Sunday, 31 March 2019

Consumers are accusing Tesla of sleazy car dealership upsell tactics

Tesla sells vehicles directly to consumers online and through company-owned showrooms. The company has set itself apart from other autodealers with its electric model and superstar CEO (Elon Musk now has a Soundcloud single!), as well as by ensuring that buying a Tesla is a luxury experience. In its 2018 annual report, Tesla described its showrooms as “highly visible, premium outlets in major metropolitan markets.” Earlier in March, Tesla decided to raise vehicle prices in order to keep some of these stores open.
In other words, one of the most important things about Tesla’s brand is that there’s nothing sleazy about it. That’s why the upselling reports from online consumers are so concerning: They suggest Tesla is willing to stoop to the same sales tactics that any other auto dealer would use.
Such tactics may bolster Tesla’s first-quarter sales numbers and bring it closer to its financial goal of being profitable in the second quarter. Tesla is also in the middle of an end-of-quarter delivery push—Musk on March 30 tweeted a photo of a Tesla semi electric truck delivering Tesla cars—so some of the customers who reported delays could still get their Model 3 in the end. The company is expected to announcesoon how many cars it built and sold in the latest quarter.
But upselling and “bait and switch” sales tactics also risk angering customers, many of whom have already had their faith tested by multi-year waits for the $35,000 Model 3. And one of the last things Tesla needs right now is more disillusioned buyers cancelling orders and having trouble getting their money back

Tuesday, 26 March 2019

China Scales Back Electric-Car Subsidies to Spur Innovation

A BYD Co. E6 electric taxi is charged at the company's charging station in Shenzhen, China.
China will scale back subsidies on electric vehicles as the industry develops and costs go down, trying to encourage local manufacturers to rely on innovation rather than government assistance to spur sales.
The subsidy for pure battery electric cars with a driving range of 400 kilometers (250 miles) and above will be cut by half, to 25,000 yuan ($3,700) per vehicle from 50,000 yuan, the Ministry of Finance said in a statement on its website Tuesday. To qualify for any subsidy, electric cars need to have a range of at least 250 kilometers, compared with 150 kilometers previously, the ministry said.
The government had warned of its plans to scale back subsidies and phase them out completely after 2020, though it hadn’t given details. While financial support for purchases has fueled the rapid growth of China’s electric-car industry, there are also concerns that automakers have become overly reliant on them at the expense of developing new technologies and better vehicles.
The move aims to support “high-quality development of a new-energy automobile industry,” the ministry said.
U.S.-listed advance depository receipts for NIO Inc., the maker of ES8 electric sport utility vehicles, plunged as much 5.4 percent to $5.06, the lowest intraday price since the Shanghai-based company’s initial public offering in September.
“While the incumbent OEMs will see some earnings damage, we consider NIO the most vulnerable of all,” Robin Zhu, a Bernstein analyst, wrote in a report Tuesday. “Despite struggling for demand, the company recently indicated it won’t reduce prices to offset lower EV subsidies. Today’s subsidy cuts mean NIO’s cars just got meaningfully more expensive for consumers.”
The finance ministry also urged local governments in China to remove subsidies on purchases of electric vehicles, including buses and trucks, after a three-month grace period starting Tuesday.
When combining the halving of subsidies for EVs with at least 400 kilometers of range with the complete removal of direct incentives from local governments, the total reduction is 67 percent, a more drastic cut than the 40 percent or 50 percent that the market was expecting, according to Patrick Yuan, a Jefferies analyst.
Subsidies have been key to making plug-in hybrids and EVs of companies such as BYD Co., which is backed by Warren Buffett, more affordable to Chinese consumers and helping the country surpass the U.S. as the world’s biggest market for such vehicles in 2015. On top of what the central government spends, Chinese cities and provinces separately offer incentives to make electric cars more appealing in a country where automakers from Volkswagen AG to Ford Motor Co. are planning to increase EV offerings.

