--FILE--A NextEV Nio EP9 electric supercar is on display at the NIO House in Shanghai, China, 16 November 2018. China's Tesla wannabe Nio Inc. said its 2018 vehicle sales totaled 11,348 units, making it the first Chinese electric-car startup to top 10,000 sales in a year. U.S.-listed Nio has partnered with conventional automaker JAC Motors to produce its pure electric model ES8 since 2016. In December, Nio launched its second commercial model, the five-seat ES6 SUV. Nio has been planning to set up its own manufacturing facility. In January 2018, it was reportedly in talks with the Jiading district in Shanghai for a new factory. In September, Nio confirmed a plan for building a Shanghai factory by 2020. However, the plan has apparently fallen under the shadow of Tesla's groundbreaking in Shanghai, where its new factory is set to start production of the Tesla Model 3 by the end of this year.
Nio (NYSE: NIO) stock price declined sharply between mid-July and late August, going on to trade near year-to-date lows. However, it has since recovered some of the losses, rising from $3.63 recorded on August 8 to $4.01 as of this writing- a gain of 10 percent in just over two weeks.
That said, the stock has lost 10.1 percent of its value in August, a sharp decline from July’s 6.7 percent gain. Nio stock price is -55 percent YTD and at -33 percent since listing. This signals a strong bearish undercurrent, that might take a while to recover from. At the current price, NIO is matches its 20-SMA, but is below the 50-SMA ($4.30), 100-SMA ($4.56) and 200-SMA ($5.62), on the daily chart as shown below.
Nio will announce its second quarter 2024 earnings results on September 5, and that could inject fresh volatility into the stock price in the intervening period. Its delivery figures were consistently above the 20,000 units mark for the three months to July, and that could result in better earnings than last year.
Nio currently produces five SUV models- ES8, ES7, ES6, EC7 and EC6, as well as three sedan models, the ET7, ET5 and ET5 Touring. The company’s current stock price is still some long way below its its $6.26 IPO opening price. Furthermore, market fundamentals do not seem to suggest an upturn in the near term, as the EV industry struggles amidst a tight competition.
Nio and other EV companies have struggled in the past few months for several reasons. First, there are concerns that the EV industry is getting crowded. There are hundreds of companies in the industry, like Li Auto, BYD, and Xpeng, that are building electric vehicles. As such, investors are worrying about demand in the industry since Nio manufactures premium cars.
To take on the tightening competition, Nio launched its lower-priced model, the Onvo L60 on May 15. The model is meant to rival Tesla’s Model Y and has a price tag of about 250,000 yuan, or about $34,500. Most Nio Models typically cost around 300,000 yuan. In addition, Nio says that the Onvo L60 is about 10 percent cheaper than the Model Y. Furthermore, it is energy-efficient, resulting in a longer range.
These are key factors in a market riddled with cutthroat competition as EVs become more mainstream. Nio has manufactured about 500,000 units since its founding about 10 years ago, and the launch of a cheaper model points to its focus on expanding its portfolio to increase its sales figures.
Earlier, NIO had already started to offer incentives to its customers. The incentives have more to do with phasing out the first-generation stock than competing with its rivals in price cuts. The company intends to make the complete transition to its second-generation platform NT 2.0, by accelerating the sales of its old stock.
Nio announced in August that it intended to build a third battery swapping station manufacturing plant in Wuhan, China. The company has identified swapping stations as central to its growth plans, and currently has two station manufacturing plants- one each in Kunshan and Hefei. The Wuhan plant will have the capacity to manufacture 1,000 swapping stations per year.
The company had initially planned to construct 1,000 swapping stations per year across China, but CEO William Li stated in July that it would likely miss that target. Nio currently has about 2, 480 swapping stations and over 23,000 charging stations across China. The company’s CEO revealed on August 20th that the swapping stations need to complete an average of 60 swaps per day to be profitable. He added that 20% of the stations have reached their breakeven point.
Nio announced in early May that it will source battery for its Onvo L60 model from rival EV maker, BYD. That means that Onvo models will be fitted with batteries from two companies, as BYD joins CATL as a supplier. It also undelines Nio’s shift from its initial plans to start manufacturing its own batteries, with the company now focusing on expanding its production capacity and sales.
Also, NIO announced a strategic partnership with Lotus Technology, a leading luxury EV maker. The partnership focuses on battery swapping and charging technology, which are two of the key growth areas for NIO as it seeks to expand its reach.
NIO also announced that its semi-solid state battery pack will be available from June 1. The battery pack’s reported price tag of $45,000 is probably the reason why the company has opted to offer it as a rental. as in-building it in car prices would make NIO prohibitively expensive. However, it brings a new dimension to NIO’s competitiveness, considering that it is compatible with all models.
