Is NIO being squeezed in the EV market?
Problems are growing at the Chinese EV-maker NIO down 55% from its intraday peak back in early August as EV-maker has indicated that it is considering raising equity capital and also laying off 10% of its staff. Even a spin-off of several units is on the table. NIO has never been profitable and the lower entry barriers into the car industry because of electric vehicles technology has increased competition to insane levels making it increasingly difficult to grow fast in a profitable way.
NIO is expected to deliver FY23 revenue of $8.6bn and FY24 revenue of $13.1bn, but still losing money on its operations. In Q1 2021, NIO delivered 20,060 battery electric vehicles (BEVs) compared to BMW’s 14,161 deliveries of BEVs. Fast forward to Q3 2023, BMW delivered 93,931 and NIO delivered only 55,432 highlighting that NIO is falling behind relatively.
Investors that want to get exposure to the EV adoption should seriously think about whether betting on an EV-maker is the most sensible decision or whether investing in other parts of the value chain makes better sense. Our equity note The growing ecosystem around electric vehicles goes a bit deeper into this argument.