First Passenger Electric Aircraft to Take Off Soon

MagniX tests its 350HP lithium-ion battery-powered electric motor in a Cessna Iron Bird.
In about a decade, Elon Musk’s crazy pipe dream of building an all-electric car became the Tesla Model 3, the best-selling electric car in the world in 2018. Now every major carmaker is working on its own electric offering.
Seattle, Washington-based magniX wants to be a Tesla-like trailblazer for electric aviation. The startup today announced plans to partner with Canadian airline Harbour Air to create the first fully electric commercial fleet.
Harbour Air operates 30,000 flights over 12 routes in the Pacific Northwest each year, carrying 500,000 passengers on its small seaplanes. MagniX will begin by swapping the fuel tanks and Pratt & Whitney engines on the airline’s six-passenger Havilland Beaver aircraft in exchange for its 560-kilowatt (750-horsepower) electric motor and lithium-ion batteries that provide enough energy to fly about 160 kilometers (100 miles) on a single charge. That, says Harbour, is enough range for the airline’s short-hop flights. Flight tests will happen later this year.
The cost of retrofitting the planes will not exceed what a standard engine overhaul—required after every 2,000 or so hours of flight time—typically costs, says magniX’s CEO Roei Ganzarski, a Boeing veteran. What’s more, Harbour will no longer have to worry about one of an airline’s biggest expenses: fuel. Exactly how much savings the company will realize by plugging in instead of filling up remains to be seen. But Harbour can expect to save on maintenance costs after the switch to electric propulsion.
As Tesla discovered years ago, the challenge is to find the right class of aircraft, says Ganzarski. One includes cargo airplanes such as the Cessna 208 Caravan, delivery companies such as FedEx rely on, but is also used to carry passengers for short flights. Another is short-hop aircraft like the Beaver.
The flight range for retrofitted airplanes should double by 2025, as they are equipped with advanced battery technologies that MagniX’s three battery suppliers are working on, Ganzarski says. These include solid-state lithium batteries and aluminum batteries—new technologies that promise to be lighter and have more capacity.
MagniX is also working with a partner to design and build an all-electric aircraft that, even with today’s batteries, would have more than 800 km (500 miles) of range.
Aside from the batteries, the key requirement for electric aircraft is the motor’s power-to-weight ratio. magniX’s 560 kW motor weighs 100 kilograms, for a robust 5 kW/kg. Packing power into a lightweight package is expensive—prohibitively so for cars and boats—but makes sense for aircraft. Only one other company has made an electric motor that packs the same power: Siemens, which is supplying motors for the small electric airplanesbeing developed by Denver, Colorado-based Bye Aerospace.
Siemens and others are also making hybrid systems that combine gas turbines and batteries. Zunum Aero, which is backed by Boeing and JetBlue, is building a 12-passenger hybrid-electric airplane, which it also plans to test this year (with plans to make it commercially available in 2022). But, says magniX’s Ganzarski, “Hybrid propulsion is just half a step forward. It’s an easier step, but only an interim solution. All-electric is the only way to go.”

Sunday, 24 March 2019

First electric bus to travel Route 66 in California arrives in Pasadena. What a kick!

