Nio (NYSE:NIO) may not be doing so hot on Tuesday, but a major catalyst could turn NIO stock around.
Recent reports claim that Nio may be looking to license out its battery swapping technology. The company makes use of this in China to offer battery switches on its electric vehicles (EVs) at service stations.
The battery switching option alleviates the limited range of EVs, which is one of the biggest factors holding the market back. If Nio licenses its battery swapping tech out, that could open the way for more EV companies to make use of it and expand their businesses.
In turn, that would be a major benefit for NIO stock as the company would generate revenue from those licensing deals. That means it would create an extra source of income from other companies’ successes in the EV market, reports Electrek.
Hui Zhang, managing director of Nio in Europe, backs up this idea by claiming the EV company plans to license battery swapping technology. However, Nio has remained quiet when asked for any additional details about the plan.
Nio’s battery swapping model has been a success in China so far with 868 locations. Each of these hold 13 EV batteries for swapping. While the locations are more expensive to build than a charging station, they offer the benefit of convenience.
Additionally, it’s possible that Nio will start opening battery swapping stations outside of China. The EV maker has been expanding further into the U.S. and Europe, which indicates increased demand for those locations.
NIO stock is down 4.8% as of Tuesday afternoon.
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On the date of publication, William White 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.