3 shocking reasons why Nio Stock crashed today


What happened

Electric vehicle (EV) stock Nio (NYSE: NIO) fell on Friday, and it wasn’t just the general bloodshed in the stock markets that caused stocks to fall. A few big reports from China, Nio’s home market, frighten investors in the hot EV stock even more. In total, its shares were trading down about 4.5% as of 11:30 a.m. ET today.

So what

Fears over a new variant of the coronavirus with several mutations found in South Africa have rocked economies around the world, with US stock markets particularly hard hit as the development comes amid the peak holiday travel season.

The United States reopened its borders to international travelers from all countries on November 8, and travel data reports already suggest this Thanksgiving is expected to be the busiest since the pandemic, based on the number of air passengers screened. .

While new COVID-related fears sent several stocks plunging on Friday, it coincided with another jarring development in China that is making Chinese equity investors, including Nio, nervous.

Image source: Getty Images.

Chinese regulators have reportedly asked the ridesharing company DiDi Global (NYSE: DIDI), to withdraw its shares in the United States over concerns over the company’s leakage of sensitive data, according to Bloomberg. DiDi has been criticized by Chinese regulators, mainly over data security concerns, since it listed its shares on the New York Stock Exchange a few months ago. A delisting order in the United States, however, is unprecedented and reflects the extent of China’s crackdown and influence over a company’s operations.

Although Nio has been one of the “safest” Chinese stocks as far as Chinese regulators have mainly targeted tech stocks lately, investors in the electric vehicle maker are still nervous.

Meanwhile, competition continues to intensify in the Chinese electric vehicle market, with its rival You’re here (NASDAQ: TSLA) hinting at $ 200 million investment plans to increase production at its Gigafactory in China. Just days ago, Elon Musk suggested that Tesla’s flagship sedan, the Model S Plaid, could be available in China as early as March 2022. Nio, dubbed “China’s Tesla,” aspires to overtake the vehicle giant electricity in this country.

Now what

The market’s massive sell-off, China’s crackdown on DiDi, and Elon Musk’s hints may have hit Nio’s shares on Friday, but the company doesn’t seem daunted by the competition and is focusing on its plans to growth. On November 25, for example, he signed an agreement with Royal Dutch Shell to jointly build and operate battery charging and exchange stations. Plans include pilot stations in Europe in 2022 and the installation of 100 exchange stations in China by 2025.

Nio’s Battery as a Service (BaaS) program is a major competitive advantage. It offers customers the option of purchasing cars without batteries (saving up to $ 10,000 per car) and subscribing to the program to charge and swap batteries at Nio stations as needed.

The company also just announced that it has started installing a factory in its NeoPark EV industrial park in China, with the first test vehicle expected to roll out from there in the second quarter of 2022. This is an important milestone for Nio. because NeoPark will be its second factory.

Its highly anticipated flagship sedan, the ET7, is also on track for launch next year, so investors may want to think twice before hitting the panic button on Nio on sales days. like Friday.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are motley! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.


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