Nio Delivery Guidance, New EV Key As China Startup Struggles

China’s Nio (NIO) prepares to report first-quarter earnings on Friday, June 9 as important new electric vehicles roll out in a hunt for growth. Nio stock rose on June, near a 52-week low.

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Nio has been struggling with soft sales, a laggard vs. its startup rivals Li Auto (LI) and XPeng (XPEV).

The Delivery outlook will be key. Nio is starting to roll out second-generation versions of its most popular electric SUVs, which were overdue for updates.

But competition in China’s electric SUV market, dominated by EV giants Tesla (TSLA) and BYD (BYDDF), is becoming more intense.

Nio Earnings

Estimates: Analysts polled by FactSet expect Nio to widen its net loss per share in the March-ended quarter to 38 cents from 12 cents a year ago. Revenue is seen rising 13% to $1.675 billion, but that would be the weakest in years.

Nio has already disclosed that it sold 31,041 EVs in Q1, lagging Li Auto by a margin, and near the low end of Nio’s own forecast for 31,000-33,000 EV deliveries.

Results: Check back Friday before the market open.

Outlook: Nio is likely to share delivery and revenue outlook for the current second quarter. Analysts forecast Q2 revenue of $2.52 billion, increasing 70% year over year, FactSet shows.

Since Nio has already reported selling 6,658 EVs in April and 6,155 in May, its guidance will basically be for June.

Nio Stock

U.S.-listed shares of Nio rose 1.3% to 7.63 in stock market action June 2. Nio stock rebounded higher June 1 after hitting a a 34-month low of 7.

The China EV stock has spent most of 2023 below the falling 10-week moving average. In fact, Nio has spent nearly all of the last two years below the 40-week average.

Battle In Electric SUV Market

Amid big changes to its product lineup, Nio’s EV sales fell in March, April and May on a month-over-month basis.

Once dubbed the Tesla (TSLA) of China, Nio “is struggling with “both weak demand for its sedans and a major production platform transition for its SUVs,” Deutsche Bank analyst Edison Yu wrote in May.

But in late May, a new and improved ES6, based on a second-gen EV platform, hit the road. A similarly updated ES8 should follow in June. Both popular models reportedly saw a sales drop-off as consumers awaited a refresh.

The Nio ES6 has been a bestseller since its 2019 launch. It’s a potential growth driver for the rest of 2023 after updates.

But more new models continue to hit the crowded Chinese electric SUV market, with 20 debuting in April alone. Nio’s SUVs will compete with Li Auto’s hybrid SUVs, as well as upcoming models from BYD’s upscale Denza line.

Further, Tesla’s Model Y remains very competitively priced, though the U.S. EV giant slightly hiked prices in May after slashing them earlier in 2023.

The Tesla price cuts led to a China EV war.

Year to date through June 2, Nio stock is down 22% while Tesla is up 74%. LI stock is up 44% over the same period, while XPEV is down 15%. BYD stock is up 28%.

TSLA stock and BYD are in buy range as of June 2.

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