Although it is true that electric vehicles are almost certainly going to be much more popular in the years to come there’s a problem. The companies that are engaged in their production have not had a great time over the past few months.
One of the most important companies in the industry that has had a particularly rough time. The company is now a penny stock: Nio Inc – ADR (NIO Stock Report). The company is the largest electric car manufacturer in China. Unfortunately, on Thursday, NIO’s stock was down by as much as 10% at one point. Since we began following this stock as a potential penny stock, it has become a penny stock. But in the worst way. Our article, “Penny Stock Watchlist: NIO Stock Continues To Tumble; Buy Or Wait?” highlighted key factors playing against this EV stock.
Although the stock did recover briefly on Thursday, it still ended the day 7% in the red at $2.65. The company listed on the New York Stock Exchange back in 2018. However, during that period, the stock had proven to be one of the most volatile ones on the market. While it soared 60% from its IPO price on two occasions, NIO stock gave away its gains just as quickly and currently the stock is down by more than 75% from its historic high.
Penny Stock: Reason Behind The Decline
At this point of time, it is difficult to pinpoint the specific reason behind the decline in the NIO stock, but at the same time, it is necessary to look at a range of factors that could be weighing it down. First and foremost, the world’s biggest electric vehicle company Tesla is all set to make a big splash in the market after having a tough time this year so far.
The company is all set to deliver the highest number of vehicles in its history in June. In addition to that, it has opened up a plant of its own in China and that is being looked upon as a direct threat to NIO’s status as China’s biggest electric vehicle company.
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Moreover, NIO has also recorded a decline in deliveries for three months straight. However, it is important to note that NIO is now in business with the Chinese government, after getting into a venture with the state car market GAC.
Chinese Government’s Support Could Create Competition
Considering the Chinese government’s support for electric vehicles, it looks like a positive for the company but it is still difficult to figure out whether it will be able to sustain its presence amid rising competition.
NIO is looking to bring new cars into the market in the coming months and although it could go on to become a major player in the industry, the stock is currently too volatile for most investors’ liking.