Furthermore, the 150 kWh battery has an enviable range, which gives NIO an edge over its competitors. During a test, the battery reportedly supported an ET7 model carrying a 200kg load for 667 miles (1070 km) on a single charge- an impressive fete by all measures!
In early April, NIO introduced a rental option for the battery pack of its ET5 sedan model. This is meant to make the model more affordable.
Nio beat industry analysts’ forecasts in June, delivering 21,209 vehicles, up from May’s record of 20,554 units. That was an increase of 98.09 percent over the figures delivered during the same period in 2023. Furthermore, its second quarter deliveries stood at 57,373 units, representing an increase of 143.9 percent compared to the corresponding quarter last year. Notably, the monthly SUV deliveries declined by 4.79 percent in June to 11,581, but up by 81.44 percent year-over-year.
The company followed the June delivery figures with 20,498 units delivered in July. The units consisted of 11,964 premium smart SUVs and 8,534 premium smart sedans. Overall, the delivery numbers stood at 557,518 as of the end of July.
Nio delivered 160,037 units in 2023 and expects to increase that figure to 200,000 in 2024. The company started 2024 on the right footing, seeing its January deliveries grow by 18.2% year-over-year to stand at 10,055 vehicles. However, that figure declined to 8,132 units in February. Overall, the company aimed to deliver between 31,000-33,000 units in the first quarter of 2024.
In June, the Chinese government announced that it will offer incentives worth an equivalent of roughly $1,400 to those who trade their fossil fuel vehicles for EVs, fuel-cell vehicles and plug-in hybrid vehicles. The move is likely to boost EV sales in the world’s second-largest economy, and NIO stands to benefit. However, BYD is likely to benefit more from the incentives, as it produces lower-priced EVs, meaning that the incentive will account for a larger percentage of its product prices.
As per the latest NIO stock news, the company is accelerating the development of its network of battery swap stations. This is expected to increase the revenue of the Chinese EV maker significantly. The company has rolled out around 10 of its next-generation battery swap stations in China. These charging stations could be ideal for long-distance travelers while also boosting the company’s revenue.
Nio (NYSE: NIO) is also expanding its business in Europe. It has already opened a battery swap station in Germany, where it expects to gain market share. The company has also launched two swap stations in Norway, one of the biggest EV countries in the industry. The company has established more than 10 NIO battery swap stations in the EU.
Also, the company plans to launch its cheaper brands known as Firfly and Alps in Europe sooner than previously expected. As per the company president, Firefly will be launched in Europe by 2025.
The EV company currently has 39 power swap stations in Europe, 11 of which are in Germany. By 2025, Nio hopes to have over 4,000 battery swap stations globally, with over 1,000 overseas.The vast majority of the stations (2, 375) are currently in China, and that figure is expected to hit 3,310 by the end of 2024.
The EV price war which was initiated by Tesla due to falling sales, are now weighing on the profits of the whole industry. As a result, the recent NIO earnings report reveals that the Chinese EV company’s losses are expanding. In fact, the company recently had to layoff 10% of its workforce.
The company could, however, get some upthrust from its much-touted 4th-generation supercharger, launched in April 2024. The battery’s power can go as high as 640 kW, and its maximum output is 765 Amps and 1,000 Volts. The fourth-generation power stations will increase the capacity of services per station from 408 to 480 per day.
It is worth mentioning here that NIO is only one of the few electric vehicle manufacturers betting big on battery-swapping technology. Tesla CEO Elon Musk has already discarded the idea after some consideration. Nevertheless, NIO still remains optimistic about the future of the technology and intends to expand its battery-swap network globally.
There are several factors that could drag the Nio stock price lower in the coming months. While 2023 was a relatively good year for EV companies, 2024 is proving to be a mixed bag. Demand has generally not grown as much as expected, amidst high inflation and high interest rates that have discouraged borrowing.
Also, competition in the EV industry is growing rapidly recently. Nio is now competing with more than 400 EV companies in China alone. Some of the top competitors are BYD, Li Auto, and XPeng. This means that, ultimately, the company’s growth will slip in the coming months.
With these factors simultaneously at play, profit margins will almost certainly reduce, while losses could pile up. With increased supplies, the EV market has also diversified the models coming out of production lines. This has also increased the demand for raw materials, which could lead to a spike in the cost of production.
For a company that has been struggling to reduce its costs to align with the slow growth in revenue, an increase in material costs is bad news. While this is not exclusive to Nio in the EV market, it places it at a disadvantage against competitors with stronger balance sheet like BYD, XPeng and Li Auto.
Further, from a technical perspective, the stock has been in a strong sell-off in the past few months. It has also crashed below the 200-SMA, and this signifies trouble. Therefore, the bearish momentum will make it difficult for the stock to bounce back any time soon.
