It's been a great couple of days for Nio (NYSE:NIO) as one of the biggest names in the electric vehicle market—particularly the Chinese electric vehicle market—made some impressive news available. Investors were over the moon, and responded accordingly, giving Nio shares hefty gains. Some of the news, though, would prove a mite disturbing, though not so much so as to dampen shareholders' spirits.
Exciting News Proves a Big Draw
Easily the biggest thing to hit Nio in the last 48 hours or so is the rollout of the ET7 sedan. Said sedan puts Nio on a fairly even footing with Tesla (NASDAQ:TSLA), and allows it to better compete on the same stages where Tesla is already seen.
The ET7 sedan comes with two options for batteries, including a 70 kWh battery and a 100 kWh battery. The 70 kWh version will allow a Nio car to travel 311 miles between charges, while the 100 kWh option will open up 435 miles. The company also expects, by late next year, to bring out a 150 kWh option that will offer up 620 miles on a single charge.
Good news, and it got even better. The same event that featured the ET7's unveiling also included a look at an upgraded autopilot system, as well as the second version of its “battery-swap” station, an unusual look at the concept of electric car recharging. Rather than recharge a battery, drivers will simply be able to pull out the old battery, place it in a charging station, and replace the expended battery with a fresh one.
The news, however, wasn't all good. Some of it was downright confusing. The word from the company's chief executive, William Li, made it pretty clear that Nio cars would not be sold under the Nio brand name when they went into wider release. Li noted that it was entirely possible that Nio could enter the “massive market,” but likewise noted “definitely not with Nio brand.”
Additionally, the price on the ET7 was also revealed, and before government subsidies kick in, a Nio—or whatever it will ultimately be called—will set car shoppers back 448,000 yuan for starters. That's about $69,105.93 US, as of this writing. By way of comparison, Tesla's Model Y SUV just started selling in China 10 days ago, and starts at 339,900 yuan, or about $52,431.05 US.
Still a Winner With Analysts
Our latest research, meanwhile, is shrugging off the whole name and price issue with both verve and elan. Not only is it currently rated a “buy” by the broader analyst community, it's been that way for the last six months, and has only been climbing since. The consensus six months ago was comprised of one “sell” rating, five “hold” and one “buy.” Today, it's one “sell”, four “hold” and seven “buy.” That's reduced the pool of “hold” positions by one, and increased “buy” by six.
Moreover, the price target has also been climbing, but not at a rate to match the actual price. Six months ago, Nio came in at $4.06, which meant a 1.75% downside. Three months later, it was at $14 even, which was a 10.14% upside. Today, it's sitting at $33.14, which is right around half of Nio's current share price. Earlier today, JPMorgan Chase & Co. upgraded its price target on Nio, going from $50 per share to a much closer to current pricing level of $75.
Big News, Unsettling Possibilities
The news for Nio is mostly good, which is reflected in its share prices. It's got new models coming out, it's keeping close to what its potential customers likely want most, it's rolling out new technologies that will make its current releases all the better. Autopilot systems on cars have been a thrilling development for years, and are right up there with the whole notion of a flying car in the “where is it??” stakes.
What's most unsettling, though, is the idea that Nio would change its brand name when going into wide release. There aren't many good reasons to change a brand name; a lot of time, effort and resources goes into building brand awareness. Nio doesn't have a problem with its current name that anyone knows of, so why make the change? There are good reasons, certainly—especially if a brand name in one country turns out to be unexpectedly close to another in another country—but which of those actually applies to Nio isn't immediately clear.
Still, what we know about Nio so far suggests that there's plenty of value in this company, and by extension in the stock. It's going to be a big force in the electric vehicle market no matter what its name ultimately becomes, so getting in on the company may prove to be a sound bet.
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I’ll start with a disclaimer. You won’t see Tesla (NASDAQ:TSLA) or Nio (NYSE:NIO) on this list. And that’s not because I’m being contrarian. I just view Tesla and Nio as the known quantities in the electric vehicle sector. The goal of this presentation is to help you identify stocks that may be flying under your radar.
Many EV stocks went public in 2020 via a special purpose acquisition company (SPAC). There is both good and bad to that story. The good is that investors have many options for investing in the EV sector. Many of the companies that have entered the market are attempting to carve out a specific niche.
The potentially bad news is that these stocks are very speculative in nature. Whereas companies like Tesla and Nio have a proven (albeit recent) track record, there are things like revenue and orders that investors can analyze. With many of these newly public companies, investors are being asked to buy the story more than the stock and that is always risky.
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