$NIO Inc.(NIO)$ 

Intense competition for EV sales!!

Global EV sales for year 2022 is around 10 million units (up ~60% vs 6.5 million units in year 2021). Although the global EV sales is expected to grow to ~13.6 million units in year 2023 (which presents a growth of ~30% yoy), one must admit that there's huge competition among the different EV brands.

BYD became the world's best selling EV brand in year 2022, recording a sales of ~1.8 million units. Followed by $Tesla Motors(TSLA)$ , which also recorded ~1.3 million units in year 2022. Furthermore, the competition is getting more intense with Volkswagen etc.

Although China has the biggest market for EVs at ~60%, there's price war among the different EVs and you can see that most of the China's EV companies are not making significant progress in their car deliveries. Taking Nio as an example, since hitting the peak of 15.8k car deliveries in Dec 2022, the number has been decreasing and mostly remained stagnant at around 10k.

Dec22 - 15,815 cars (Q4 22 = 40,052)

Jan23 - 8,506 cars

Feb23 - 12,157 cars

Mar23 - 10,378 cars (Q1 23 = 31,041 down 22.5%)

Apr23 - 6,658 cars

Clearly, it's a challenging to scale up the car deliveries exponentially. Since the peak deliveries of ~16k in Dec 2022, the monthly car delivery is on a downtrend. Furthermore, the competition in the EV market has intensified as numerous traditional car markers (Mercedes-Benz, BMW etc) are also investing and building more EV units. Hence, I think the downside will be more for EV companies such as $Li Auto(LI)$ .$XPeng Inc.(XPEV)$ $Rivian Automotive, Inc.(RIVN)$ 

The good thing is the price of raw material for EV battery (lithium) has been on a decline since the peak in Nov 2020 ~CNY600,000/ton, reaching a current price of ~CNY172,500/ton (~70% decrease from its peak). However, the price war from Telsa would also lead to lower profit margin! With increasing interest rate hikes, I doubt people would be splashing more money to buy new cars!! The outlook for Q4 delivery is only at 20k. It's insignificant as compared to Tesla's 500+k per quarter and Ford's 150+k EV per quarter.

Nio's Q1 2023 results will be released on 9th June. The deliveries number are already published online, the decline for car deliveries is likely factored into the current stock price. The million dollar question is its future profit margin and outlook! What do you think? Let me know your thoughts!

@Daily_Discussion  @TigerStars  @MillionaireTiger  

# 💰 Stocks to watch today?(20 Dec)

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  • FatBelly TGR
    ·2023-06-03
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    my observation is that, when competition is high and hot... means that there is still a huge potential in the EV markets...
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  • riffy
    ·2023-05-31

    I wonder how Nio's Q1 results will impact their stock price and future outlook. 🤔

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  • twiddly
    ·2023-05-31

    Scaling up car deliveries is definitely a challenge, especially with all the competition. 🤔

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  • Frosty4ever
    ·2023-06-01
    slow scaling makes economies of scale becomes more difficult.
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  • gleezy
    ·2023-05-31

    It's interesting to see BYD leading the way with 1.8 million units sold. 🏆

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  • cutzi
    ·2023-05-31

    Wow, the competition for EV sales is really heating up! 🚗💨

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  • Chris_Lim
    ·2023-06-06

    Great ariticle, would you like to share it?

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