Nio (NYSE:NIO) is slashing prices for all its vehicles and will cease to provide free battery-swapping services to new customers, beginning June 12. These adjustments stem from the Chinese automaker’s struggles to achieve profitability and drive sales growth.
The price cut of $4,199 (30,000 yuan) is applicable across all vehicle models, including the recently revamped ES6 and ES8 sports utility vehicles. It is worth highlighting that this move by the company contradicts CEO William Li’s previous statement during the fourth-quarter earnings call on March 1, in which he assured that Nio would maintain a “stable” pricing policy.
Regarding battery swapping, customers now have the option to either charge their batteries at home or choose to pay for the service. Looking ahead, NIO aims to introduce innovative and flexible battery charging and swapping packages.
Over the past few months, NIO has been reducing the benefits it offers to its customers. In April, the company announced that starting June 1, customers purchasing vehicles would be responsible for the cost of charging station installation. However, previously, the company provided buyers with two options: either they could enjoy up to six free battery swaps per month or receive a complimentary home charging station along with four battery swap benefits.
NIO’s Recent Q1 Performance
NIO announced the recent changes following the release of its fiscal first-quarter results on June 9. The company’s vehicle margin reflected a sharp contraction to 5.1% in Q1 compared with 18.1% in the last year’s quarter. Also, it gave disappointing guidance of a year-over-year decline in revenues and vehicle deliveries in the fiscal second quarter.
Despite the gloomy results, six analysts maintained a Buy rating on NIO stock, while two downgraded the rating to Hold. Among the bullish analysts, Deutsche Bank analyst Edison Yu is of the opinion that NIO’s controlled operating expenses are impressive. Also, the company provided a better-than-expected Q2 outlook.
Is NIO a Buy or Sell Now?
Wall Street’s Strong Buy consensus rating on Nio is based on eight Buys and two Holds. The average price target of $12.52 implies over 62% upside. Shares have fallen about 19% year-to-date.
