Should Nio Be Worried About Tesla's Model 3 Order Overflows In China?

Chinese electric vehicle startup Nio Inc – ADR NIO, which is battling both macroeconomic and company-specific issues, is facing competition from U.S. peer Tesla Inc TSLA as it plunges headlong into the Chinese market.

Tesla's China push is unsurprising, as the country represents the biggest market for alternative energy vehicles, including EVs, hybrids and natural gas combustion vehicles.

Strong Demand For Model 3s

Tesla, which recently rolled out its first Chinese-made made Model 3 EV from its Shanghai Gigafactory, is being flooded with orders, the Chinese National Business Daily reported, citing 21st Century Business Herald.

Tesla is clocking daily order rate of over 1,000 Model 3 vehicles, the report said. The price cuts have had a healthy effect, boosting orders, the publication said.

The company is unable to attend to people who are coming for test drives during the weekends, the report said, citing a Tesla salesperson.

See Also: Nio CEO Confident Following Rebound In Deliveries: 'Spring For Electric Vehicles Is Near

A Nio Snapshot

Nasdaq-listed Nio underwent a turnaround of sorts in the second half of 2019, as the company reported its fifth consecutive month of month-over-month increase in deliveries in December.

The performance has come despite the softness in the Chinese market, which has been impacted by the domestic economic slowdown, a reduction in EV subsidies and the U.S.-China trade war that raged over for most of last year.

With Tesla making a big splash with its China-made Model 3 EVs, cash-strapped Nio is facing a big competitive threat.

Nio has embarked on several initiatives in recent months to boost its deliveries as well as to trim costs to put its financial house in order.

The company is pursuing a service-focus approach, with the Nio Space testifying to the fact.

We have recently launched our NIO Space concept across 24 cities including Shanghai, Beijing, and Guangzhou. Unlike NIO House, NIO Spaces are communal settings where consumers can interact with the vehicles on display and discover more about the NIO lifestyle. pic.twitter.com/X2ctYmh57S

— NIO (@NIOGlobal) October 17, 2019

A lesser-known EV manufacturer, BYD Co., is the No. 1 EV maker in China, selling about 30,000 EVs or plug-in hybrids per month, according to Bloomberg.

Data released earlier this week showed that Nio reported deliveries of 8,224 EV vehicles in December.

Photo courtesy of Nio.