NIO shares surged as much as 12% on October 8 after the Chinese electric vehicle maker delivered 4,799 vehicles in the third quarter, up 35.1% from the second quarter, exceeding expectations by a large margin.
This is a positive development for the Chinese firm that has been plagued by cost overruns, a voluntary battery recall, declining passenger vehicle sales and reduced EV subsidies from the Chinese government.
In the third quarter, NIO delivered 4,196 of its five-seater ES6 SUV and 603 of the ES8, its more expensive seven-seater premium electric SUV. Production and delivery of the ES6 “continued to ramp up after its initial launch in June,” Chief Executive William Li said in a statement.
“In addition to the solid sequential improvement in our delivery numbers, we have seen accelerated growth of our order backlog since September supported by a more expansive sales network,” Li added.
Despite the good news on sales, NIO still has many hurdles ahead. The company burned more than half of its remaining cash in the second quarter as it expanded its retail presence and worked to get its ES6 SUV into full production. And just a few weeks ago, NIO announced that they would lay off more than 20% of their workforce. The announcements sent shares of the company down as much as 30% over two days.
It remains unclear if the promising results is the start of a positive trend for NIO, which has accumulated about $6 billion in losses since its founding in 2014. EV sales in China have been declining since July. In August, the sales dropped by 16% from a year earlier.
The back-to-back declines came after China scaled back subsidies to the industry, according to data from industry group China Association of Automobile Manufacturers. China’s overall auto sales in August saw the 14th consecutive drop since July 2018, falling to 1.65 million units.