Nio, an electric car maker from Shanghai, is gaining popularity in the electric vehicle investment market. Founded in 2014, the company has quickly risen to become a leader in the rapidly growing market for electric vehicles in China, and its innovative designs and cutting-edge technology have caught the attention of investors around the world. This early success has been a driving force for the stock price over the past few years, but currently, the company isn’t doing as well as it once was. Today, we are going to be exploring what Nio does and ultimately making a decision on whether Nio is worth investment for future growth. Let’s discover: Is Nio a good stock to buy?
What is Nio?
Nio is an electric vehicle (EV) maker that has been around since its founding back in 2014. Originally founded by serial entrepreneur William Li, the EV maker has developed innovative ways to generate income and “charge” cars. They are pushing production across the world to western markets and have expansion plans that will soon place them in the United States. Currently, Nio is listed on the NYSE, a stock exchange based here in the United States, although they aren’t currently producing cars here. In addition to its NYSE listing, they are listed on a few other important international exchanges, including its home market, the Shanghai Stock Exchange.
With a massive global focus on EVs and their future use, investors are flocking to invest in any company that seems to be able to capture even a niche market within the space. Tesla is clearly the gorilla in the room, but smaller companies such as Nio, Lucid, and Polestar are gaining speed and continuing to scale production.
As one of the only EV makers to have a serious bid at being one of the primary manufacturers in China and the massive Asian market, people are wondering if Nio is ready for the challenge.
What Makes Nio Different?
While many companies around the world are looking to create the newest and best electric cars, Nio is also adding something different to its offerings. Sure, they have the standard options that most car companies do, with five available models (NIO EC6, NIO ES6, NIO ES7, NIO ES8, and NIO ET7), but they are also doing something that many consider revolutionary in the EV world: battery swapping.
Generally speaking, an EV has to charge after driving between 200-400 miles, depending on the model of the car and the terrain it’s driving through. For most people, this isn’t a problem since they can simply plug it in once they get home, essentially eliminating the need for external charging stations. Still, there is the occasion when someone either forgets to charge at home or is heading on a road trip where they will need to utilize a network of charging stations. These charging stations can take anywhere between 20 minutes to an hour to fully charge a car, making extended trips more time-consuming and difficult. Nio is offering something new.
In addition to their standard charging options, Nio also offers quick-swap battery technology in their cars, allowing someone to simply switch their entire battery out instead of waiting for it to recharge. Using over 1,400 patents, Nio Power Swap is pretty revolutionary in its field. As is described on their website:
NIO Power is a mobile internet-based power solution with extensive networks for battery charging and battery swap facilities. Enhanced by Power Cloud, it offers a power service system with chargeable, swappable and upgradable batteries to provide users with power services catering to all scenarios.Nio Power
For many, this expansive network and potential to generate revenue from vehicles AND swaps make the company something worth investing in.
Nio’s Performance Over the Past Year
All that’s being said, Nio hasn’t had a great two years, at least regarding its stock price. The company hit an ATH (all-time high) of ~$60 USD back in 2021 but has since sagged to the current $12-13 range that it’s been sitting at for a few months. (Yahoo Finance)
While there is never a single answer as to why, many investors attribute this poor performance to a few global trends. Some of the biggest issues plaguing global markets as a whole, things like inflation, supply chain complications, and investor fear in the face of a recession, have a lot to do with Nio’s stock performance. Additionally, the local issues that China is facing in regard to economic problems, namely a lack of cash from market instability from the real estate crisis, zero-tolerance COVID policies, and changing social priorities, are also impacting the Shanghai company.
With that in mind, here’s a look at some important financials from Nio (YAHOO FINANCE)
|Q3 2022||Miss -13.20%||Beat 0.73%|
|Q1 2022||Beat 25.59%||Beat 0.56%|
|Q4 2021||Miss -22.82%||Beat 1.69%|
Is Nio a Good Stock to Buy?
After a relatively tumultuous year and a lot of global and localized hardships, is Nio still worth investment? We think so. Nio is one of the only companies in the world that has successfully brought EVs to market, and in Asia, there are few competitors that are at their level. Even more, the events surrounding 2021-2022 aren’t specific to Nio, although they were directly impacted by them.
Overall, Nio’s business plan seems to remain unchanged, and they are moving forward and expanding the essentials of their business. Even more, they are poised to enter 25 more countries by 2025, including the United States. Currently, they have expanded to a few countries in Europe and continue to deliver cars in a field where deliveries are pretty much the most important metric. As of July 2022, Nio has already delivered over 200,000 cars and continues to expand its market.
As a taper to the potential optimism, there is still a lot of market volatility, and nobody can predict when exactly the market will settle. Additionally, Nio is far from being a serious contender against the likes of the American Tesla or the Chinese BYD in sheer yearly sales. Still, they seem to be finding markets where people are buying their cars and using their charging systems.
In conclusion, Nio is a company that is well-positioned for growth in the electric car market. With its strong offering and unique service, Nio is poised to carve a niche in the industry as it begins to expand. As more and more consumers turn to electric cars as a sustainable and cost-effective transportation option, Nio is well-positioned to capitalize on this trend and continue to thrive in the years ahead.
Here are a few things to remember:
- Nio isn’t through the tough times, but it seems to have come through the worst of the global and local issues with its business intact and ready for growth.
- Nio isn’t Tesla, but it is beginning to really scale its product and enter new markets. Growth is on the way, even if it isn’t scaled “to the moon.”
- Aside from the cars themselves, Nio offers a unique ecosystem of charging and battery swap technology, potentially giving it an edge over competitors in some ways.
The image featured at the top of this post is ©Is Nio A Good Stock To Buy?/Shutterstock.com.