Nio (NYSE:NIO) is expanding its electric vehicle (EV) charging network through an important new partnership. After months of struggling, the Chinese EV producer needs a growth driving catalyst — and it may have just found one. Now, NIO stock is rising on news of an agreement with SAIC General Motors Corporation (SAIC-GM), a joint venture of General Motors (NYSE:GM).
As part of the new partnership, CnEVPost reports, “more than 10,000 Nio charging terminals join SAIC-GM’s Ultium energy replenishment network.” This means that Nio’s network will be open to many more drivers who own SAIC-GM models.
News of this development has boosted NIO stock, indicating that the market is responding well to the partnership. This is good news for investors in more ways than one. It suggests that Nio’s way back to success may be through its charging network, not just EV sales.
What’s Happening With NIO Stock?
This partnership seems to be exactly what NIO stock needed to start rising. As of this writing, shares are up about 3% for the day. General Motors was in the green earlier today as well, although some of its growth may have been due to momentum for its new headquarters.
That said, investors shouldn’t discount the significance of Nio’s latest growth-driving announcement. SAIC-GM is responsible for the production of the popular Buick and Cadillac brands. Under this partnership, any driver who owns an EV from either will be able to plug into one of Nio’s chargers and access it through a smartphone app. This will also allow them to view real-time charging pile prices.
Of course, it isn’t hard to see how this could benefit both NIO stock and GM, particularly given the vast size of Nio’s charging network. Per Electrive:
“Currently, Nio has a total of 2,204 charging stations across China, including a total of 10,056 charging piles […] Of these stations, 364 are located in highway service areas, while its battery-swapping network covers a total of 2,402 locations, including 790 on highways. Nio also points out that its network has been open since the beginning, ‘with around 80 per cent of the power provided being used by non-Nio models.'”
This isn’t the first charging network development that Nio has announced this month, either. Earlier in April, the company entered into a similar agreement with Jiyue, a Chinese EV producer backed by Baidu (NASDAQ:BIDU).
Why It Matters
Today’s charging network news is definitely a step in the right direction for Nio. NIO stock has barely stayed above water as the EV market has been rocked by turbulence over the past year. Now, though, the firm’s focus on its charging network and battery swapping operations — rather than only pumping out EVs into an already-crowded market — appears to be a good sign. Gaining a footing in other areas of the market is a strategic move that could easily pay off for Nio — and investors in NIO stock.
On the date of publication, Samuel O’Brient did not hold (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.
