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Nio Shares Fall On Wider Q4 Loss, Delivery Slowdown

Tesla rival Nio Inc.'s (NIO) American depositary shares are losing more than 18 percent in Wednesday's pre-market activity after the China-based electric car maker reported a net loss for the fourth quarter that widened from last year.

In addition, Nio reported a vehicle delivery slowdown in the first two months of 2019 and said it has terminated a plan to build a manufacturing plant in China.

Fourth-quarter net loss attributable to Nio's ordinary shareholders widened to RMB 3.52 billion or $511.5 million, from RMB 2.78 billion last year. However, loss per American Depositary Share of ADS narrowed to RMB 3.37 or $0.49, from RMB 119.73 a year ago.

Adjusted net loss was RMB 3.20 per ADS, compared to adjusted net loss of RMB 71.47 per share in the same period last year.

Total revenues for the quarter were RMB 3.44 billion, or $499.7 million, up 133.8 percent from the preceding third quarter. The company did not provide corresponding figures for the year-ago period.

Production of the ES8, Nio's flagship electric SUV that was launched last year in the Chinese market, totaled 8,069 in the fourth quarter, up 91.8 percent from 4,206 vehicles produced in the preceding third quarter. ES8 deliveries in the quarter totalled 7,980 vehicles, up 144.2 percent from the prior quarter.

However, Nio noted that deliveries of the ES8 in January and February 2019 were 1,805 and 811 vehicles respectively, which reflect a "greater than anticipated slowdown" in monthly deliveries compared to December 2018.

According to Nio, the sequential slowdown in vehicle deliveries in January and February was mainly caused by accelerated deliveries made at the end of last year in anticipation of EV subsidy reductions in China in 2019.

The company noted that seasonal slowdowns surrounding the January 1st and Chinese New Year holidays as well as the current slowdown of macro-economic conditions in China, particularly in the automotive sector, also contributed to the sequential slowdown.

In 2017, Nio signed signed framework agreements and memorandums with the government and related entities in Jia Ding, Shanghai, to build a manufacturing plant for the company.

However, Nio recently agreed in principle with these contractual counterparties to terminate the plan for this manufacturing plant, pending signing of definitive termination agreement.

According to Nio, the existing NIO/JAC plant in Hefei will give it the capacity and flexibility to support its market penetration and growth plans for the next two to three years.

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