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The Awesome ET5 Will Spark Nio’s Recovery

There’s no denying it: Chinese electric-vehicle (EV) maker Nio (NYSE:NIO) disappointed investors in 2021. Even while the company’s vehicle-delivery numbers were impressive, NIO stock just kept falling.

A Nio (NIO) sign and logo on a tan concrete building.

Source: Sundry Photography / Shutterstock.com

Perhaps we could blame the new Covid-19 variant, omicron  or the global shortage of microprocessors and other tech components. Also, we could cite China’s persistent crackdown on a multiplicity of businesses over cybersecurity concerns and anticompetitive practices.

It’s possible that some of those concerns will diminish in 2022. Notably, the Chinese government has reportedly vowed to focus on helping the nation’s consumption rebound while also reducing some income tax rates.

At the end of the day, however, Nio, not the nation of China, will determine the performance of NIO stock. And as Nio steps boldly into the fiercely competitive electric-sedan niche, a turnaround by its stock could be just around the bend.

A Closer Look at NIO Stock

To recap a dismal 2021 for the shares, NIO stock started off last year with a bang as it quickly hit $62 in January. Yet the stock wasn’t meant to stay in the $60s, and it would soon fell.

Disappointingly, each and every rally by the shares would be met with selling in 2021. Valiant attempts to push up the share price in June and November turned out to be short-lived and futile.

Painfully, NIO stock even dropped below $30 in late December. However, the aforementioned news about China’s potential new policies subsequently helped bring the share price back above that critical $30 level.

At the same time, the company had trailing 12-month earnings per share of approximately -$1. That’s pretty close to break-even, suggesting the possibility of profitability on the horizon.

Coming to America (Maybe)

Perusing through InvestorPlace‘s daily offering of up-to-the-minute market news and updates, I recently found a timely article from none other than commentator extraordinaire Larry Ramer.

Apparently, there’s buzz going around that Nio may be setting up camp in the U.S. in the very near future.

In reporting this, Ramer cited advertisements for U.S.-based positions that Nio posted on LinkedIn.

It appears that the automaker posted ads for 46 positions in America, some of which involve managing technical operations, including software development and autonomous driving.

Informed investors shouldn’t jump to conclusions at this point. It’s probably advisable to adopt a watch-and-wait policy and see how the automaker’s potential push into America plays out.

Still, the ads for the U.S.-based positions are a sign that Nio is preparing for a multinational expansion effort.

I previously reported on the company’s push into the Norwegian electric-SUV niche, but that could be small potatoes compared to Nio’s foray into the vast and growing U.S. electric vehicle market.

The ET5 Comes Alive

Move over, Tesla (NASDAQ:TSLA). Your iconic Model 3 sedan now has a competitor, and it could be a game changer.

On Dec. 18, 2021, Nio held its much-anticipated Nio Day event. Surprisingly, the company only showcased one new electric car during that event.

But what a car it was! With specs to impress the skeptics, the newly unveiled ET5 sedan could easily give Tesla’s Model 3 a run for its money.

There are a few interior and exterior photos of the ET5 over at Green Car Reports, and you’ll be lying if you tell me that you’re not impressed.

However, looks aren’t everything. Both the drivers and the investors will want the battery specs, and Nio is ready to deliver them.

The ET5 is set to to start deliveries in China in the fall of 2022, and buyers will be able to choose from 75-kwh, 100-kwh and 150-kwh battery pack options.

Nio claims that the largest ET5 battery pack, known as the Ultralong, will have 600 miles of range.

As a basis of comparison, the Tesla Model 3 Long Range has a range of 334 miles and costs $50,990. Meanwhile, the ET5 is similarly priced, at slightly over $51,000 before subsidies.

The Bottom Line

Even as Nio’s share price has been trending downwards, this is no time to count Nio out.

The company could present a serious threat to Tesla with its upcoming ET5 sedan model. Similarly priced to Tesla’s Model 3, the ET5 appears to have superior range at a competitive price point.

So don’t lose faith if you’re holding NIO stock now. This up-and-coming Tesla rival could surprise the critics in 2022 with (hopefully) a foray into the U.S. market and a new sedan with remarkable range.

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 InvestorPlace.com Publishing Guidelines.


Article printed from InvestorPlace Media, https://investorplace.com/2022/01/the-awesome-et5-will-be-nio-stocks-catalyst-for-recovery/.

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