NIO wraps up battery recall early, but it’s at the expense of sales

NIO wraps up battery recall early, but it’s at the expense of sales

NIO has replaced all of the affected battery packs it recently recalled for fire risk, and it did so ahead of schedule, the company announced in a press release on Monday. But the recall’s completion has come at the expense of overall sales: the high-profile Chinese EV startup delivered just 837 vehicles in July, making it the company’s third-worst full month since it started deliveries in June 2018.

NIO recalled nearly 5,000 electric ES8 SUVs at the end of June, following reports of spontaneous fires coming from the battery packs. The company found out that, in packs made between April 2nd, 2018, and October 19th, 2018, there was a module that occasionally pressed up against a voltage sampling cable in the car’s wiring harness. This contact could wear down those cables over time, and, in a few cases, it resulted in short-circuits that started the fires. The company switched to a different battery pack design in late October, and so the recall affected a little less than a third of the 17,000 ES8s on Chinese roads.

The automaker was able to finish the recall in about half the time it had projected because it “prioritized battery manufacturing capacity” in July, focusing on the replacement packs ahead of ones destined for deliverable cars. This “significantly affected [NIO’s] production and delivery results,” founder William Li said in a statement.

In the end, NIO delivered just 164 ES8 SUVs, which is the smallest amount it has ever delivered in a full month. (NIO delivered 100 ES8s in June 2018, but deliveries started in the final days of that month.) After getting off to a fairly hot start, the ES8’s decline helps explain why NIO’s stock price has fallen and why the company has had to resort to a number of cost-cutting measures, including layoffs, delays, the cancellation of a factory, and a reduced presence in electric racing series Formula E.

The remaining 673 vehicles NIO delivered this July were the ES6, the company’s second model, which is smaller and more affordable. NIO started delivering the ES6 in June. It shipped 413 of them that month, and as of May, it had about 12,000 preorders for the SUV.

With government subsidies expiring and China’s auto market in decline (including even its world-leading EV sector), NIO has touted the cheaper ES6 as the company’s best chance to turn things around. “[W]ith battery capacity allocation back to normal, we will accelerate deliveries and make up for the delivery loss impacted by the recall,” Li said in a statement. “We expect August to be a much stronger month, and target to deliver between 2,000 and 2,500 vehicles.”

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