Investors in Chinese premium electric vehicle maker NIO (NYSE:NIO) are getting excited about the upcoming NIO Day (set to take place on Saturday, Jan. 9) and which usually involves a series of new product and business announcements from the company. As of this writing, NIO stock is up about 8% in the final trading day before that event.

This enthusiasm is not misplaced.

NIO Day could be a hugely positive catalyst for NIO stock. That’s because the company is reportedly unveiling a new sedan that could act as a bridge for NIO bursting into the mainstream auto market, a new battery pack that should stand out as the best the EV market has to offer, and a material upgrade to its battery-as-a-service program, which should lower costs and accelerate deployment.

Those are big updates. And they are huge catalysts for NIO stock.

So, with NIO Day on the horizon, I say stick with red-hot NIO stock.

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Here’s a deeper look.

New Sedan Could Start Nio Transition to ‘Mainstream’

If you really believe that NIO is a mini-Tesla (NASDAQ:TSLA) in the making — which is a totally credible belief — then the new NIO sedan unveiled at NIO Day could do for Chinese EV-maker what the Model S did for Elon Musk & Co.

That is, Tesla sold a lot of Model S cars. But, more than that, the Model S gave Tesla a working foundation for creating an electric sedan, which served as the building blocks for Tesla eventually making an affordable electric sedan in the Model 3.

The Model 3 was a huge success for Tesla. It is the vehicle that propelled Tesla out of its formerly premium niche, directly into the mainstream auto market. Indeed, any reasonable argument could posit that the Model 3 was the defining catalyst for TSLA stock breaking out over the past two years.

A new NIO sedan could do the exact same for NIO stock.

The sedan is rumored to be in the F-segment, so equivalent to a BMW 7 series. It’ll likely be a very expensive car reserved for rich folks. NIO will sell a lot of those cars to rich consumers in China. That’s the good news.

But the better news is that the sedan will give NIO a working foundation to (perhaps in 2022 or 2023) unveil an affordable electric sedan — its version of the Model 3. That car will be the big deal. That car is what will give NIO stock robust long-term visibility as a major player in the global EV market.

The NIO sedan unveil is a huge first step in that direction. As such, it’s a big reason to be bullish on NIO stock.

150 kWh Battery Pack Will Provide Big Competitive Edge

NIO is also expected to unveil a new generation of 150 kWh battery packs at NIO Day. That is arguably just as bullish for NIO stock as the new sedan launch, for two big reasons.

First, it’ll be the best-in-breed battery pack in the market.

The denser the battery pack in an EV, the better the EV. Denser battery packs imply lower costs, longer driving ranges and better driving performance. The gold standard in EVs today is a 100 kWh battery pack. That’s what the Tesla Model S and Model X feature. It’s also what NIO’s cars have. That’s why Tesla and NIO cars consistently outperform all other EVs in terms of performance and range — yet aren’t multiples more expensive than other EVs.

If NIO does unveil a 150 kWh battery pack, it’ll be the first EV maker to do so. That means NIO’s cars will, at least for the interim, have a competitive performance advantage over all EVs, even Tesla EVs. From a timing perspective, that’s important, because it means NIO’s cars will be the best-performing electric vehicles in the first half of 2021, at the exact same time China’s auto market should rebound significantly from the Covid-19 pandemic and demand for electrics should surge.

Second, this new battery pack underscores the relentless innovation happening at NIO.

NIO just unveiled 100 kWh battery packs two months ago. Now, they’re unveiling 150 kWh battery packs. In just two months, NIO has managed to make 50% denser battery packs. That’s impressive. It speaks to the commitment to and speed of innovation at NIO.

Innovation is the fuel of growth. So long as NIO maintains this innovation prowess, the outlook will remain bright for NIO stock.

New & Improved BaaS Model Will Widen Customer Reach

Finally, NIO is also expected to announce a new and improved battery-as-a-service model, which should help widen the company’s customer reach and, ultimately, act as an upward catalyst for NIO’s stock.

For context, one of NIO’s biggest unique features is this BaaS model. Long story short, other EV makers sell entire EVs to consumers, including the car and the battery. NIO offers the option for consumers to buy just the car, and then “rent” batteries through a battery swapping model. In practice, consumer A buys a NIO, drives the NIO until the battery dies, goes into a NIO battery swapping station, and swaps out that old battery for a new battery in about 3 minutes (much more quickly than it would take to actually recharge the old battery).

The advantages, of course, are time and cost. Battery swapping is about 10X faster than battery recharging, and slices about $10,000 off the car purchase price.

To be sure, this BaaS model only works if NIO has a great battery-swapping station infrastructure. On NIO Day, NIO is expected to unveil a new station design which will contain more battery packs and which will build those stations at substantially lower costs, allowing the company to open many more stations at a much faster speed.

That’s a big deal, because 40% of NIO customers in December opted into this BaaS model. Clearly, demand is there. The more battery swapping stations has — and the better those stations are — the better equipped NIO is to capitalize on robust BaaS demand.

Bottom Line on NIO Stock

NIO Day should include multiple meaningful product and business updates which, in sum, should provide a ton of firepower for NIO stock to sustain its recent hot streak.

To that end, I say stick with NIO stock until these catalysts run dry.