Nio (NYSE:NIO) has been in the spotlight after China eased lockdown restrictions and the company unveiled the ES7 SUV model. It is the company’s fifth production model and will start deliveries on Aug. 28. NIO stock has been up over the past week and it looks like the upward trend will continue. The stock has gone from $17 to $20 in the past few days.
I believe Nio has the potential to compete with some of the biggest names in the electric vehicle (EV) industry and the company will bounce back and make a mark in no time. With that in mind, let’s dig deeper into my investment thesis on NIO stock.
New European Plant
Nio held a communications event with Hefei users and confirmed a new European plant. This plant will produce battery swap stations. The company plans to produce Battery Swap Stations and Charging Piles in Europe so as to avoid the export costs. Nio has suffered a lot due to the supply chain issues and China lockdowns and the company is now making the right moves to ensure that it is not plagued again. The company aims to achieve the goal of 1,300 Battery Swap Stations across the world by the end of the year.
This move looks stronger than one can imagine. Having entered the European market with its EVs, Nio is looking to strengthen its position in Europe with a new plant. It will not only reduce costs, but will help expand the market and impact the bottom line.
Fifth Production Model
Despite the pandemic, supply chain constraints, and China’s lockdown, Nio managed to unveil its fifth product and it garnered massive attention. The ES7 SUV will have a starting price of $59,210. It is the first car to use Nio’s NT2.O technology platform and it will be equipped with Nio Autonomous Driving.
Besides that, the company is also working on the mass market model and it recently announced that it will produce an 800-volt battery pack in-house in the second half of 2024. The company is making strong strides in the industry and it will prove to be highly successful in the long term. It has consistently reported solid delivery numbers and with a new model, the demand for Nio cars is only going to rise.
The Bottom Line on NIO Stock
Apart from me, several Wall Street analysts are bullish on the stock. Tim Hsiao, a Morgan Stanley (NYSE:MS) analyst believes that if the company manages to report sales of 11,000 to 13,000 in the month of June, it will help Nio regain investor confidence and it will support the shares before a crucial delivery schedule set to begin in August. An analyst at Mizuho (NYSE:MFG), Vijay Rakesh, has a “buy” rating for the stock and believes that EV sales could be recovering well from the lockdowns. With China easing lockdowns and a government stimulus on the way, the second half of the year could benefit Nio.
Further, Edison Yu, a Deutsche Bank analyst, has a “buy” rating with a target price of $45. The analyst cited that Nio is moving toward an important product cycle in the history of the company and the deliveries are expected to increase gradually. This will shift the narrative away from the supply chain issues to the solid product super cycle.
There is a lot to look forward to with Nio and it is time to take your position before the upward rally makes it too expensive.
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.