It's Rough in China's Auto Market. When Will the Other Shoe Drop for Nio?
The Chinese auto market is a brutal one right now, with a price war, reduced subsidies, and a new vehicle tax -- can Nio continue to defy the odds and post growth?
It's Rough in China's Auto Market. When Will the Other Shoe Drop for Nio?
Overview
While most of the world is concerned about the rapid expansion of Chinese automakers that have the ability to severely undercut on price while still boasting advanced electric vehicles (EVs), Chinese companies have big issues at home. For them, the grass is truly greener on the other side, and exports are surging to support their businesses.
While many competitors in China are feeling the pain, one domestic automaker is bucking the trend: Nio (NYSE: NIO). Can that continue? Or is the other shoe about to drop, sending Nio's results more in line with domestic competitors?
Details
Chinese automakers might be scary-looking as they gain market share across the globe, but they're struggling on their home turf, with EV sales nationwide plunging, sending earnings and margins reeling. Investors looking for a culprit can quickly find it in a new-vehicle tax, reduced EV subsidies, and a stumbling economy. That's caused consumers to be cautious about big-ticket purchases, and that sentiment hasn't budged. Included in those challenges was that subsidies dropped to 8% of new-energy vehicle (NEV) prices.
Source
Originally published at www.fool.com.
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