NIO Weekly Chart
The explosive rise in NIO shares over the past year reflected investor optimism that the Shanghai-based company is in the best position to compete with Tesla in China, the world’s largest electric vehicle market.
New Delivery Record
Vehicle sales in China are on the rise, even though the manufacturer is still not fully profitable and the net loss in the fourth quarter is below analyst’s expectations. Nio delivered 17,353 vehicles in China in the fourth quarter, setting a new quarterly delivery record.
According to Bloomberg, demand for electric cars in the world’s largest car market will continue to increase in the coming years, with consumers adopting cleaner cars and falling prices for electric cars.
Electric car sales could grow by over 50% in 2021, with a standardized network of public electric car charging units in China, a high rate of government support and a return of strong consumer demand, according to a report by research firm Canalys.
Japan-based Mizuho Financial Group launched its review for Nio with a “buy” rating in a study published this month and said they saw “serious upward potential” in the company’s stock:
“NIO is a leader and innovator in the elite electric car segment, and is headquartered in China, the world’s largest and fastest-expanding electric car market. NIO has one important difference from its counterparts: through its distinctive ‘Battery as a Service’ battery swapping module. It offers an elite electric car for a low price. “
Despite analysts’ positive ratings for the stock, the NIO has been under dire selling pressure since the company warned that production could remain limited in the first quarter due to a global chip shortage this month.
According to NIO CEO William Li, while the monthly capacity has increased to 10,000 units, production will remain at 7,500 units “due to supply chain constraints, including the lack of chips”, according to NIO CEO William Li. “While we believe we can manage to meet demand for the second quarter, there is a really high risk.”
The NIO stock looks tempting, following the recent weakness that took up the bulk of the foam created by the unique rally that took place over the past year. The company had a strong start in China and is well positioned to compete with Tesla and other players in this market. For investors looking to enter the electric car market in China, Nio offers a good entry point.