Can Nio Stock Profit From Nikola's Troubles?

[9/30/2020] Can Nikola’s Troubles Benefit Nio Stock 

Shares of Chinese premium electric vehicle (EV) company Nio (NYSE:NIO) jumped by over 15% over the last two trading days, driven partly by a positive report from Deutsche Bank, which raised revenue and earnings forecasts and expressed optimism surrounding the company’s technology and brand recognition in China. Apart from this, there could be another factor driving the interest in Nio stock.

Electric vehicle stocks have been in high demand this year, but there are few viable ways to play the space. EV bellwether Tesla (NASDAQ:TSLA) looks good but is richly valued, with its stock rising almost 5x year-to-date with a market cap of roughly $400 billion. On the other hand electric truck startup, Nikola, has come under fire for misleading investors about its technology and capabilities and is now the subject of investigations by the U.S. Department of Justice and the SEC. Investors could stay on the sidelines until the company delivers a product. Nio, which trades at a relatively reasonable 7.5x consensus 2021 revenues, is looking like a decent pick for investors who want to play the EV space without overpaying or betting on unproven companies. Nio’s Revenue is likely to grow by over 90% in 2020 and by about 70% in 2021, per consensus data.

Want exposure to the growing electric vehicle market, without having to bet on individual brands? Check out our indicative theme of Electric Vehicle Component Suppliers which includes names such as Amphenol Corporation (APH), TE Connectivity (TEL), BorgWarner (BWA), and others.

[8/26/2020] Nio Stock Continues To Surge Ahead

The stock price for Nio (NYSE: NIO), a Chinese premium electric vehicle (EV) start-up, continues to surge rising by 19% on Tuesday. The stock is up by about 50% over the last month alone. The recent gains are driven by a couple of factors. Firstly, UBS analysts upgraded the stock, raising their price target dramatically from around $1 per share to $16. Secondly, the company also indicated that it intends to enter new markets, beginning with Europe, starting from the second half of 2021. Nio also launched a new “battery as a service” offering, which reduces the upfront cost of a vehicle by selling the EV without a battery and making users pay for batteries monthly (roughly $140 per month), much like they would for gasoline on an internal combustion engine car. Users can swap out depleted batteries for fully charged ones within a few minutes, across 143 battery swap stations in 64 cities in China.

Nio stock is up over 4.5x this year. How does its valuation compare with other EV makers? Is it overvalued? Now Nio’s $21 billion market cap implies that it is trading at about 6x consensus 2021 revenues of about $3.6 billion. In comparison, Tesla (NASDAQ:TSLA) is valued at $375 billion, or about 7x consensus 2021 revenue of about $41 billion, while Nikola (NASDAQ:NKLA), an electric truck startup is valued at $15 billion despite the fact that it has yet to start commercial production. Looking at the relative valuation, Nio seems fairly priced considering its stronger near-term growth prospects.

Is Nio stock a better investment than EV bellwether Tesla? Find out more in our dashboard analysis How Does Nio Compare With Tesla?

[7/27/2020] Some Recent Updates On Nio Stock

Chinese premium electric vehicle (EV) start-up Nio has seen its stock rally by about 50% in July, driven by strong Q2 delivery figures and a general increase in demand for stocks of EV companies. Below, we take a look at some of the recent developments for NIO.

In early July, NIO published its second-quarter delivery report, indicating that it delivered 10,331 vehicles, marking an increase of 191% year-over-year and about 169% sequentially. The company has benefited from pent-up demand post the Covid-19 related lockdowns, and its total deliveries for the first half of the year now stand at 14,169 cars.

Last week, the company provided more details on its EC6 crossover SUV, noting that it would be priced at RMB 368,000 (about $53,000) before subsidies. The vehicle, which is a coupe-style version of the ES6 mid-sized SUV, will start deliveries this September. However, it will be interesting to see how it fares when Tesla launches the Model Y compact SUV in China in early 2021. While pricing for the made in China Model Y isn’t known yet, we think it’s likely that it will undercut the EC6. For instance, the Model 3 sedan sells for about $41,000 before subsidies in China and the Model Y in the U.S. costs about $4,000 more than the Model 3, indicating that a price of under $50,000 for the base model is quite likely.

