NIO Stock Has a HUGE Catalyst in 2023

Editor’s note: This article was updated on Dec. 12 to correct the length of time it takes to conduct a battery swap. 

  • Nio (NIO) is putting more battery swap stations in Europe.
  • The stations will help it compete more closely with Tesla and other high-end makers there.
  • Nio is also helped by the rising yuan and the end of China’s mass Covid-19 lockdowns.
NIO stock - NIO Stock Has a HUGE Catalyst in 2023

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Nio (NYSE:NIO) stock is continuing to rise as investors cheer China’s moves to end Covid-19 lockdowns and boost exports. The stock is also gaining from China’s Yuan currency rising against the U.S Dollar.

Nio opened Dec. 9 at $13.25. A month ago, it traded at $9.58. Early in 2022, it was trading at over $30. The market capitalization is now about $22.5 billion with an estimated 2022 revenue of $6.5 billion. The Yuan is now trading at 6.94 to the dollar, after trading as low as 7.24 a month ago.

Exports Rising

Nio is distinguished from other electric car companies by its battery swapping stations. The company says its chargers can power up a battery in 30 minutes, while its battery swaps can occur in roughly three minutes. This helps it maintain the driving range of its cars and bringing in additional revenue.

Nio is also further along than most Chinese EV makers in exporting to Europe. It began leasing its cars in Germany last October. It has now agreed to put 20 battery swapping stations into charging parks owned by a German electric utility  It plans to have 120 such stations in Europe by the end of next year.

The battery swaps help Nio compete at the high end of the EV market against Tesla (NASDAQ:TSLA), Geely’s (OTCMKTS:GELYF) Polestar (NASDAQ:PSNYW), and other high-end brands. The swaps are expensive, and require capital, but so did Tesla’s supercharger stations, which help it dominate the market, even in China.

Chinese stocks and the country’s currency have been rising ever since the government began responding to consumer demands to lift Covid-19 restrictions that were doing economic damage. The moves came after President Xi Jinping secured a third five-year term in office alongside a loyal team, and after authorities cracked down on the protests.

The move in the Yuan should particularly benefit car exporters like Nio because it makes their sales more valuable when translated into dollars. The 4% move in the currency goes straight to the exporter’s bottom line. During the worst of the pandemic, the Yuan traded as low as 6.32 to the dollar.

NIO Stock: What Happens Next?

It is almost always true that an investment in a Chinese stock is an investment in China’s government. If China is letting its economy off the leash, companies like Nio should have a smoother ride.

On the date of publication, Dana Blankenhorn held no positions in any companies mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Dana Blankenhorn has been a financial and technology journalist since 1978. He is the author of Technology’s Big Bang: Yesterday, Today and Tomorrow with Moore’s Law, available at the Amazon Kindle store. Write him at danablankenhorn@gmail.com, tweet him at @danablankenhorn, or subscribe to his Substack.


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