Nio (NIO 8.72%) stock tumbled this week, plunging to a 52-week low of $5.86 per share as of this writing. By noon Friday, the electric vehicle (EV) stock had dropped 18% in the week, according to data provided by S&P Global Market Intelligence.
Nio is all set to begin deliveries of its 2024 models in March, but that may not be enough to grow its clout in an industry where competition is getting increasingly intense by the day. Worse yet, the EV industry is also slowing down, as evident by the latest data from China.
EV sales in China are falling
China is the world's largest EV market, and Nio is among the leading players. The Chinese EV industry, however, has shown visible signs of a slowdown in recent weeks. This week, data from the China Passenger Car Association revealed a 21% drop in retail new energy vehicles (NEV) sales in China between Jan. 1 and Jan. 14 compared to a similar period from December.
Meanwhile, Nio's peers are growing sales at a faster pace, with XPeng and Li Auto reporting 171% and 185% growth in fourth-quarter deliveries, respectively. Nio's Q4 deliveries barely rose 25% year over year.
To be fair, in recent months, Nio has transitioned all its models to an advanced second-generation platform, which hit production and began deliveries last quarter. However, there's no denying that competition is catching up with the Chinese EV maker. With EV leader Tesla slashing the prices of its cars in China in recent days, Nio must work even harder to boost sales.
Is Nio stock a buy now?
Nio doesn't plan to launch new models for the better part of 2024 because it has just upgraded all its models to a new platform and will start delivering them in March. Nio is also confident of launching its mass-market brand later this year, which should open up more demand segments for the company. Further, Nio's Q4 deliveries exceeded its guidance, and it delivered a record number of vehicles – a little over 160,000 units -- in 2023, up 31% year over year.
With Nio also cutting costs and investing aggressively in its battery-swap business, which is a big competitive advantage, long-term investors will find value in Nio stock now as it trades at only 1.5 times price-to-sales (P/S).
