Nio inc. (NIO) the Chinese Tesla?
Smartrick's Deep Dive into one of the EV Market's new favorite plays
Introduction
Chinese luxury electric car company Nio (NYSE: NIO) has recently become a major topic in the American stock market recently seeing over a 100% increase in price since June 1st. The electric vehicle market has become one of the hottest sectors in the market as of late. I will attempt to highlight everything you need to know about Nio.
This deep dive will include the following:
Company summary
Financials history
Technicals
Trading history
Competition
Timeline
Potential catalysts and theories
Analyst reports and trader’s sentiments
Nio Summary
Nio, Inc. designs, manufactures and sells smart and connected electric vehicles. It manufactures autonomous driving electric vehicles integrated with next generation technologies and artificial intelligence. It manufactures ES8, which is a seven-seater all aluminum alloy body electric sports utility vehicle (SUV). It is equipped with e-propulsion system which is capable of accelerating from zero to 100 km per hour in 4.4 seconds and delivering a New European Driving Cycle driving range of up to 355 Kilometers (km) and a maximum range of up to 500 km in a single charge. It is also focused on providing vehicle charging solutions, which include Power Home, Power Swap, Power Mobile and Power Express service. It also offers various value-added services to its users, such as statutory and third-party liability insurance and car damage insurance through third-party insurers, repair and routine maintenance services, courtesy car during lengthy repairs and maintenance and roadside assistance.
Technical Analysis
Things to watch
After establishing an all time high of $16.44 on July 13th Nio has been on downturn sliding 30% in 5 days. Possible factors leading to this recent downturn could be attested to the US’s deteriorating trade relationship with China many traders fear a potential delisting of Chinese stocks. (interesting read on topic via Politico)
Moving Averages
Trading History
Timeline
Summary
Nio was formed in 2014 and produces 3 models in a sports car, sedan, and SUV. Nio targets the premium EV customers with the luxurious appearance. Nio has seen a lot of capital flown there way via institutional investors and shares. Nio rewarded those investors delivering higher and high sales totals than expected. Still very young in its life Nio has been making some headlines as of late. (check out link to interactive timeline with sources will continue to update.
Click here to view interactive chart with sources
Competition
Overview
China Maintains the number 1 selling EV market globally, with the government leading the charge in pushing more and more green initiatives. China even extended their China extends NEV subsidies until 2022 continuing to invest more into NEV market. China houses some of the most prominent NEV companies on the globe who are trying to compete with the USA’s Tesla. Newcomers like Li Auto, Byton, and Xpang should have American investors attention as the NEV market only has room to grow as more and more countries are adopting green initiatives.
Tesla - TSLA
The US EV juggernaut maintains a heavy presences in China, Tesla’s Model 3 YTD is the number #1 selling EV in China. Musk and Tesla have seen great success in marketing their premium line of EV’s to its Chinese customers and even has an assembly plant in Shanghai. Tesla plans to expand its lineup in China by offering a locally built Model 3 sedan with a longer driving range with plans of expanding its battery capabilities with the more cost effective Lithium iron phosphate battery. (LFP) This would allow Tesla a better price point to compete with some of the lower cost EV’s currently selling in the Chinese Market . Tesla also announced its plan to produce its new Model Y crossover from its Gigafactory in Shanghai.
Other Tesla news: (OPINION)
Tesla announced a second gigafactory and initial reports rumored China as the destination Elon Musk stated they were looking into India as the next location. With China- India relationship in poor condition. Could this be a move by Tesla to start moving away from Chinese sales? Or are is Tesla broadening their global impact? All questions to think about…
Another thing to think about is Chinese Government’s position in Nio, China doesn’t have the same patient laws and American copyrights are not always safe from Chinese manufacturers. ***In my opinion*** President Xi probably isn’t fond of the love Tesla receives in China.
Elon Musk’s image isn’t good for business in China, so maybe this is China using their money to promote a copycat Tesla to rival them in the coming years. NEV’s like Nio, Byton, and Xpang are all emerging companies in past few years out of China. They will be fun to watch and I will continue to update more info as it comes out.
