Electric vehicle (EV) news has been dominating headlines for the past few weeks. Between President Joe Biden’s new EV executive order, EV sales surging in China and NIO’s (NYSE:NIO) latest earnings announcements, there is quite a lot to talk about right now. So, let’s dive right in.
President Biden said last week that he plans to slash greenhouse gas emissions by mandating that half of all new vehicles sold in 2030 be electric. Several major automakers, like General Motors (NYSE:GM), Ford (NYSE:F) and Chrysler parent company, Stellantis (NYSE:STLA), are backing Biden’s move.
The Biden administration also proposed new vehicle standards that would cut pollution through 2026, starting with a 10% stringency increase in the 2023 model year. The standards cover battery electric, fuel cell and plug-in hybrid vehicles that also have a gasoline engine.
Meanwhile, EV sales in China surged in July. Wholesale deliveries of new energy vehicles sky-rocketed 164% year-over-year to 271,000 units, according to the China Association of Automobiles. This means electric cars accounted for 10% of total auto sales in China from January to July this year.
Interestingly, Tesla (NASDAQ:TSLA) seems to be falling behind the pack in both the U.S. and China. Tesla was left out of EV talks by the Biden Administration and only sold 8,621 cars in China last month, according to the China Passenger Car Association (CPCA). This is possibly due to negative press in China, ranging from quality concerns to worries over theories about privacy breaches from on-board cameras circling in the Chinese media.
Nio also released its most-recent earnings results on Thursday. The Chinese electric vehicle manufacturer reported an adjusted earnings per ADS loss of 3 cents, which is up from an earnings per ADS loss of 18 cents in the second quarter of 2020. The analyst community was expecting an earnings per share loss of 11 cents, so NIO crushed expectations.
Nio boasts that it is the “next-generation car company,” as it designs and manufactures electric vehicles that utilize the latest technologies in connectivity, autonomous driving and artificial intelligence. The company currently offers an electric seven-seater SUV (ES8) and a five-seater electric SUV (ES6), and recently introduced an attractive electric sedan (ET7). Its vehicles utilize NOMI, an in-vehicle artificial intelligence assistant.
With its efforts for a new mass-market brand, NIO, Inc. is aligning its business to better compete with rivals Volkswagen AG (OTCMKTS:VWAGY) and Tesla. Company management stated, “We want to provide better product and service at prices lower than Tesla.” NIO is even planning to introduce three new car models in 2022, which includes its first sedan.
Even without these new models, NIO revealed that it’s experienced strong demand for its electric vehicles, as it delivered 21,879 in the second quarter. That represented a 111.9% year-over-year increase. Total vehicle sales soared 127% year-over-year to 7.91 billion RMB, while total second-quarter revenue rose 127.2% year-over-year to 8.45 billion RMB. In U.S. dollar terms, NIO achieved total revenue of $1.31 billion in vehicle sales, topping estimates for $1.28 billion.
Looking forward to the third quarter, NIO expects to deliver between 23,000 and 25,000 vehicles, or an 88.4% to 104.8% year-over-year increase. Total third-quarter revenue is expected to grow between 96.9% and 112.8%, or $1.38 billion to $1.49 billion.
Despite the strong results, the stock pulled back, but I look for it to bounce back after a little consolidation. Personally, I expect NIO to be one of the electric vehicle winners, as the company was bailed out by the Chinese government last year. The Chinese government injected $1 billion and now has a 24% ownership in the company.
As I mentioned earlier, China wants to dominate at least five major industries by 2025, and NIO is now its ticket to dominate EV manufacturing. With the backing of the Chinese government, some Wall Street firms are now eager to help NIO by issuing new debt or equity. So I wouldn’t be surprised if NIO surpasses Tesla in the upcoming years.
In fact, there are several other stocks on my Growth Investor Buy Lists that are perfectly positioned to benefit from the EV boom. It’s also filled with fundamentally superior stocks in several of the most explosive sectors of the economy, like internet technology, semiconductors, artificial intelligence (AI) and healthcare. So, my Growth Investor Buy List represents the crème de la crème of growth stocks with strong sales and earnings.
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The Editor (Louis Navellier) hereby discloses that as of the date of this email, the Editor (Louis Navellier), directly or indirectly, owns the following securities that are the subject of the commentary, analysis, opinions, advice, or recommendations in, or which are otherwise mentioned in, the essay set forth below:
Nio, Inc. (NIO)
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