Why Nio shares fell on Tuesday

What happened

Nio (NIO -1.71%) has yet to announce its second-quarter results, but the stock is hit today after a competitor did. Nio shares fell 4% today, before paring those losses. As of 2:45 p.m. ET on Tuesday, the stock was still down 2.3%.

So what

Li-Auto spooked investors from China’s electric vehicle (EV) makers after it said yesterday that second-quarter deliveries were up 63% year-on-year but did not offer a promising outlook for the third quarter. More pessimism was also added yesterday, when China cut interest rates after the world’s second-largest economy suffered a slowdown in July.

Now what

Li Auto delivered over 10,400 of its Li One electric vehicles in July. But he told investors he only expects between 27,000 and 29,000 vehicle deliveries for the third quarter. That would represent a year-over-year increase of just 7.5% to 15.5%, and is well below the 39,000 analysts expected. Investors believe that could translate into a similarly disappointing outlook from Nio when it releases its second-quarter results.

China’s economy may also be showing the consequences of several intermittent shutdowns with its “zero COVID” policy. Authorities cut interest rates on Monday after July data showed economic activity was slowing across the country. Disappointing data included factory output as well as consumer spending and real estate.

At the same time, Nio continues to increase its exports to Europe. The company plans to begin deliveries of its flagship ET7 luxury sedan in Germany later this year. A recent report including video of a fleet of them being staged at a Chinese port for export was shared by industry watcher InsideEVs over the weekend.

Investors should do their own research and consider risk tolerance, but if short-term production issues from past stops are dragging the stock down, now may be a good time to invest, given that Nio seems always moving forward with its overseas growth. .

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