Chinese electric vehicle (EV) maker Nio (NYSE:NIO) has enjoyed a spectacular 2020. In early 2019, nobody thought the company would make it this big. NIO stock traded for only around $6 in January 2019, but it hit an all-time high of $66 in two years. Patient investors earned more than 1000% over the past year. With support from the Chinese government and the economy getting back to normal, NIO stock could soar higher.
Recently, the company reported the strongest delivery numbers and set the floor on fire at the Shanghai Auto Show. NIO stock remains a promising investment for its continued success in China and its strong moves to expand across Europe.
With that in mind, let’s take a look at the aspects behind the investment case for NIO stock.
A Closer Look at NIO Stock
NIO stock is far from its peak today. It reached a peak in February 2021, when the share price was as high as $66. The stock has drifted downward since that time for several reasons. Chip shortage, product recalls and reduced subsidies are a few reasons that pulled the stock downward.
NIO stock showed high volatility in March but there was a moderate recovery after hitting the low of $35. It is currently exchanging hands closer to the March low and it is possible that the stock will remain steady and show less volatility moving forward. It could even make a run for $60 this year.
At the Shanghai Auto Show on Monday, Nio unveiled a Power North Plant project which will be executed over the next three years. The company aims to deploy a 100 swap stations, 500 power charger stations, 120 power mobiles, 2,000 power chargers and more than 10,000 destination chargers across China.
The company aims to have one power station at every 100 kms making it convenient for consumers to drive EVs. Nio has already gained an edge in the industry with the battery swap stations and it will grab a high market share with the execution of the power plant. Over the next three years, the company will certainly hold a strong and strategic position in the EV industry.
Outstanding Delivery Numbers
In less than three years, NIO hit the mark of producing 100,000 cars. This leaves no doubt about the ability of the company to reach a high production level. The first-quarter deliveries of 2021 stood at 200,60 and having manufactured 100,000 is no small feat.
Interestingly, the company managed to achieve the milestone at a time when the industry was struggling with chip shortage and the world was grappling with a pandemic. The numbers reflect the ability of NIO to achieve new levels of mass production and meet the increasing demand in China.
Nio Power Swap Station 2
Recently, Nio signed a strategic agreement with Sinopec, a Chinese company. It is an agreement to build around 5,000 swapping and charging stations by 2025. This move can change the way electric car batteries are charged and used. Beijing already has its first outlet at Sinopec’s Chaoying Station.
Additionally, the agreement also includes the development of Battery as a service and tackling the changing scenarios with the experience. Every station will have four cloud computing systems and 239 sensors. Users will be able to complete the battery swap through a single click, from their car.
This strategic partnership can be a milestone for the growth of the company. It will expand its presence across the market and will be able to grow revenue through this service. NIO is making well-planned strategic moves in the EV industry. By successfully separating the battery from the car, the company will be able to generate higher revenues and gain a competitive edge in the industry.
The Bottom Line on NIO stock
I am bullish on the EV industry and NIO is the best company in terms of fundamentals and growth. NIO is not profitable but it has a strong balance sheet. It is well-positioned in terms of consumer demand and innovation.
All in all, there is nothing to worry about NIO stock. It is trading at a low of $36 and is a great opportunity to add it to your portfolio. Yes, there is competition in the industry but there is huge demand and space for all to grow.
The company reports Q1 2021 results on Apr. 29. It will give a perspective to investors about the future growth prospects.
On the date of publication, Vandita Jadeja did not have (either directly or indirectly) any positions in the securities mentioned in this article.