Nio (NYSE:NIO) stock is falling on news the European Union will move forward with new tariffs on Chinese electric vehicles (EVs).
Europe will impose tariffs of up to 38% on cars imported from China. This comes a month after the U.S. imposed a tariff of 100%. But it’s more relevant because Nio is seeking to sell its cars in Europe, not the U.S.
Nio has been falling since it reported a loss of $676 million for its most recent quarter on sales of $1.37 billion, converted from Chinese Yuan. After earnings, Barclays repeated its “underweight” rating on the stock.
NIO stock opened in New York this morning at $4.40 per share, a market capitalization of slightly over $10 billion.
Nio Sees a Stop Sign
Nio has already responded by shuffling its sales team, with special emphasis on the Middle East. The new head of the Middle East division helped launch Nio in Europe back in 2020.
Nio said it delivered 20,544 cars in May and has now shipped 66,217 for all of 2024. That’s 51% higher than its shipment rate in 2023.
Other Chinese EV stocks, like XPeng (NASDAQ:XPEV) and BYD (OTCMKTS:BYDDY), are also down on the European news. The trade war could also hit Tesla (NASDAQ:TSLA), which manufactures many of its cars in Shanghai.
The European tariffs follow an investigation into China’s EV supply chain that alleged “unfair subsidies.” China responded with a statement saying Europe is “weaponizing economic and trade issues.” There are about 13 million jobs in Europe’s auto sector.
China could retaliate by raising duties on gas-powered imports from Europe. This would hit Volkswagen (OTCMKTS:VWAGY) especially hard because it also has production facilities in China.
NIO Stock: What Happens Next?
Nio insists its commitment to Europe is “unwavering.” However, fellow InvestorPlace contributor Chris MacDonald warns the stock is “a ticking time bomb.”
On the date of publication, Dana Blankenhorn did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