Route 66 epitomizes car culture, freedom and Sunday drives especially in the West.
What some don’t know is the famous, 2,278-mile road passing through eight states from Illinois to California ends in Santa Monica and includes historic Colorado Boulevard in Pasadena, the route taken by the world famous Rose Parade every Jan. 1.
Now you can add to the list of vehicles that ever rode the highway since it opened in 1926: A full-sized electric transit bus. This one picks up and drops off passengers in Pasadena.
Foothill Transit began running its 2600 series electric buses on Colorado, Arroyo Parkway (also part of Route 66) and on Foothill Boulevard in East Pasadena about a month ago. There was no fanfare. Only the silence of a battery-powered transit bus capable of carrying 40 people.
“Congratulations. You saw an electric bus in Pasadena,” confirmed Felicia Friesema, spokeswoman for Foothill Transit, the public-private bus company out of West Covina running white buses with blue stripes.
The battery-powered buses carry the following message in large letters, “Your all-electric bus,” across the windows. On the roof’s edge they say: “Let’s clear the air.”
Electric buses are cleaner than diesel buses, of course. But these are replacing compressed natural gas buses, running from Azusa to Pasadena on its heavily used Line 187. Electric buses don’t produce any emissions — neither the smog variety nor the greenhouse gas kind, unlike natural gas burning vehicles. With California getting more electric power from clean sources, the full environmental picture is also cleaner.
Metro buses in Pasadena and most other places in Los Angeles County operate on compressed natural gas.
None is electric, at least not yet. L.A. Metro has been testing some EV buses on its Orange Line in the San Fernando Valley, a fixed busway.
buses from the Inland Empire to downtown Los Angeles, of which 10 percent are electric, Friesema said. The smaller agency is committed to 100 percent electric buses.
The agency runs 35-foot long, short-range electric buses that go 30 miles and then get a quick charge at the Pomona bus yard on its Pomona to La Verne route, Line 291. Their first electric bus began taking passengers in September 2010.
In addition, Foothill Transit purchased 14 of the long-range buses (Series 2600) that travel 150 miles on a single charge. Basically, they can go for an entire shift without stopping to recharge. The bus then plugs in and charges overnight at Foothill’s Arcadia bus yard, she said.
Foothill has primary purchased its electric buses from Proterra, a South Carolina company that opened a manufacturing facility in City of Industry in 2017. The Proterra “Catalyst” buses are being mixed into the Line 187 route as operators become trained, she said.
I spotted them on Colorado Boulevard in the Playhouse District and on Foothill Boulevard near the Sierra Madre Villa Gold Line Station.
Most people don’t notice they are riding in an electric bus, Friesema said.
“The true success of the electric buses is that they are quiet, clean energy buses and they emit zero emissions,” Friesema said.

