NIO Reports Fewer Deliveries in July After its Flagship ES8 SUV was Recalled for Battery Issues
Chinese electric automaker Nio Inc.'s (Nasdaq: NIO) stock fell nearly 4 percent on Monday, to $3.02 per share, after the company announced July deliveries and battery recalls on 4,803 NIO ES8s, the seven-passenger electric SUV crossover.
The electric automaker is seen as a rival to Tesla in China and is first Chinese electric automaker to file a U.S. IPO. NIO debuted on the New York Stock Exchange in Sept, 2018.
The electric vehicle maker said it delivered 837 vehicles in July. The monthly total includes 673 ES6s, the automaker's 5-passenger electric SUV, and 164 of the larger ES8 SUV. The ES8 first went on sale in June 2018.
"Our deliveries in July were negatively impacted by multiple factors," William Li, the founder, chairman and chief executive officer of Nio, said in the statement.
He also said the prioritized battery recalls "significantly affected our production and delivery results."
On June 14, a NIO ES8, the company's flagship SUV, caught fire while parked in China's central Wuhan city. A witness at the scene said he saw black smoke and fire coming from the vehicle's chassis, while firefighters said there was a small explosion when they tried to put out the fire. There were no injuries.
NIO recalled around 5,000 ES8's to inspect the vehicle for fire risk. The NIO inspectors, along with the supplier of the battery pack, concluded there was a vulnerability in the design of the battery pack that could cause a short circuit.
Days later, China ordered companies manufacturing electric cars to check for potential safety hazards that could lead to fire or inhibit someone's ability extinguish a fire. China is requiring automakers to inspect their battery packs, high-voltage wiring harnesses, waterproof protection, and on-board charging devices. Automakers have until the end of October to submit their findings to the government.
Li also noted that China's weakened auto market and the trade war with the United States both negatively affected NIO's electric vehicle sales.
"On the positive side, we completed the ES8 battery recall in approximately half the time compared to our original timeline," he stated. "Having taken swift and transparent actions throughout the recall process, we are happy to report that we see users' confidence in the safety and quality of our vehicles quickly returning."
Li said he expects the sales to rebound in August and deliver between 2,000 and 2,500 vehicles.
NIO is based in Shanghai with its U.S. headquarters and software development center based in Silicon Valley.
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