NIO - A commentary on delivery process

NIO reported a 74% increase in deliveries month over month for June and also recaptured the significant 10,000 delivery mark. Additionally, retail sales of new energy vehicles increased 10% month over month last month, according to data from the China Passenger Car Association (CPCA), suggesting that Chinese electric vehicle start-ups may be entering the second half of the year with significantly stronger delivery and sales momentum than the first. Due to the growing demand for new energy vehicles as well as the introduction of new products like the ET5 Touring, which diversifies the company's sedan product line, NIO may be poised for ongoing delivery growth.
The decline in car margins, which presents a profitability issue for both the EV company and the larger sector, is the largest risk for NIO. Because of increased pricing pressure and fiercer market rivalry (as EV companies diversify their product lines to provide customers more options), vehicle margins are declining. If NIO started to experience negative vehicle margins, as XPeng did in the first quarter, that is what would make me rethink my opinion of the firm.
From an operational perspective, NIO has also recently recorded some very respectable successes: NIO reported its second-highest monthly delivery volume of FY 2023 (only behind February) and regained the significant 10,000 EV delivery threshold in June for the first time since March. Although NIO didn't do as well as Li Auto, which for the first time ever exceeded the threshold of 30,000 EV vehicles, NIO still performed well in June with a 74% M/M rise in deliveries as well as a comeback (15%) in sedan deliveries.
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