Friday, 22 March 2019

The Global Electric-Car Showdown Is Officially on in China

A showroom for BJEV, the biggest maker of pure electrics in China.
Inside Beijing Electric Vehicle’s headquarters, a glass-and-steel complex on the Chinese capital’s edge, a cafeteria awaits renovation so that cooks can crank out pizza and other Western fare for the posse of foreigners the company expects to hire. “We need to have a more international feeling,” says Wang Shitao, a Chinese engineer who earned a master’s degree in Germany in energy storage before returning to his country to ply his skills in its new and booming electric-car industry. “You cannot force them to eat Chinese food all the time.”
Nor, the Chinese government has decided, can bureaucrats continue to aggressively steer Chinese electric-car buyers to domestic brands. The inescapable reality: Beijing Electric Vehicle needs a tune-up.
All but unknown outside its homeland, Beijing Electric Vehicle, or BJEV, is China’s largest maker of pure-electric vehicles and the world’s No. 2 manufacturer, behind Tesla. A decade old, BJEV owes its growth to state support.
But now the Chinese government is ratcheting back that aid. It’s slashing customer subsidies for the cheapest electric cars, which are the bulk of BJEV’s sales. And it’s opening the country’s electric-vehicle market to greater competition from the West’s better-established automakers, a move widely seen as a bid to tamp down the global trade war.
As a result, BJEV must get a lot more sophisticated, and fast. Thus its plan to hire an army of electric-car experts from abroad.
Because the electric-car market in China dwarfs those of all other countries—China accounted for 60% of the 1.3 million electric-only cars sold globally last year, according to Bloomberg New Energy Finance—and because the growth in demand for electric cars is expected to outpace that for conventional vehicles, foreign firms see it as a fight for their futures. Tesla, General Motors, Volkswagen, and BMW are ramping up their presence.
The Chinese electric-car race has big geopolitical, economic, and environmental stakes. For the planet, what happens in China will be the biggest test yet of whether electric cars can meaningfully displace gasoline cars, with potentially huge repercussions for the oil industry and the climate. For the world’s conventional-auto giants, embarrassed by Tesla in the electric-car race’s first stage—the one in the West—the scramble on Chinese turf will determine whether they can finally outflank Tesla’s controversial CEO, Elon Musk. And for China, the competition will test whether the country’s industrial push has advanced to the point where homegrown companies, such as BJEV, can best Western rivals in a still-­fledgling industry in which global leadership has yet to solidify.
China’s electric-vehicle market is forcing “the international automakers to accelerate their electric-vehicle strategies globally,” says Kou Nannan, a Bloomberg analyst in Beijing.
BJEV, founded in 2009, is a unit of state-controlled Beijing ­Automotive Group, or BAIC Group, one of China’s biggest auto­makers. In February, Ma Fanglie was named to lead the unit, which has around 6,000 employees. His predecessor left, the company says, for “physical and family reasons.”
In written answers to questions, Ma acknowledges BJEV’s challenges. With subsidies falling, he asks, “how can new-energy vehicles impress consumers?” As for the Western auto companies piling into China, their “brand accumulation and technical strength cannot be underestimated,” he says. But BJEV knows the Chinese market and is scrambling to improve its vehicles, says Ma: “We believe that the competition between car companies is to see who has more blood and who is bleeding slower.”
Pure electrics accounted for 3.3% of new passenger-car sales in China in 2018, up from 0.7% in 2015 and more than double the U.S. share of 1.3%, according to Wood Mackenzie. Together, pure electrics and plug-in hybrids accounted for 4.5% of China’s market in 2018.
For many drivers, the stick has been at least as important. ­Traffic-clogged megalopolises such as Beijing have greatly reduced the number of new license plates they issue for conventional ­vehicles and have limited when such cars may drive in certain areas. But cities are issuing more electric-car license plates, which are green, while not restricting when electric cars can be used.
The wake-up call for BJEV was China’s shifting electric-car subsidies to car models that are more efficient and go farther on every charge. The company is also grappling with the government’s eliminating protectionist policies that coddled domestic firms.
China still requires that foreign automakers pay import duties if they manufacture the cars outside the country. But as of 2018, foreign companies no longer need joint ventures with Chinese firms to undertake local manufacturing and thus avoid tariffs.
Further unleashing the foreign competition is a Chinese requirement taking effect this year that any automaker selling petroleum-powered vehicles in the country must either sell a minimum number of its own electric cars—a number pegged to its total-vehicle sales—or buy so-called new-energy-vehicle credits from other automakers. It’s an environmental mandate China modeled on one in California.
VW, which sold only about 8,000 electric and plug-in hybrids in China in 2018, according to Bloomberg, says it plans to sell an eye-popping 400,000 annually by next year and 1.5 million annually by 2025. Tesla, which resisted manufacturing in China when the country still required joint ventures, shifted strategy after the policy changes and broke ground in January on a factory in Shanghai, its first factory outside the U.S. Tesla says the plant will ultimately produce 500,000 electric cars annually.
Amid that onslaught, BJEV is scrambling. It has targeted selling 500,000 electric vehicles annually starting next year, and it is pursuing foreign markets. In a meeting room at the company’s headquarters that, like others, is named for a major global city—in this case, Berlin—Wang, the BJEV engineer, explains that Chinese automakers have focused mostly on ancillary car features, like Wi-Fi, but still lag established auto giants on the basics, such as safety and high-speed handling.
On “the fundamental things, they have the experience,” Wang says of Western rivals. “In the future, we need to care about the quality of the car—not only to say we are the cheapest.” He adds, “We need to catch up.”

GM plans to make new electric car, spend $300M, hire 400 workers in Lake Orion

Two UAW workers at GM's Orion Assembly plant where GM builds its Bolt EV and the self-driving test cars.

