Yesterday brought some bad news for Nio (NYSE:NIO) as the Chinese electric vehicle producer failed to make the list of the top 15 best-selling EVs in China for the year. While its competitors Tesla (NASDAQ:TSLA) and Li Auto (NASDAQ:LI) both made the list, Nio’s name was nowhere to be found. However, an announcement from the company bringing good news has given investors cause for optimism with NIO stock.
What Happened With NIO Stock
According to yesterday’s announcement, Nio will be doubling the production capacity of its Hefei plan, located in China’s Anhui Province. Previous production capacity had been 120,000 units per year but this expansion will allow the company to double this figure, completing 240,000 throughout 2022.
This news has already sent NIO stock up by 4.27% as of this writing and it doesn’t show signs of slowing down. The month has been turbulent, but the future looks promising.
What It Means
It has been reported that Nio’s newly expanded production line will be completed within the first half of 2022, gearing it up for a productive second half. Shareholders should be able to anticipate what comes next in 2022 with confidence.
Despite some turbulence, the fall has been generally good for Nio. The company delivered “10,628 vehicles globally in September 2021, an all-time high monthly record representing a robust growth of 125.7% year-over-year.” This development indicated that both the company and its sector have so far been able to make progress despite the difficulties posed by supply chain problems.
The following week, a Goldman Sachs =analyst set a $56 price target for NIO stock. His reasoning? The fast-growing company still holds considerable upside. Today’s production expansion news should only further his bull case.
Why It Matters
China’s EV market is red hot and it’s still heating up. While Tesla has a dominant slice of the market, there’s plenty of room for innovative startups to grab their own. Nio is trying to do exactly that, positioning itself well to move forward as demand increases across continents.
InvestorPlace’s Vandita Jadeja recently spoke to NIO stock’s long-term potential, noting “Nio looks attractive for long-term investors. It has low risk and the valuation will grow with time. The sales are going to increase in the coming months as the chip shortage is almost over and the company will try to meet the international demand. The strong delivery numbers will ensure that the key margins are improved.”
For anyone considering a long-term play among EV stocks, Nio is absolutely worth watching.
On the date of publication, Samuel O’Brient 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