What happened
The slowing growth of electric vehicle (EV) sales slowed Nio (NYSE: NIO) stock on Friday. Investors were concerned for top EV names after a big bank published a research report highlighting recently reduced growth numbers. Nio's share price took a 3% hit as a result, on a day when the S&P 500 index battled to a nearly 0.6% gain.
So what
The report's author, UBS analyst Patrick Hummel, delved into the findings of the seventh annual Evidence Lab EV consumer survey. This year's version found that 46% of survey respondents are likely to consider buying an EV, which is three percentage points below the 2022 study. This marks the first year-over-year decline since UBS launched the yearly poll in 2016.
While Hummel expressed continued optimism for the global expansion of the EV segment, he trimmed estimates for the European market because of factors such as higher electricity prices and lower government subsidies for EVs.
Despite the apparently declining demand, he expects EVs to continue making inroads, grabbing 26% worldwide market share in 2025, and 51% in 2020. By comparison, 2022's figure was only 12%.
This will be due to some extent on increasing affordability in certain markets. "As the industry is no longer supply constrained, we expect an era of price wars to boost growth while driving seismic shifts in the industry," Hummel wrote in his note.
Now what
As it is a major EV company based in the massive Chinese market, Nio will benefit from these positive trends, but it will suffer with the negative ones too. Its native market is a hotly contested one, and despite its advantages, Nio might have to fight harder if the apparently weakening desire for EVs becomes a long-term trend.
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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nio. The Motley Fool has a disclosure policy.
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