U.S. manufacturing cuts, General Motors said Friday it plans to spend $300 million to build a new electric car at its Orion Assembly Plant north of Detroit and provided a vigorous defense of its U.S. manufacturing commitment.
GM said it plans to add about 400 workers at the Orion factory, which currently builds the electric Chevrolet Bolt, autonomous vehicles for GM's Cruise unit, and the Chevy Sonic compact car.
GM CEO Mary Barra made the announcement at a meeting involving UAW officials and a range of elected officials, including Gov. Gretchen Whitmer and U.S. Rep. Elissa Slotkin, who gathered at the 4.3 million-square foot plant in Lake Orion, which employs about 1,166 people. 
"GM is absolutely committed to investing in and growing good-paying manufacturing jobs in the United States," Barra said, part of an implicit response to President Donald Trump's attacks on the company's move to idle its factory in Lordstown, Ohio.
Barra said provisions of the proposed new trade agreement among the United States, Mexico and Canada helped persuade GM that the vehicle should be built in the United States.A company statement said the announcement was part of GM’s "new commitment to invest a total of $1.8 billion in its United States manufacturing operations, creating 700 new jobs and supporting 28,000 jobs across six states."
Barra declined to release any details about the new EV or timing on the investment. A GM spokesman said the $1.8 billion investment will unfold over the next two to three years, likewise so will the investment in Orion.
Barra vigorously defended GM's U.S. investments during the announcement, but UAW leaders also told Barra and the Orion factory workers that the union will hold GM accountable. 
Orion hourly worker Chrissy Clason said the news is “wonderful. We always seem to get bad news.” She said when GM said it would idle four U.S. plants, it was scary and the investment in Orion provides “a little bit of job security for us.”
But GM's production cuts elsewhere loomed over the celebration.
Clason said her cousin worked at Lordstown and was lucky to get transferred to GM’s plant in Flint, which builds the Chevrolet Silverado and GMC Sierra pickups.
The Detroit carmaker has been the target of harsh criticism since Nov. 26, when it announced its plan to idle five plants in North America this year and early next year, affecting some 6,200 jobs. GM has said the cuts are part of its restructuring — which also included cutting 8,000 white-collar jobs — and will save it $2.5 billion this year. The plants that were idled mostly build sedans, which have seen sales decline as consumers shift to buying SUVs and pickups.
Two of those plants are in Michigan: Detroit-Hamtramck, set to stop production in January 2020, and Warren Transmission, slated to idle this year. The D-Ham plant had built the Chevy Volt, an electric car with a gas-power generator backup, since it went into production in 2010. The Volt is among sedans GM is discontinuing.

UAW not satisfied

UAW leaders at the event did not let GM leadership off the hook. UAW Vice President Terry Dittes took the stage to thank Barra and GM for its new investment at Orion, but was quick to note, “There’s hardship among four of our other locations and we’ve made it clear we disagree with that.”
Dittes said the UAW will continue to work with GM to find a “solution for so many families who desperately need it.”
Later, Dittes told reporters that the UAW is limited for the time being on how it can help the factories GM looks to idle, noting: “The UAW doesn’t allocate product and those four locations will not be forgotten by the UAW.”
GM has said the ultimate fate of the plants will be determined in contract talks with the UAW this summer, in bargaining that most observers expect to be contentious.
Regarding contract negotiations, Barra told reporters after the announcement: “We want to have good discussions and that will be our focus, and I think when you’re able to demonstrate that the company is strong and you’re able to make investments, $300 million to create 400 new jobs, that’s where we have a lot in common.”
Asked about Trump’s tweets, Barra said, “What is important and where there are similarities, we believe in a strong manufacturing base. We want to create jobs, good paying jobs. We’re going to stay on that focus and I think that’s a common message.”
She said GM wants "every person at Lordstown to stay within the GM family,” but declined to comment beyond regarding her relationship with Trump.
“You’re all focused on that relationship,” Barra told reporters. “He has an agenda and it’s job creation. I very much want the company to continue to grow, to continue to invest in the United States. Not only did we announce we’d make the investment here but we’re investing $1.8 billion in this country. That’s on top of the last decade when we invested $22 million. So General Motors has been in the United States for a very long time and we will continue to be.”
Barra said GM still has 4,000 employees at four plants in Ohio, and noted that Ohio is second only to Michigan in GM presence. She promised announcements soon about more workers shifting to Ohio operations. 
Ohio Gov. Mike DeWine has repeatedly asked GM to either build a new vehicle at the Lordstown facility or sell the factory to another company that would.
GM officials have given DeWine no indication that they intend to build another vehicle there.
GM officials have said that they've received interest in the plant but have not shared details about which companies they might consider selling the plant to.
DeWine has asked GM to let them know as soon as possible so Ohio could craft an incentives package to match that company, spokesman Dan Tierney said.

