Not all electric vehicle (EV) stocks had an excellent 2021, and Nio (NYSE:NIO) is no exception. However, the automaker is geared up to make 2022 one of its most successful years with several catalysts providing tailwinds for NIO stock.
The company plans to takes giant leaps into 2022. NIO stock is down by about 20% over the past week, and despite reporting strong delivery numbers for the month, the stock did not pick up.
NIO stock once traded for more than $60, but it hit a new 52-week low today just above $23. This is a huge dip, but several EV stocks have declined due to the ongoing tech weakness and decreasing trust in Chinese stocks.
However, there are positive catalysts that make NIO stock the one to own for 2022. Let’s take a look at one key factor that can push Nio shares back up.
Growing Production Capacity
The automaker is leaving no stone unturned to meet the growing demand for its EVs, and it has taken two major steps in the direction. Nio has leased a large headquarters building in San Jose, California and the space is more than 200,000 square feet. There will be massive research and production taking place at this facility.
This is not the first time the company has taken measures to expand production. Late last year, Nio announced its plans to double the capacity of its Hefei plant to 240,000 vehicles per year. Once the expansion process is complete, it will be able to manufacture up to 300,000 cars a year. That’s much higher than the current production capacity.
The company has not shared details about when it plans to enter the U.S. market, but this move indicates it is planning to launch in the country soon. It is already planning to expand into European countries in 2022.
Nio already has a presence in Norway and is gaining popularity there. If it manages to meet growing demand, it will be able to make the most of the increasing interest in EVs.
The company has also entered into a partnership with Baoshan Iron and Steel to collaborate on products and supply chain. EV makers have had a lot of trouble due to supply chain issues, and Nio is taking a step toward remedying this.
It has already reported strong deliveries for the past two months and has successfully met projected numbers for the quarter. This will have an impact on the bottom line and Nio will be able to impress investors with strong revenue. In turn, this could push NIO stock higher.
The Bottom Line On NIO Stock
Analysts are bullish on NIO stock. Erica Chen, a Macquarie analyst, gave NIO stock an “outperform” rating with an average price target of $37.70. The analyst expects 31% annual EV sales growth for China and 52% annual revenue growth through 2024. Additionally, Morgan Stanley analyst Tim Hsiao has an “overweight” rating for NIO stock.
Nio is currently trading at a discount and it may take some time to rebound. The fourth-quarter results could push the stock higher, but investors will have to remain patient.
Do not judge the company based on the temporary dip — NIO stock is one EV pick to own for the long term. The company is expanding production and gearing up to enter new markets. This shows it has the potential to grow and meet the demands of the consumers. At its new low, now is the right time to take a position in NIO stock.
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.