Nio Caves In And Joins The Price-Cut War Despite CEO's Pledge

Chinese EV maker and Tesla Inc (NASDAQ:TSLA) rival Nio Inc (NYSE:NIO) said it would cut prices on all its new models starting Monday. The announcement comes days after the company reported quarterly results below estimates.

What Happened: The starting price of 6 new models will be reduced by 30,000 yuan or $4,200, the company said in a statement. The vehicles include ET5, ES6, ET7, ES7, EC7 and ES8.

Further, the company will no longer provide a free battery exchange service for new users. Instead, users can exchange batteries for a single payment.

Why It Matters: On Friday, Nio reported first-quarter FY23 sales growth of 7.7% year-on-year to $1.56 billion, missing the consensus of $1.63 billion. Vehicle sales declined and vehicle margin contracted 1,300 basis points to 5.1%. Net loss for the quarter expanded to 4.7 billion yuan as compared to 1.8 billion yuan in the previous corresponding period

For the next quarter, Nio sees deliveries of 23,000 to 25,000, down by 8.2% – 0.2% year-over-year, and revenue of $1.27 billion to $1.36 billion, down by 15.1% to 9.0%.

In April, CEO William Li had said that the company wouldn’t join the price war triggered by EV giant Tesla Inc (NASDAQ:TSLA) as its gross margins are too low.

"Tesla can fix vehicle prices in the U.S. with a market share of over 60%, but not in China, where it holds only about 7%," he said.

Price Action: Shares of NIO on the NYSE closed down 0.8% at $7.73 on Friday, according to data from Benzinga Pro. and were up 4.01% at premarket on Monday.

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