Sales of Chinese electric carmaker NIO have started to soar following a surge in the company's vehicle orders for the third quarter. The "Chinese Tesla", as analysts have said, still has a lot of gas in its tank.
NIO's shares grew more than 11 percent during pre-market sessions Tuesday after the Chinese electric vehicle manufacturer announced it had 4,800 vehicles rolled out in nine months this year, an increase of 35 percent compared to the second quarter.
This figure was also on the higher end of its profits guidance, NIO said. In September, the Tesla rival unloaded 2,110 battery-powered cars, a positive development for the EV maker that has been hounded by budget overruns, and macroeconomic problems like weak vehicle sales and falling subsidies.
In addition, the company was forced to recall around 4,800 electric cars in June after reports that three of the vehicles caught fire. NIO said the malfunctions were caused by short circuits with an aging type of lithium packs. The recall affected 25 percent of the ES8 cars NIO has unloaded since they went on sale in the same month.
But even prior to the recall, the number of orders was starting to slide, though they climbed back in September when the company said it shipped more than 2,000 vehicles for the month.
However, it is not clear if these figures usher the start of a larger turnaround for the Chinese carmaker, which has registered approximately $6 billion in losses since it was established more than five years ago. Sales of electric vehicles in China continue to dwindle, a weakening blamed on a huge withdrawal in subsidies.
The Chinese EV maker has grappled to reach its own guidance target during the past several months. It started to unload units of its ES8 in China in June last year. And while orders beat projections at first, it fell in the first months this year.
NIO posted declines of $391 million in the first three months this year, but the setback continued in the second quarter when the company logged a loss of $461 million.
Meanwhile, the robust shipment figures come just a couple of weeks after the company disclosed, along with poor second-quarter profits, that it will trim down over 20 percent of its personnel. The announcement sent its stocks crumbling more than 30 percent in just two days.
Despite these issues, NIO chief executive officer William Li said "improving retail prices" on the E-S6 was a huge factor in the latest increase in vehicle orders. The company, he pointed out, expects their longer-range vehicles to fast-track more deliveries in the next three months.