Nio's overall order intake peaked in July after a significant price cut in June, according to Morgan Stanley.

(Visitors check out a Nio ET5 at the August 2023 Chengdu auto show. Image credit: CnEVPost)

Nio (NYSE: NIO) lowered the starting prices of its entire model lineup by RMB 30,000 ($4,110) in mid-June, and many wondered how that would affect order inflows. Now, a Morgan Stanley research note provides some reference.

"Overall store traffic was healthy in 1H of August per our checks, largely extending the momentum we saw in June/July right after ES6/ET5 Touring launches and price cuts," analyst Tim Hsiao's team said in a research note sent to investors on August 23.

Nio cut the starting prices of all new models by RMB 30,000 on June 12, but the free battery swap service benefit became a paid option.

Following the move, Nio's order inflow saw a meaningful spike in July, but order inflow moderate so far in August, according to Hsiao's team.

Nio's overall order intake peaked in July with an average weekly run rate of over 6,000 units, according to the team.

However, the average weekly run rate dropped to 4,000-5,000 units in August as the company discontinued its free lifetime battery swap package from August 1, according to the team.

"On the bright side, order momentum gradually picked up again from mid-August," the team wrote.

Retail conversion rates in the first half of August slipped from a record 7 percent in July, according to Morgan Stanley.

Despite good foot traffic, conversion rates at some Nio stores have been trending down recently, as more customers seem to be inclined to take a wait-and-see approach amid a new industry price war, the team said.

Insurance registrations for Nio vehicles in China were 4,300, 3,300 and 4,100 in the first three weeks of August, according to data previously shared by Li Auto (NASDAQ: LI) on Weibo.

Local media outlet Caixin reported on August 21 that Nio's F1 plant stopped production for five days between July 29 and August 2 to carry out production line upgrades.

It's also worth noting that Nio will report its unaudited financial results for the second quarter on Tuesday, August 29, before the US markets open.

Already released figures show that the company delivered 23,520 vehicles in the second quarter, slightly above the lower end of its guidance range of 23,000 to 25,000 vehicles.

Morgan Stanley expects Nio to guide third-quarter deliveries at 55,000 to 57,000 units, meaning average monthly deliveries in August and September could fluctuate between 17,000 and 20,000 units.

Nio delivered a record 20,462 vehicles in July, the first time since its inception that it has seen deliveries exceed the 20,000-unit mark, according to data released by the company earlier this month.

($1 = RMB 7.2937)

China EV insurance registrations for week ending Aug 20: Tesla 13,900, Li Auto 8,000, Nio 4,100