Tuesday, 19 March 2019

Bugatti Royale electric saloon coming in 2023?

Slide 1 of 15: Bugatti Galibier concept

It's rumoured to use the same platform as the Porsche Taycan.

Hot on the heels of Bugatti’s recent revelations about the possibility of launching an electric car, a new juicy report from here in the UK attempts to shed some light about the zero-emissions machine from Molsheim. According to CAR, the Bugatti sans combustion engine is being prepared for a 2023 market launch as a pure electric saloon riding on a stretched platform adapted from the forthcoming Porsche Taycan.
The new four-door Bugatti is allegedly slated to revive the iconic “Royale” moniker and make extensive use of carbon fibre to keep weight in check. While the Taycan is about 4.85 metres long, its EV counterpart from France will reportedly be “much longer,” so we’re probably looking at a car that’ll stretch beyond five metres “to give it the stature of the ultimate luxury car.”
As far as styling is concerned, CAR goes on to mention it will take cues from recent Bugattis such as the Chiron, but with some retro cues inspired by the original Type 41 built during the late 1920s and early 1930s. No word about the interior, but you can imagine it will be highly customisable given the car’s rumoured price tag of €700,000, which works out to about £600,000 at current exchange rates.
While the Porsche Taycan is going to offer more than 600 bhp, the revived Bugatti Royale is set to provide somewhere in the region of 870 bhp thanks to three electric motors. An all-wheel-drive system seems likely, as do solid-state batteries and level 4 autonomous driving capabilities.
Although the report mainly talks about a saloon, CAR also mentions the Royale might be offered in multiple body styles. It remains to be seen whether the five-door fastback shape of the 16C Galibier concept pictured here and unveiled nearly a decade ago will eventually have a correspondent in a production model.

Monday, 18 March 2019

Fisker relaunches Tesla rivalry with $40k electric car

Fisker, the electric car brand which was an early rival to Tesla, announced Monday it would produce a new sport utility vehicle priced below $40,000 that will be available next year.
The move could relaunch the brand which attracted celebrity buyers before a 2013 bankruptcy.
The brand led by former BMW designer Henrik Fisker underwent a lengthy restructuring and its latest move suggest it is out to revive its challenge to Tesla in the market for mass-market electric vehicles.
Fisker, which made its announcement in a press release with images of the new vehicle, said a drivable prototype would be available later this year.
Like Tesla, Fisker will sell directly to consumers without dealers.
The company said it is "currently finalizing the selection of a facility, located in the United States, to produce the all-electric SUV."
The relaunch comes after a high-profile bankruptcy by Fisker Automotive, which received $192 million in US government loans and left $139 million of that unpaid.
The $100,000 Fisker Karma released in 2012 attracted buyers including Justin Bieber, Leonardo DiCaprio and Ashton Kutcher.
But that company filed for bankruptcy in 2013 and a year later its assets were sold to Chinese auto parts maker Wanxiang.
The new car, with an expected range of some 300 miles (500 kilometers) between charges, comes from a new corporate entity called Fisker Inc.
A year ago, Henrik Fisker unveiled plans for a $129,000 electric luxury car, but the group said that vehicle launch will be pushed back until after the lower-priced SUV.
The company projects to eventually have three different vehicles.
"Our team set out on a mission to create an affordable EV that's more exciting and emotion-stirring than what the market has been offering," Henrik Fisker said in the statement.
"We're now excited to be introducing a vehicle that truly reinvents the SUV."
Fisker is among several startups in the US and elsewhere moving into the electric vehicle market which is expected to see strong growth.
The move by Fisker comes as Tesla ramps up efforts for more affordable electric cars including a Model 3 priced at $35,000 and a Model Y SUV starting at $39,000.

