Is NIO a good investment?

There is no doubt that China electric vehicle manufacturer NIO is one of the biggest players in the automobile industry at the moment. A proof of this is how it generated over 660million dollars within the 3rd quarter of 2020 despite the pandemic. According to reporters, this represented over 100% increment as compared to revenue generated within the same period of 2019. With electric vehicles expected to become very popular amongst members of the public, there is every reason to believe that NIO is on a path to greatness in the stock market.

Is NIO a good investment for the long term? We will try to give you all the information you need for the best decision you can make.

Why are people investing in NIO stock?

NIO has made lots of headlines in the stock market over the years. The best part is that it seems to be getting better with each year that passes by. This is obvious given how the company’s stocks have skyrocketed by over 1000% in the year 2020 despite the pandemic hitting most companies. Below are some of the obvious reasons for such positive development.

1. Its impressive performance

This is where NIO seems to be leading when compared to other automobile companies. Its overall performances have been nothing short of impressive for both existing and potential stock investors in past years. For instance, its quarterly deliveries of ES6 and ES8 have been recorded to be around 10,331 vehicles in 2020. There has been an increase in quarterly vehicle margin of around 9.7% as compared to 2019. Based on this, its gross margin measures around 8.4%.

There has been a major improvement in performances which stock investors have found to be very encouraging. During the second quarter of 2019, vehicles delivered were about 3,553. However, in the first quarter of 2020, 3,838 have been delivered. You will notice the major difference in overall performance. Nobody wants to invest in the stock of a company that is struggling. NIO is one of the few companies which have managed to give stock investors hope that the future is bright.

2. The rise of electric vehicles

The advent of electric vehicles is also one of the major reasons why investors are choosing to take part in the future of NIO business activities. The rate at which the market for these new cars seems to be rising is quite amazing. For instance, China has probably one of the largest EV (electric vehicles) markets in the world. In the year 2018 according to reporters, these vehicles made up around 4.2% of cars sold in various locations around the country. Compare this statistics with sales of 2017, it is a market that looks really promising as there has been increase of 80%.

With experts predicting that electric vehicles are expected to hit around 10% of global vehicle sales by the year 2025, there is every reason to believe that NIO is well-positioned to dominate the world automobile market for a very long time. It has provided a platform where stock investors can feel much secured.  

As of the month of May 2020, it was reported that electric cars in China were about 1.8million. With this number expected to grow as the years are going by, smart investors are beginning to see reasons why NIO stocks should be explored.

3. Opinions from experts

When it comes to stock market and investors’ decisions, there is no doubting the fact that opinions of analysts and experts can play a crucial role. There are people who listen to the contributions of experts before investing in stock. This has contributed positively to the overall increase in the number of investors for NIO stocks over the years. For instance, when Chinese government decided to subsidize electric vehicles(for around a billion dollars), experts pointed out that such a decision can only make the market become stronger in China. Such an opinion positively influenced the decisions of stock investors to a great extent.

In 2019, it was reported that NIO delivered 31,430 vehicles by October 31. This represented an increase of 111% as compared to the previous year. A performance like this made experts optimistic about the company’s future thereby influencing the decisions of stock investors. Furthermore, there were experts who compared the features of electric vehicles of NIO and those produced by Tesla.

It was eventually discovered that the former company’s (NIO) vehicles had better features and functionalities. This has also contributed to the way people have invested in its stock since there is hope that demand for such vehicles will increase. Finally, it is also worthy of note to point out that experts have predicted the stock price to reach $100 by the year 2025. This sounds encouraging to investors.

Future plans of NIO

NIO has proven to be one of the few companies with clearly defined mission and vision. It is not just a powerhouse in China but has plans of becoming a global brand. Below are some of the reasons which demonstrate its global dominance. 

1. Expansion to Europe

There are currently plans to expand its business activities across Europe. For instance, it has plans of delivering cars to Europe within the first half of 2021. This is a major step and it is expected to compete favorably with other top automobile brands like Hyundai, Ford, Chrysler, Toyota, Volkswagen, and many others.

There are experts who have explained that many companies may go extinct given the rise of electric vehicles. From the above explanations and statistics, it is obvious that NIO is fully prepared to embrace this new technology.

2. Increased production capacity

Investors are always happy when a company has a very bright prospect. This is one of the reasons why analysts are making positive predictions about the future of NIO. The company’s vision to dominate the global automobile industry by 2025 has been demonstrated in its plans to increase production capacity. This is in a bid to meet increased demand from potential end-users of electric vehicles.

Its CEO, William Li explained during an interview about how the company plans to produce 150,000 units of cars in 2021. The long term goal is to ensure that production capacity is doubled at the end of every year. This is quite ambitious for a company that delivered about 43,728 vehicles in 2020. 

3. Innovation

In this present world where technology seems to be advancing at such an incredible pace, innovation is what keeps a company going. NIO remains relevant in the automobile industry today due to its high level of innovation. It is not just a force to be reckoned with when it comes to electric vehicles. Also, its creativity seems to know no bounds at the moment.

For instance, at the start of 2021, there were reports claiming the company just launched its Sedan. This doesn’t just come with a battery pack of 150kwh but has been built with some of the most latest technologies on autonomous driving. One of its core features is the impressive swap stations. This electric vehicle is a sign that NIO is fully ready to compete with Tesla, one of the biggest automobile companies in the world.

NIO stock analysis

Just as said above, the value of NIO stock seems to be waxing stronger in terms of performances amongst others. The company has experienced an incredible growth rate since starting operations in 2014. With the future of the automobile industry looking very bright, there is every reason for its stock investors to be optimistic. For instance, electric vehicles are expected to become the next “big thing” in the industry according to experts. In other words, they have been predicted to replace petrol-driven cars all over the world by 2040. Being one of the leading manufacturers of EVs, NIO is expected to play a major role in such an automobile revolution.

According to reports released in the early parts of 2021, China has about 360million vehicles. Out of this number, there are over 280million cars. In the same vein, Europe vehicle owners are about 321million. These are typical examples of huge markets for electric vehicles in the future. They are the reasons why the stock of NIO is expected to be valued at $100 a few years from now as compared to the 61.95 it is currently valued at. Experts are predicting that by the end of 2030, 50% of vehicle owners in China and Europe will start using electric vehicles.

So is NIO a good investment?

Based on the above analysis, it is very obvious that NIO stock is a profitable and safe investment option to explore. They are a typical reflection of good management, tactful market analysis, and innovation at its very best. As an investor, you need to start considering how to take advantage of what this great automobile company has got to offer stock investors at the moment. 

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