This is why I am BUYING NIO stock! Is NIO the future of electric vehicles?
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Why I am LONG NIO stock:
For those that don’t know much about NIO, they are an electric vehicle manufacturer based in China.
Many view them as the biggest competitor of Tesla and for good reason.
I’m going to start with possibly the biggest reason that I am bullish on NIO long term.
China has been the world’s largest auto manufacturer since 2009.
China also leads the world in CO2 emissions… They have pledged to achieve carbon neutrality by the year 2060…
Here’s why this is important.
The Chinese government has a stronghold on their economy, and when companies are backed and have mutual interest with the government, they tend to succeed.
According to the International Energy Agency, over the last 10 years, EV sales have risen from 17,000 to 7.2 million… 47% of which were in China!
Not only that, but about a year ago, NIO received a bailout from the Chinese Government exceeding $1B!
The Chinese Government wants NIO to succeed!
The government had restrictions around securing a license plate to limit the number of new vehicles on the road to reduce pollution. However, several local governments have been lifting these restrictions on the purchase of new EVs. This will likely push new drivers to buy NIO electric vehicle rather than a traditional gas powered vehicle.
Apparently the government has an ambitious goal of increasing the market share of EVs to 25% by 2025 from the current 5%. This will push EV manufacturers like NIO to produce cars and produce them fast!
Now, although from a fundamental perspective, NIO lags and is certainly viewed as overvalued… But from a growth perspective and comparing to what we’ve seen with Tesla over the past few years, many people are extremely bullish on NIO stock.
NIO deliveries in Q2, Q3 and Q4 grew YOY at 191%, 154%, and 111% respectively.
On January 9th 2021, we saw some very interesting reveals at NIO Day.
One of the major announcements was a new luxury sedan they plan to produce, the ET7. The car will supposedly get up to 625 miles of range!
An ET7 will cost around $84,000. Additionally, NIO unveiled a higher-capacity battery AND new battery swapping stations, they claim will have a higher capacity, so more cars can have batteries swapped each day. NIO has already completed over 1.5 million battery swaps to date, and this number will likely continue to rise at a drastic rate.
NIO also announced a partnership with Nvidia to continue to develop self driving capabilities. What I like about NIO is how they hide the LIDAR sensor/cameras on top of the car. It looks really good, especially compared to the prototypes of autonomous vehicles produced by Waymo and Uber.
If NIO’s self driving technology proves sufficient, this also presents a major opportunity. China has a major traffic problem… With traffic comes increased automobile accidents. If self driving technology helps reduce traffic and accidents, NIO may be the car of choice for drivers and heavily pushed by the government as well.
NIO will likely need to produce a more affordable sedan model for the general public, similar to that of the Tesla Model 3. When Tesla produced the Model S, it struggled to sell to most consumers, as it was priced as a luxury vehicle. But as soon as the Model 3 was mass produced, Tesla orders and deliveries skyrocketed.
If NIO can produce a more affordable electric vehicle, and can appeal to the general Chinese consumer, they will have a chance to be extremely successful. This is why I am LONG NIO stock right now. I am betting on their ability to do this and sell millions of cars.
What do you all think? Do you think NIO will succeed or fail?
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