Thursday, 14 March 2019

Kia partners with Amazon to make EV charger installation simpler

Kia partners with Amazon to make EV charger installation simpler - Roadshow

Living with a plug-in hybrid or an electric car is all the easier if you have a high-powered home charging station, and now Kia wants to make it simpler for buyers of its plug-in cars to get such a charger installed. Kia announced Thursday that it's partnering with Amazon to make buying and arranging for installation of a charger as simple as buying anything else online.
Customers can visit to see Level 2 chargers that Kia recommends, while also reading reviews and other info from other buyers. The Amazon interface doesn't simply allow for purchasing the charger, though: shoppers can also use the website to schedule a professional electrician to wire up the charger, too. Customers can complete the whole process before even receiving their new Kia.
The goal: remove one more barrier to adoption of plug-in cars. "Being able to order a Level 2 charger and installation through Amazon further demystifies and simplifies the experience for new Kia EV and PHEV owners," Orth Hedrick, Kia Motor America's director of car planning and telematics, said in a statement.
The tie-up with Amazon comes as Kia's plug-in fleet grows with the addition of the new 2020 Soul EV, which joins the Kia Niro EVNiro PHEV and Optima PHEV. It follows an earlier announcement, in September 2018, that Audi E-Tronbuyers would also be able to buy and schedule the installation of EV chargers through Amazon.

Wednesday, 13 March 2019

Nio Abandons Factory Plans: Should Investors Abandon NIO Stock?

Nio stock price

Electric-car maker Nio (NYSE:NIO) announced March 5 that it was scrapping plans to build its own factory in China. NIO stock is getting pummeled on the news. Is now the time to buy?

Sure, Nio might have just been named one of the World’s Most Innovative Companies by Fast Company, but that doesn’t mean you should buy NIO stock at this point in the company’s development.
At least not if you can’t afford to lose your investment.
However, when a stock drops by more than 10% in a single day of trading, color me interested. Investors typically overreact to news, good or bad, with equal enthusiasm. Successful investors have learned that it pays to live somewhere in the middle where good news won’t make you rich and bad news won’t make you poor.
The game is played over nine innings. A lot can happen to knock Nio stock down further or catapult it back over $10.
I think it will continue to fall. Here’s why.

Tremendous Losses

At the same time Nio called off its Shanghai factory, it also announced fourth-quarter 2018 results.  
On the top line, revenue in Q4 rose 134% over Q3 2018 to $499.7 million. On the bottom line, it lost $0.47 a share, 69% less than its losses in the third quarter.
That is good news. The bad news is Nio’s losses continue to pile up. For all of fiscal 2018, Nio lost $1.3 billion on $720.1 million in revenue. On a per-share basis excluding share-based compensation, it lost $3.90. With just $1.2 billion in cash on its balance sheet, it could run out of money before too long.
Investors might read that Nio had a vehicle margin of 3.7% in Q4, up from -4.3%in Q3, and think that’s a good thing. It’s not. While it is better than in the previous quarter, it’s still nowhere near what it needs to make from each car to become profitable.
Just ask Elon Musk about the math.
And in case you’re wondering, Nio had a vehicle margin of -1.6% for the entire 2018, which means if it sold a car for $70,000, it took $71,000 to make it.

Anemic Vehicle Production

Automotive experts suggest that Nio needs to make 100,000 vehicles annually to achieve economies of scale that will lead to eventual profitability. In 2018, it sold just over 10,000 — well short of the target.
Sure, Tesla (NASDAQ:TSLA) had to climb the same mountain, but given the pathway, Musk has made for electric vehicle companies like Nio, you would think it could do better. As competition from the existing automotive manufacturers heats up, there’s a real possibility that Nio will get left behind.

“A lot of market uncertainties are now involved, with the price cut from Tesla and Nio’s own sales projection,” said independent automotive consultant David Zhang.  
How bad are Nio’s projections for Q1 2019? It expects to deliver between 3,500 and 3,800 ES8 vehicles, 52% less than in the fourth quarter and 13% lower than in the third quarter.
And that doesn’t take into consideration the opening of Tesla’s Shanghai plant in late 2019, early 2020.

The Bottom Line on NIO Stock

In my most recent article about Nio in November, I finished off by stating that I couldn’t see the company hanging in for 14 years as the Tesla CEO has done. With these latest results, I’m even more confident.