Nio Inc (NYSE: NIO) is slipping in premarket on Wednesday after the European Union announced a significant increase in tariffs on Chinese electric vehicles.
Details of new EU tariffs on $NIO
The bloc has decided in favour of slapping up to 38.1% tariff on imports of China-made EVs that it said benefits “heavily from unfair subsidies” that undermine the producers in Europe.
Still, Nio Inc remains committed as ever to expanding in Europe. It did, however, condemn the massive increase in tariffs the EU Commission announced on Wednesday.
Nio will continue to serve our users and explore new opportunities within Europe despite protectionism.
Interestingly, the China Passenger Car Association finds the EU’s provisional tariffs as well within its expectations. Cui Dongshu – its secretary general is convinced that it won’t have any significant effect on majority of the Chinese firms.
The new tariffs will go live from July. Shares of other EV makers based out of China including BYD that late Charlie Munger once said was ahead of Tesla are in the red at writing as well.
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Is Nio stock still worth owning?
Last month, the United States also favoured quadrupling tariffs on Chinese electric vehicles to 100%. The European Union deems Nio Inc a cooperating company that will pay another 21% duty on top of the current 10% on electric vehicle imports.
The Chinese EV firm also confirmed this morning that it’s keenly following the situation and will make decisions that best align with its business interests. Its peers Geely and BYD will now be subject to 20% and 17.4% additional duty rate.
EU tariffs news arrives only days after $NIO reported $1.37 billion in revenue for its first financial quarter that missed Street estimates by about $70 million (find out more). The New York listed firm still lost less-than-expected on a per-share basis in its fiscal Q1.
In May, analysts at JPMorgan raised their rating on Nio stock to “neutral”. Their $5.40 price target suggests close to a 25% upside from here. They changed their stance on the EV stock primarily for its BaaS (battery as a service) strategy that’s positively affecting sales momentum.
Plus, the government of China has announced stimulus aimed at lifting automobile demand, including for NEVs (new energy vehicles) that may benefit NIO shares that are currently down close to 50% versus the start of 2024.
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