NIO (NIO) Losing Its Charge Today As The Chinese EV Company Cuts Its Q4 Delivery Outlook

NIO Inc. (NIO) is under pressure today after the Chinese EV company lowered its Q4 delivery outlook. There was also a Reuters report that Tesla (TSLA) suspended its Shanghai plant production, which is also weighing on the EV space today.

NIO says that in December it has been hampered by supply chain constraints, caused by the COVID-19 outbreak in major cities in China. This has caused challenges in terms of deliveries and in terms of its production schedule. As a result, NIO is lowering its Q4 delivery outlook to 38,500-39,500 vehicles from prior guidance of 43,000-48,000 vehicles.

Our first thought is that was a pretty large drop, which helps to explain why the stock is down so much even though the shares had already been weak in recent months. NIO does not provide updated guidance for Q4 revenue today, but we have to think its prior guidance of RMB17,368-19,225 mln is in jeopardy. And we wonder if NIO will offer more muted guidance for 2023 when it reports Q4 results, likely in March.

Overall, the lowered Q4 delivery guidance is a letdown. What’s more is that it comes only about six weeks after NIO guided Q4 revenue below consensus by a good amount, which is pretty disappointing. Also, that 43-48K guidance was pretty recent on November 10. That tells us that December must have been a bad month and that makes us nervous heading into Q1. We never like to see a company stumble late in a quarter as that does not bode well for the next quarter.

Hopefully, the issues are truly mostly supply constraint-related and hopefully that situation improves in 1H23, but as of now, we would be cautious with NIO in the coming quarters.