A new dominator in the Chinese EV market, Nio (NYSE:NIO) is firing on all cylinders. The company did not have an easy ride initially but it is gearing up for the big EV market now. NIO stock had a rough start after going public in 2018 but it has had an excellent 2021.
![A close-up shot of the Nio (NIO) ES8 vehicle.](https://investorplace.com/wp-content/plugins/lazy-load/images/1x1.trans.gif)
The company has delivered record-breaking numbers and is a new competitor of Tesla (NASDAQ:TSLA).
Despite the pandemic and the chip shortage, Nio has been able to maintain strong delivery numbers. It is constantly expanding the market and has remained patient through the ups and downs. The patience has certainly paid off. Today, Nio is one of the most sought-after EV manufacturers in the industry with a diverse product portfolio.
NIO stock went from $13 in July 2020 to $43 in July 2021. The stock is up more than 200% over the year and there is no stopping the momentum.
I have always been bullish on NIO stock and believe it has the potential to go higher. With that in mind, let’s consider the investment case for NIO stock.
Massive Battery Swap Expansion
On NIO Power Day last week, the company announced expansion plans to grow the battery swap station deployment. Known as NIO Power 2025, the company plans to expand the swap stations to 4,000 by the end of 2025, including 1,000 outside of China. It already has 301 swap stations and 204 fast-charging stations.
Additionally, Nio has 382 destination charging stations. The company aims to increase to more than 700 stations by the end of this year.
The swap stations generate additional revenue for the company and attract consumers to the service. The long-term goal of establishing 4,000 stations is proof that the company is in line with the market and considers a rising demand for its EVs.
The additional revenue will contribute significantly to the company’s balance sheet. In time, battery swap stations will be easily available to more users and they will provide a quick and convenient way of charging.
President Biden’s Plan
Known as the American Jobs Plan, U.S. President Biden has made a $174 billion allocation for the promotion of EV and EV charging stations. This is a major boost to the EV industry and fans are calling it the “downpayment on the future of transportation.”
It is expected that private investment in the sector will soon follow. It is clear that EV manufacturers will benefit from this plan, which includes incentives to purchase EVs. There will also be more support to install EV charging stations across the country. Besides NIO, several other EV companies will benefit from this plan and it could make NIO stock more expensive.
For the second quarter, the company expects to report revenue between $1,243 million to $1,298 million. Considering the delivery numbers, I believe the company will beat the projection. It is an increase of about 2% to 6.5% from the first quarter of 2021.
The Bottom Line on NIO Stock
Nio is making the right moves to maintain a strong hold in the industry.
The company has announced several positive developments this year. These range from an increase in production capacity to record-breaking delivery numbers and an expansion into Europe. Everything is working in favor of NIO and the stage is set for a new high.
As the demand for EVs continue to grow, Nio is well on its way to establishing itself as one of the top EV manufacturers. Investors need not be nervous about the latest Chinese regulation until we get more clarity on it. The threats could fade over time.
Until then, NIO stock is a buy and hold.
On the date of publication, Vandita Jadeja did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Vandita Jadeja is a CPA and a freelance financial copywriter who loves to read and write about stocks. She believes in buying and holding for long term gains. Her knowledge of words and numbers helps her write clear stock analysis.