger cars registered in Norway in March, nearly 90% were electric cars.
That sounds like great news for Nio. But Tesla is already dominating the market, accounting for more than 40% of the monthly sales. The Model Y alone recorded the highest ever monthly sales volume for a car model in Norway.
And it's not just Norway. Tesla is also gaining market share in Nio's home market. The China Passenger Car Association (CPCA) just reported that Tesla sold 88,869 China-made EVs in March. That's nearly a 20% increase from February. While some of those are exported, Tesla's new German factory is likely now serving the European market. While data for Tesla's quarterly China sales aren't available yet, as of late March the company was on pace to sell a record number of vehicles in China itself.
Nio just reported that its first-quarter deliveries dropped sequentially from the 2022 fourth quarter. Combined with Tesla's success in the markets where Nio is also focused, that doesn't bode well for Nio. Investors should know it's a long-term growth story, but Nio will need to show expansion and growth in the markets it serves for the stock to move higher from here.