You can see that the NASDAQ: NIO chart has been accumulating below its 200-day EMA, which is currently at $5.74. The 200-EMA is above both 20 and 50-EMA, signaling the bearish momentum. Furthermore, all three EMAs are below the IPO price. This presents a good opportunity to buy low, but I wouldn’t advise anyone to buy the stock until it returns above the 50-EMA mark of $4.28. Nio has critical psychological support at $3.50, and a breakdown below this level will be too costly.
Due to this reason, it is critical to manage your risk if you intend to buy at the current levels. A better idea would be to dollar cost average.
NIO reported revenues of $1.372 billion in the first quarter of 2024, representing a decline of 7.2 percent compared to the corresponding quarter in 2023. Furthermore, it was a decrease of 42.1 percent from the fourth quarter of 2023. The Q1 2024 Gross profit was at $67.6 million, representing a decline of 61.2 percent from Q4 2024, but a jump of 200.5 percent from Q1 2023 profit.
Analysts have mixed feelings about the Nio stock price. Data compiled by Marketbeat shows that the average target for the stock is $6.19, which is substantially higher than the current $4.49. In the near term, NIO is likely to struggle to return profits. However, Tesla has proven that EV manufacturers can return good profit once they establish a stable enough and wide enough market base. Equally important is the ability to meet customer orders.
Some of the analysts bullish on the Nio stock price are from China Renaissance, Mizuho, Jeffries, Deutsche Bank, and UBS. Most of these analysts have a buy or hold rating on the stock.
Another broader look by most analysts shows that most of them are bullish on the stock. In addition, data compiled by Tipranks shows that the target for the stock is $16, which is also higher than the current level.
Meanwhile, according to Long Forecast, the Nio stock price will remain in a tight range in the next few months. They expect the shares to be below $5 at the end of 2024.
It is difficult to predict how a stock will perform in about three years, as history has shown us. The situation is more volatile for Nio because it is a Chinese company that could probably be delisted in the United States.
All factors constant, there is a possibility that the Nio share price will do well by 2025 as electric vehicles go mainstream. As you already know, many countries such as those in Europe and even China have made plans for phasing out combustion engine vehicles.
By 2025, Nio will have perfected its manufacturing process and expanded its business to other countries. According to Long Forecast, the stock will be trading at about $9.56 in December 2025. If you want to test, you can check the ATFX trading demo account.
According to analysts at Tipranks.com, NIO stock currently has a rating of a “moderate buy” based on the analysis of 10 analysts, with an average price target of $6.52. The high price target is $10.00 while the low target is at $4.00. The average price target is 62% above the current price as of this writing, signaling it as a potential good buy with room for growth.
Generally, I am a bit bullish on the Nio stock price in the long term because of the company’s rapid growth. Therefore, I believe that the stock will be substantially higher than where it is today. However, based on its historic performance, we can’t rule out a situation where the stock rises three times by 2030 to over $70. As Tesla has proven, this is a possible scenario.
As shown below, the Nio share price has had a roller-coaster as a public company. The company went public in 2018, and its stock price collapsed to an all-time low of $1.20. At the time, there were concerns about the company’s existence as a going concern.
It then started a spectacular rally in November 2019 as the firm geared towards the launch of its products. Since then, it jumped by more than 5,400% and reached an all-time high of $66.99. Today, the stock is about 1,570% below its all-time high price.
While Nio is a good company, it is also highly risky. Being a Chinese company, there are concerns about the accuracy of its financial results. In the past, we have seen Chinese companies publish inaccurate numbers.
Another concern is that the company could be delisted in the US. If this happens, many American investors will be left carrying the bag. Also, there are concerns about rising competition in the EV industry as companies like BYD, Xpeng, Geely, and Zeekr take market share. However, the Chinese government has proven its support for its burgeoning EV industry, with Nio being one of the major beneficiaries of government financing. This could help steady the company amidst rising competition.
Short interest refers to the number of shares held by short-sellers. These are people who bet that a stock will go down. The current Nio short interest stands at just $191 million million, which is substantially lower than its level of $878 million a year ago. At its peak, the value of shares held by short-sellers was worth over $4 billion.
Source: Marketbeat.com
Nio is a relatively young company that is in the process of ramping up its production. Nio has sold over 551k cars, which is a remarkable number for a company of its age. Analysts expect that it will sell over 500k cars per year in the next five years.
Like most EV stocks, Nio is currently overvalued. Besides, this is a loss-making company that makes less than $4 billion in annual revenue that is being valued at almost $35 billion. The company has a price-to-sales ratio of 5.89, making it overvalued. However, this overvaluation can be justified if the company maintains its growth.
The Nio stock price has done well over the years. In this article, we have explained why it has performed like that. We have also identified potential risks that the company is currently facing. Key among these is the successful rollout of charging and swapping stations.
This post was last modified on Sep 26, 2024, 01:29 BST 01:29