Nio also secured credit lines with six Chinese banks for a total of RMB 10.4 billion (about $1.5 billion) this month. This is a very positive development for the company, considering that it began 2020 with a precariously low cash position. Since then, the company raised over $ 1 billion from Chinese government agencies while also seeing some capital infusion from early investor Tencent Holdings. With the new credit lines, the company should have adequate liquidity to execute on its plans and launch new models.

Is Nio stock a better investment than EV bellwether Tesla? Find out more in our dashboard analysis How Does Nio Compare With Tesla?

[6/23/2020] A Look At Nios Business Model & How It Makes Money

Nio, a Chinese automobile company that designs and manufactures premium electric vehicles, has seen its stock almost double year-to-date. Nio’s Revenues have grown from around $720 million in 2018 to about $1.12 billion in 2019, as its vehicle deliveries grew from around 11,300 units to about 20,600 units. Sales are expected to grow by 65%, driven by strong sales of the company’s ES6 5-seater electric SUV and the launch of the smaller EC6 SUV, which is expected to commence deliveries later this year. In our interactive dashboard Nio Revenues: How Does Nio Make Money? we discuss Nio’s business model, followed by sections that review past performance and 2020 and 2021 expectations for the company’s revenue drivers, and competitive comparisons with Tesla. The key elements of this analysis are discussed below.

Nio reported about $1.12 billion in Total Revenues for full-year 2019. This includes 2 operating segments:

  • Automotive: $1.06 billion in 2019 (94% of Total Revenues). Sells the company’s electric vehicles, which currently include the Nio ES 8, which is a premium SUV available in six or seven-seater configurations and Nio ES 6, a five-seater SUV.
  • Other: $66 million in 2019 (6% of Total Revenues). This segment includes revenues from the company’s service packages for its EVs and its energy solutions that include charging and battery swapping.

Nio’s Automotive Segment

  • Sales from the Automotive segment have increased by 50% from $706 million in 2018, the year the company launched its vehicles, to  $1.06 billion in 2019.
  • This was primarily driven by higher deliveries, which rose from 11.3k in 2018 to about 20.6k in 2019. However, the average price declined from $62k to about $52k, driven by a higher mix of ES6 SUVs, which have a lower price point compared to the flagship ES8 SUV.
  • We expect revenue to grow to $1.78 billion in 2020, as deliveries grow by over 70% to 35k units, driven by higher uptake of the ES6 and the launch of the more compact EC6, with the revenue growing further to $2.75 billion in 2021.
  • The Chinese automotive market has recovered well following the Covid-19 related disruption earlier this year, and Nio indicated that it saw a monthly delivery record of 3,436 vehicles in May 2020.
  • Additional details about how key drivers of Nio’s Automotive Revenues have changed over the years and are likely to trend going forward are available in our interactive dashboard.

Nio’s Other Segment

  • Other sales have grown from $14.4 million in 2018 to $66 million in 2019 and we expect the metric to grow to $105 million in 2020 and $152 million in 2021, driven by a higher base of vehicles on the road, which should boost demand for service packages and energy sales.

See all Trefis Price Estimates and Download Trefis Data here

What’s behind Trefis? See How It’s Powering New Collaboration and What-Ifs For CFOs and Finance Teams | Product, R&D, and Marketing Teams

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story


Other Topics

US Markets Investing

Latest Markets Videos


    Trefis is an interactive financial community structured around trends, forecasts and insights related to some of the most popular stocks in the US. Whereas most finance sites simply give you the facts about where a stock has been and what a company has done in the past, Trefis focuses entirely on the future.

    Learn More