Chinese electric-vehicle manufacturer Nio (NYSE:NIO) saw its shares struggle despite positive developments. Late last week, the company revealed in its Tech Day event how it was spending its research and development funds. In particular, an advanced computer chip designed specifically for autonomous driving generated headlines. Still, investors were skeptical on NIO stock on Monday.
According to a TechNode report, the EV maker announced the world’s first five-nanometer chip for automated driving. Called the Shenji NX9031, the System on Chip (SoC) architecture delivers “high pixel throughputs of 6.25 Gigapixels per second, which NIO said makes it capable of capturing pictures with higher quality resolution in minimally lit environments, compared with flagship offerings from leading chipmakers.”
Nio head executive William Li also stated that the company completed a tape-out for its automated driving semiconductor. Per CnEVPost, tape-out “is a technical term used in the chip industry, which refers to the process of transforming a circuit design into a chip that can be produced on an assembly line after the chip design has been completed.”
Significantly, CnEVPost notes that following a successful tape-out, “a chip prototype can begin mass production if it passes subsequent tests.”
NIO Stock Offers a Compelling Fundamental Narrative
While the Chinese EV specialist is pushing its autonomous chip forward, TechNode also stated that Nio is on schedule to launch its advanced driver assistance system, which is called Navigate on Pilot Plus (NOP+) 2.0. The debut will occur sometime in the second half of this year.
One of Nio’s goals is to leverage artificial intelligence to empower vehicles with point-to-point navigation on Chinese highways, city streets and parking spaces. Currently, EV juggernaut Tesla (NASDAQ:TSLA) leads this race.
Another element that should help move the needle for NIO stock in the long run is the underlying company’s debut of its proprietary operating system, named Sky OS. Per TechNode, the system will have “central control of all vehicle domains, allowing it to provide more advanced user experiences.” A key benefit of this advanced OS is the ability to quickly and conveniently arrange for Nio’s battery-swapping service.
Still, NIO stock has lost about 4% of equity value in the past five sessions. In the trailing month, it’s down about 1%. Although the underlying sector is promising, a key headwind is overcrowding. With China having more than 200 EV manufacturers, it may be inevitable that many will fail. In the meantime, the existence of so many entities could cannibalize sales of the most-promising ventures.
On the date of publication, Josh Enomoto 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.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
