Why did the stock of NIO Inc. (NIO) Drop This Morning?

NIO has been unable to follow through on some of its early promises, which has angered investors.
WAN CHAI, Hong Kong - July 29, 2022 - PRLog -- The shares of NIO plummeted this morning, falling 11.2% in the first two minutes of trading. After that, the hot electric vehicle (EV) stock gained some ground, although it was still down 5.2% at 10:30 a.m. Monday, at 5:00 p.m. ET NIO shares were snatched up by investors in a frenzy after the firm made two statements they didn't want to hear.

For several weeks, there was fear that NIO's development may slow as a result of an increase in coronavirus infections in China, which has put numerous cities, including the financial powerhouse Shanghai, on lockdown. Tesla's Gigafactory in Shanghai was shut down on March 28, and while the EV giant anticipated it to reopen in just four days, there are no signs of it doing so yet.

Despite the fact that NIO's headquarters are in Shanghai, the company did not notice any manufacturing issues until this weekend. According to CnEvPost, NIO announced through its app on April 9 that it has halted production after some of its supply chain partners in China were forced to shut down operations due to lockdowns.

In fact, during the quarter ending in March, NIO announced record deliveries, up 37.5% year over year and 63% sequentially. Suspending production now, however, would result in delayed deliveries in the near future, putting the company's 2022 plans in jeopardy, including the debut of its SUV ES7, which has already been pushed back a month to late May. Meanwhile, on March 28, NIO began shipping its premium car, the ET7. NIO revealed a few weeks ago that it had gotten more orders for the ET7 than the estimated 15,000 units in the media.

According to CnEvPost, NIO stated via its app that it would raise costs of its vehicles as well as its battery-as-a-service (BaaS) program beginning May 10. This is another major event that is making NIO investors rather anxious today.

This statement may not have gone down well with investors today, considering NIO's CEO William Li stated during the business's fourth-quarter results conference call on March 25 that the company had no intentions to raise its product pricing.

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Monica Sue
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