Image credits: NIO
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Analysis

Who is NIO and Why Has Its Stock Price Skyrocketed?

By Alejandro Enríquez | Tue, 10/13/2020 - 17:21

NIO is a Chinese automaker that designs and manufactures premium electric vehicles. The company was founded in 2014 and went public in September 2018. One year later, in October, its shares reached historic lows just to grow year-on-year sixteen-fold in October 2020.

The pandemic had no major effects for NIO. On the contrary, the company has broken its own records in vehicle deliveries, growth and stock price. "In August, we achieved our best-ever monthly performance in both deliveries and orders,” said William Bin Li, Founder, Chairman, and CEO of NIO, in a statement.

The company introduced in 2016 the EP6 model, an electric supercar that raised interest in the brand as a premium EV manufacturer. NIO's portfolio also includes the ES8 and ES6. ES8 was introduced in December 2017 and started deliveries in late June 2018, while ES6 was introduced in December 2018 and began the first deliveries in June 2019. Both are electric SUVs with seven and five seats, respectively. A third model was introduced in December 2019, the EC6, an electric coupé SUV that started deliveries in September 2020. NIO's manufacturing capacity is based on its strategic partnership with Chinese manufacturer JAC.

In 3Q18, when the company went public, only 3,268 deliveries were made. The following year, they increased to 4,799 by 46.84 percent. Last week, NIO reported preliminary 3Q20 results that set a year-on-year increase of 154.3 percent in deliveries with a total of 12,206, breaking its previous record of 10,331 units delivered in 2Q20. As of Sept. 30, 2020, cumulative deliveries of the ES8, ES6 and EC6 reached 58,288 vehicles, of which 26,375 were delivered in 2020.

The World Economic Forum reported in early 2019 that electric vehicles in China are "soaring." The country represents the largest market for electric vehicles. The China Association of Automotive Manufacturers (CAAM) reported 1.25 million new energy vehicles, which also includes plug-in hybrids and plug-in electric vehicles, sold in 2018, while in the US only 361,307 models of that kind were sold. The figure reduced slightly in 2019 to 1.23 million and CAAM estimates that new energy vehicle sales will reduce by 11 percent to around 1.1 million in 2020. In perspective, more electric and hybrid vehiclez will be sold in China than all ICE and electric vehicles are to be sold in the Mexican market alone.

NIO's shares have grown accordingly. When the company first went public, its stock price was set at US$6.63. It reached its lowest on Oct. 28, 2019 at US$1.26 per share. Almost one year later, the stock price is at US$21.85, a 1,634 percent growth.  

Delivering electric vehicles is not the company’s only focus. "We offer comprehensive value-added services and a convenient and innovative suite of charging solutions to our users. These solutions include Power Home, our home charging solution; Power Swap, our innovative battery swapping service; Power Mobile, our mobile charging service through charging trucks and Power Express, our 24-hour on-demand pick-up and drop-off charging service," said the company in a statement.

As a technology pioneer, NIO presented its Battery-as-a-Service business model where the customer purchases the vehicle but subscribes to a battery-pack service separately. As for autonomous vehicles, the company has announced its strategic partnership with Intel's Mobileye to bring Level 4 autonomous vehicles to consumers. "We have further enhanced our balance sheet and optimized our capital structure to be better prepared for the acceleration of our core technology development, autonomous driving in particular, and the global market expansion in the future," said Bin Li.

Photo by:   NIO
Alejandro Enríquez Alejandro Enríquez Journalist and Industry Analyst

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