Production-Line Upgrade Sets the Stage for Nio’s Next Leg Up

Depending on when someone took a position in Chinese electric vehicle (EV) maker Nio (NYSE:NIO), they might be very happy or extremely frustrated. That’s because, despite the huge long-term gains in NIO stock, it has lost value in 2021 so far.

NIO stock: A shot from the outside of a Nio display room at night.
Source: Robert Way /

To me, this lackluster result is surprising. In August, Nio delivered 5,880 vehicles. That represents a 48.3% year-over-year increase. Then, in September alone, the automaker managed to deliver 10,628 vehicles, representing a mind-blowing 125.7% year-over-year improvement.

What more does the trading community want?

If you took a long position at an unfavorable price, I’ll encourage you today to just hold onto your shares. Nio’s story is still unfolding, and Wall Street can’t ignore the positive reports for much longer.

A Closer Look at NIO Stock

The outlook seemed quite positive at the beginning of 2021, when NIO stock was trading at $53 and change. By early February, buyers had pushed it past $60 and it felt like the sky was the limit.

Then came a painful correction, with the share price plunging towards $35 in March. The buyers attempted several rallies during the ensuing months, but with little success. It’s probably not much consolation to observe that NIO stock recovered the $40 level in mid-October. It should have at least been up to $50 by that time.

In general, the final three months of the year tend to be seasonally favorable to stocks. Plus, there’s an old saying: a rising tide lifts all boats.

So, maybe there will be enough holiday cheer to go around, to lift up the NIO stock price. On the other hand, if the buyers can’t even get it above $50 by the year’s end, that won’t be a good sign.

An Upgrade to Meet the Demand

I already address Nio’s outstanding delivery numbers. Clearly, there’s a demand for the company’s vehicles.

Therefore, it’s only logical that the company completed, in cooperation with state-owned Chinese automobile manufacturer JAC, a phased upgrade of its production line at Nio’s Hefei-based factory.

The upgrade’s purpose is to further prepare Nio for the introduction of new automobile models and a capacity increase.

Here are some facts associated with the production-line upgrade:

  • 101 new robots were added to the body shop
  • 408 robots were adjusted to software programs and rhythms
  • A high-strength steel and aluminum hybrid process body production line was added
  • Two new production lines were built in the final assembly plant
  • In-line tooling equipment was upgraded
  • A new paint shop is under construction
  • The entire upgrade will be completed in the first half of 2022

All of this, naturally, will lead to increased capacity for production. The plant’s current annual production capacity is 120,000 units per year. However, it’s expected to double to 240,000 units per year after the overall upgrade is completed.

Mark Your Calendar

Need more good news to look forward to? Fine: Mark Dec. 18 on your calendar. That’s when Nio is expected to hold its annual event, NIO Day 2021, at the Olympic Sports Center in Suzhou.

Granted, not all of us will be able to hop on a plane and make the trip. Nevertheless, the company’s stakeholders ought to be excited about this particular event.

That’s because Nio is expected to unveil multiple new automobile models at this year’s event.

Reportedly, these models are expected to include one called ET5, another unknown model and Nio’s new brand for the mass market.

CEO William Li has teased that Nio will enter the mass market through a new brand, preparations for which have been accelerated and a core team has been established. Li also provided an additional clue, saying, “The NIO brand has a similar relationship to this new brand as Lexus has to Toyota, and Audi has to Volkswagen.”

The Bottom Line on NIO Stock

What will the new automobile models look like? What will their specs and stats be?

It’s exciting to ponder these questions. Moreover, it’s good to know that Nio is ramping up its production capacity to meet the demand for the company’s vehicles.

All of this ought to give NIO stock holders some encouragement. There’s no need to dump your shares now, as 2021’s fourth quarter could be the best one yet.

On the date of publication, David Moadel 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 Publishing Guidelines.

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