Nio (NYSE: NIO) stock price has been under pressure in the past few months as concerns about the electric vehicle (EV) industry remain. The shares were trading at $9.03, which is a few points above the year-to-date low of $8.33. This price is ~86% below the highest level in 2021, giving it a market cap of over $14.85 billion.
EV concerns remain
There are concerns that the electric vehicle industry is slowing dramatically as competition in the industry. For example, during the weekend, Tesla announced that it will slash its prices in the United States again.
It has slashed prices three times this year, meaning that there are concerns about demand. Besides, no company slashes prices when demand is elevated.
Tesla is not the only company cutting prices. For example, data shows that Toyota’s bZ4X price dropped by 30.2% in the first quarter. Other brands that had the steepest price cuts were Mazda CX-8, Buick GL6, Changan Eado Plus, and Audi Q4 E-tron slashed prices in China. While not all these companies are EVs, the steepest decline in prices was in their electric versions.
Nio has not been left behind in cutting prices of its cars. In February, Nio slashed prices of its key models with a maximum drop of $14,892.
Still, these price cuts did not do much to boost the company’s sales. In a report last week, Nio said that it delivered over 10.3k cars in March, down by 14.6% on a year-on-year basis.
In addition to weakening demand, there are concerns about overproduction. One of the top technology news during the weekend was that Tesla announced that it will build another plant in China.
A recent report by UBS estimated that vehicle companies will manufacture 85.8 million vehicles in 2023, higher than its previous estimate of 81 million. The report said:
“OEMs argue with pent-up demand, but that expectation is not supported by latest macro trends. Given the bullish production schedules, we see high risk of overproduction and growing pricing pressure as a result. The price war has already started unfolding in the EV space.”
Nio stock price forecast
NIO chart by TradingView
The daily chart shows that the Nio share price has been in a bearish trend in the past few months. It dropped to the key support at $8.33, the lowest level this year. The stock has formed a descending triangle pattern, which is usually a bearish sign.
Nio stock has also moved below all moving averages while the Relative Strength Index (RSI) has moved below the neutral point. Therefore, while these risks have been priced in, the stock will likely have a bearish breakout as the company faces more headwinds.
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