Nio Will Bounce Back With Impressive Delivery Numbers

Nio (NYSE:NIO) stock has been under pressure for the past month. The Chinese EV company suffered from the investor sell-off and the Chinese government crackdown.

A close-up shot of the Nio (NIO) ES8 vehicle.
Source: xiaorui / Shutterstock.com

However, China is one of the top EV markets in the world and it is expected that there will be a consistent rise in the demand for EVs in the coming years. The EV market in China nearly tripled to 19% in October, according to Forbes. The market is growing bigger, and it is moving very fast.

Nio is making strong strides in the industry and has already made its presence felt with a wide product range. NIO stock is less than half of the all-time high of $66. 

Nio started the year with a bang and was trading close to $53 in January. It hit a high in February and has been declining since then. NIO stock is down 24% in the past six months, but this does not mean you can write off Nio. The company has a long way to go and there are several catalysts working in its favor.

Impressive Delivery Numbers

The entire EV industry was facing a chip shortage and had major supply chain issues which led to a dip in deliveries. Nio did not have a good October, but it did bounce back in November. It reported 3,667 deliveries in October and delivered 10,878 vehicles in November which is a 105% increase from a year ago. This brings the year-to-date deliveries in 2021 to 80,940 vehicles, a 120% increase from 2020, and the total deliveries to 156,581. 

For the fourth quarter, the company expects deliveries between 23,500 and 25,500 vehicles. That means the company will have to deliver extraordinary numbers in December to meet the projections. Considering the current situation of the market, it looks difficult for the company to meet the revenue or deliveries for the fourth quarter, and this may impact the bottom line.

However, I believe Nio should not be judged simply based on the October deliveries. The chip shortage and supply chain issues affected every automaker and it is temporary. Looking at the big picture, Nio shows strong potential to grow and meet the growing demand of consumers in the thriving EV market.

Battery as a Service Is a Major Draw

Nio recently signed an agreement with Shell (NYSE:RDS.A, NYSE:RDS.B) to build and operate the battery charging stations. It includes the installation of 100 swapping stations in China by 2025 and pilot stations in Europe in the next year. The company’s battery-as-a-service (BaaS) offers a huge advantage in the competitive market and this partnership is a clear path towards International expansion. BaaS allows consumers to buy cars without batteries and subscribe to the program to swap batteries at the stations. This reduces the cost of the car significantly. 

It is also setting up a factory at the NeoPark EV industry park in China and expects to roll out the first vehicle in the second quarter of next year. The company will have NIO day on Dec. 18,  when it expects to launch its new ET7 sedan.

The Bottom Line on NIO Stock

Do not panic due to the investor sell-off and instead load up on NIO stock in the dip. Nio is one of the top EV players in the industry and the market is only growing bigger in the coming years. The company has a lot lined up for 2022 and it will benefit investors.

A dip in delivery numbers for one month does not speak anything about the potential of the company. Look at the bigger picture and see how far Nio has come. The company is set to grow bigger on high demand and sales. 

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.


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