Nio Is Doing Well Compared to Tesla at a Similar Point

Investing in Nio (NYSE:NIO) stock continues to make sense, in my opinion. For fundamental investors, that is true at least. Because in terms of the underlying business execution, Nio is doing very well.

NIO Stock
Source: Carrie Fereday /

Thus, if you believe that the strength of business behind a given stock is what should ultimately propel prices upward, Nio is a smart bet. 

In Nio’s case, this means that investors should look at production and deliveries as a reasonable bellwether for its strength. Comparing those figures to industry standard-bearer Tesla (NASDAQ:TSLA) is particularly useful. 

Strong Business

It’s important to remember that Nio remains a relatively young company. Nio began delivering the ES8 7-seater SUV in June 2018. It launched and began delivering several other models since. But the point here is that it essentially has a three-and-half year track record. 

When we compare that to Tesla, we start to get a clearer conception of what an important company Nio is shaping up to be. So, let’s look at Tesla’s progression and Nio’s progression on the basis of sales and deliveries at similar points.

To be clear, this cannot be an apples-to-apples comparison. Tesla pioneered the development of the electric vehicle industry. Nio benefited from Tesla’s early work, as did the entire EV sector. 

My point here is that I can’t compare Tesla’s Roadster sales with Nio’s ES8 sales. It wouldn’t be fair to either firm. Let’s handicap in favor of Tesla since they did the most early heavy lifting. In doing so, I’ll compare Tesla sales in 2019 with those at Nio in 2021.

2019 and 2021

These two periods weren’t chosen arbitrarily. In 2019 Tesla was selling three vehicles; the Model S, the Model X, and the Model 3. 

By 2021, Nio was also selling three vehicles; the ES8, the ES6, and the EC6. We can’t make any perfect comparison, but these points make the two companies somewhat comparable. 

The next logical question then is, who sold more vehicles at these points in time?

The answer is Tesla. In 2019 the firm collectively sold 195,125 vehicles. In 2021 Nio collectively sold 91,429 vehicles. That’s less than half as many vehicle sales. 

That may not exactly make a strong case for Nio stock. However, we need to remember these are not exactly analogous companies. Nio had been delivering vehicles for approximately 3.5 years and reached 167,070 cumulative sales of all of its vehicles by the end of 2021. 

Modern Comparison

Tesla’s Model S hit the market in 2012. Let’s call that the beginning of Tesla’s modern era. Through 2015, Tesla sold a cumulative 107,453 vehicles. 

At the end of 2015, TSLA stock traded near $46. It had sold 107,000 vehicles by that point. At the end of 2021, Nio stock traded near $31. It had sold 167,000 vehicles by that point. Again, not an apples-to-apples comparison, but an interesting note. It does suggest that Nio is relatively underpriced. 

That is also a sentiment being echoed by some on Wall Street.

Macquarie On Board

Macquarie analyst Erica Chen recently initiated coverage of Nio, giving it an “outperform” rating. She gave it a target price of $37.70, substantially higher than its current price of nearly $29. 

Average price targets for Nio across all of Wall Street sit near $59 overall. Again, that suggests it could be a very strong choice at present. Most of the financial world believes in Nio and its business.  

What to Do With Nio Stock

I continue to believe Nio stock is buy worthy, or investment grade. Nio sales are projected to grow at approximately 50% for the next several years. Unit sales growth for EVs hit 180% in China in 2021. Nio sells almost all of its vehicles in China. It has a strong position in a particularly strong market.

It’s hard to bet against Nio now, and you probably shouldn’t. 

On the date of publication, Alex Sirois 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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