The NIO (NYSENIO) share value is down 49.5% over 12 months. The corporate simply retains on underdelivering, and this time there’s much less optimism that the inventory will pop again up. Effectively, that’s definitely my view.

Underdelivering time after time

The Shanghai-based EV agency delivered 30,053 automobiles within the first quarter of 2024. That interprets to a 3% decline versus the identical quarter final yr. In a fast-growing market like new power automobiles (NEVs), going backwards isn’t spectacular.

Nonetheless, a few of this may be put right down to the broader macroeconomic local weather. Tesla is amongst these firms which can be struggling for the time being, just lately saying falling deliveries yr on yr. The massive distinction is that NIO is one million miles behind Tesla, and it nonetheless loses cash.

For my part, NIO has confirmed to be the loser within the extremely aggressive Chinese language EV market. My prime decide, Li Auto, just lately introduced a 53% enhance in deliveries yr on yr for Q1 — and that was nonetheless down on the place it hoped to be.

Ready longer on profitability

After I first began overlaying NIO inventory two years in the past, it was as a consequence of flip its first revenue in 2024/25. In fact, there have been points that have been outdoors of the corporate’s management. NIO was seemingly tougher hit by extended Chinese language lockdowns earlier than ‘Covid Zero’ was lifted.

Nonetheless, the enterprise simply hasn’t moved ahead as shortly as we’d have hoped. In truth, it’s now unlikely to show a revenue till 2027. Meaning three extra years of losses, and possibly additional cash raises. NIO ended 2023 with $8.1bn in money and equivalents, however it misplaced $600m within the final quarter of the yr.

Whereas this run price doesn’t look overly alarming, the corporate is planning to open over 1,000 battery-swapping stations over the subsequent yr. And it could must open extra to develop its battery-swapping infrastructure totally. At $420,000 per station, it’s going to require a lot extra capex.

Nice vehicles, however USP fading

I actually like what NIO has executed. It has an important vary of automobiles, cool tech and distinctive battery-swapping know-how. However whereas the battery-swapping idea is spectacular, I consider it’s much less of a promoting level than it was once.

NIO says you’ll be able to swap your automobile’s empty battery for a full one in a matter of minutes. And that’s sooner than any charging various. It might nonetheless be a characteristic that helps it bounce again. The issue is that automobile charging is getting sooner, so constructing all this battery-swapping infrastructure appears much less related to me.

For instance, Li Auto’s Mega can attain full cost in simply 12 minutes. And I think about it’s solely going to get sooner. I’m now not satisfied that battery swapping is the way in which ahead.

All in all, I’m not satisfied NIO can flip issues round. I’d like to be optimistic, however it’s in a tough state of affairs and has a monitor file of disappointing me. It’s at present buying and selling at 25.9 occasions predicted earnings for 2027 — not costly, however that’s a good distance away.