It has been a wild week for electric vehicle companies, but Chinese EV leader Nio (NYSE:NIO) is not done in the spotlight just yet. In an early Friday announcement, CEO William Li unveiled a new battery system and gave investors some insight on just what to watch for NIO stock.
So what exactly has happened this week? Well, Nio kicked everything off with its vehicle delivery report at the start of the week. Investors celebrated news that it delivered 5,055 vehicles during the month of October, marking a 100% year-over-year increase. Then, Citigroup analyst Jeff Chung bumped his 12-month price target to $46, further boosting stock in NIO.
Further helping matters is the success of its peers — signifying the strength of the Chinese EV industry. Xpeng (NYSE:XPEV) and Li Auto (NASDAQ:LI) similarly have had banner weeks on October delivery numbers and investor enthusiasm. It should be very clear that bulls in this space are very powerful.
Just as Nio started the week with vehicle delivery fanfare, it is looking to end the week on a high note after launching its new battery system. As it ups its game on the international EV stage, here are three takeaways on the 100 kWh battery launch event and what they mean for Nio’s stock holders.
Takeaway No. 1: A New Battery System Boosts NIO Stock
The simplest catalyst to explain from the event is that a new battery system is really quite exciting. Electric car makers all around the world continue to improve on their battery capabilities. As they do so, cars get longer ranges and become more reliable. Understanding that the pressure is on, Nio is making sure its battery system is up to the challenge.
Its big announcement, as the event name implies, is that Nio is rolling out its 100 kilowatt hour battery system. But what does that really mean?
When you talk about electric vehicle batteries, you measure their capabilities using kilowatt hours. This unit essentially looks at how much energy a car — or any other appliance — uses while running for one hour. And, at least in most instances, bigger is better.
Nio knows this. From its 70 kWh battery systems in 2018 to its 84 kWh hour battery systems in 2019, it has continued to expand. With the launch of its 100 kWh battery systems it can better take on rivals like Tesla (NASDAQ:TSLA) and make other key improvements.
The takeaways? Nio shared that this new battery system would give its vehicles longer driving ranges, make them safer and provide more flexible upgrades. Remember, another up-and-coming catalyst for Nio is the rollout of its battery-as-a-service business model. Another important thing to note is that with the 100 kWh battery, its vehicles will have a maximum driving range of 615 kilometers.
Takeaway No. 2: Batteries as a Service
Batteries, batteries, batteries. The investing world is going crazy over batteries, and Nio continues to deliver. During the 100 kWh battery launch event, it shared more updates on its battery-swapping stations and its broader battery-as-a-service business model. Importantly, these new batteries tie perfectly into the flexible upgrade programs that Nio touts.
Essentially, Nio offers a subscription plan for batteries. Consumers buy the car, and then select different options for what types and how many batteries they need. As a business model, this is different than what we largely see in the U.S. with the push to build more charging stations. As one writer put it, it is almost the EV equivalent to stopping on the highway to refill your gas tank. In just a few minutes, you can swap out for a fully charged battery and be back on the road. This improves the experience for long-distance drivers, and also takes the pressure off owners to charge up at home overnight.
These battery-swapping stations came into focus during the launch event. Nio says it has already built 158 swapping stations around China, and that those station have facilitated 1.18 million swaps. As it rolls out these new batteries and continues to expand its swapping station footprint, pay close attention.
Nio will continue to build on this business model, making it more central with the launch of the 100 kWh batteries. When you buy a vehicle with the newest battery system, you will save money on the initial purchase price. Then, you have selections over a monthly or yearly battery lease program to keep your Nio model charged up.
It sure is different, but it seems to be working. As Nio demonstrated during the event, it is as simple as a woman pulling into a charging station, hopping out of her care to grab a coffee and then coming back to hit the road. Fitting into the life of luxury Nio exudes, it could certainly continue to be a meaningful upside catalyst for NIO stock.
Takeaway No. 3: Competition Is Fierce
Nio made it very clear during the 100 kWh battery launch event that it is watching Tesla. For so long, investors have considered it the Tesla of China. As it continues its path toward European expansion, Nio is quickly becoming an EV giant in its own right.
Still, competition remains. Just minutes after the live event ended, CEO Elon Musk took to Twitter (NYSE:TWTR) with what many saw as a jab against Nio.
420 is ten times better than 42
— Elon Musk (@elonmusk) November 6, 2020
Musk appears to be referencing the $42 closing price of NIO before the event. Although the TSLA stock price is currently 10 times higher, Nio bulls are ready to go.
The Bottom Line on NIO Stock
Nio appears to be delivering just what the bulls want. It continues to innovate, respond to consumer demands and improve on its products. With a new business model and plans for expansion, it also looks to really meaningful rival traditional automakers and Tesla.
There are also a few more big catalysts on the horizon. The company will report its third-quarter earnings on Nov. 17, and investors are eager to tune in. Additionally, Nio has promised another shareholder launch event some time in early 2021 to reveal more improvements.
Although it is hard to predict the EV future, Nio should remain on your radar.
On the date of publication, Sarah Smith did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Sarah Smith is a Web Content Producer for InvestorPlace.com.