BYD Company - OTC:BYDDF
This Warren Buffett backed Chinese company founded in 1995 by Wang Chuanfu a Chinese chemist this billionaire businessman founded BYD company at the age of 29. BYD maintains one of the largest rechargeable battery manufacturing capabilities in the world primarily in the cell phone industry.
Since its inception BYD Co Ltd. has seen major expansion into many other electronic markets to include automobiles, lift trucks, and various cell phone components through its many subsidiaries. BYD reported $2.81 billion usd (19.6 billion Yuan) in the first quarter of 2020 a decrease of 30% in comparison to 2019’s corresponding period. This is most likely due to Covid-19’s effects on the global economy. Experts expect BYD’s sales to correct itself as we move forward out of the pandemic with many of BYD’s factories now reopened working at full capacity.
BYD Automobile Co. Ltd
In 2002 BYD acquired Tsinchuan Automobile Co Ltd. expanding BYD into the automotive industry birthing BYD Automobile co. Ltd. Since 2015, BYD has led global sales developing their New Energy vehicles (NEV) products that include cars, commercial vehicles and rail transit.
BYD Co. LTD primarily focuses on its sales of NEV buses and has extended their capabilities globally. Earlier this year, Los Angeles Mayor announced an order of 155 \ electric buses in which 134 of them will come BYD. The 30’ buses will be assembled at the companies Lancaster, California plant which opened in 2013. LA is planning to convert its entire public bus fleet to an emissions-free system by 2028 before it hosts the 2028 Summer Olympics. (See Report)
Other links and Noteable News
Shanghai Auto (SAIC) - 600104 SHA
SAIC Motor is currently the largest auto group in China, the main business of which consists of Vehicles, Components, Mobility and Service, Auto Finance and Global Operation. The Group went public in 2011 on the Shanghai Stock Exchange (SHA). Currently SAIC Motor ranks 39th among Fortune Global 500 and is apart of the “Big 4” state-owned Chinese automakers (along with Changan Automobile, FAW Group, and Dongfeng Motor Corporation). SAIC is responsible for multiple Chinese Auto brands to include Roewe, MG, and Marvel. (View Company Listing)
In addition to SAIC’s internal brand SAIC maintains joint partnerships with many global automakers to include Volkswagen, GM, Mercedes Benz, and Volvo.
Leading the way in AI and NEV in China
In 2017 SAIC unveiled 7 new NEV models to the New Energy Vehicles Achievement Exhibition held in Beijing. At the time SAIC Motor was the only enterprise in China producing vehicles with plug-in hybrid, pure electric and fuel cell at the same time. It has launched 12 passenger and commercial vehicles run by new energy. The seven vehicle models at the fair were NEVs of advanced technologies and preeminent safety performance, demonstrating SAIC Motor’s proposal for a green lifestyle. (See Company Press Release)
SAIC is also a pioneer in AI technology as it was the first Chinese company to build an auto industry dedicated to AI development. In 2019, SAIC Motors in a joint efforts with China Mobile, Huawei and Shanghai International Automobile City debut its 5G self driving. (Report)
Other Links and Notable News
XPENG
Xpeng Motor founded back 2014, is considered the new kid on the block in terms of premium line EV’s in China. Xpeng is backed by super conglomerate Alibaba (NYSE BABA), Xiaomi and many others. Xpeng is very early in its production and is still raising capital. It currently sells two different models in the G3 e-SUV and P7 which is manufactures in its 3000 acre industrial park in Zhaoqing which it launched earlier this summer. Xpeng has announced their intentions to IPO in the US market with no date currently set however this company looks very promising going forward.
Others to watch
GAC Motors (GAC )- OTCPK:GELYF
Byton (Concept)
Potential Catalyst & Smartrick’s theories
Disclaimer: These are my own opinions and are meant to start self a conversation of possible scenarios primarily risks . I’m not claiming any of these events will happen.
I will group them in to Bullish and Bearish lists consisting of a positive event such as beating earnings to look for as a bullish sentiment or bearish sentiment. Some of these may be obvious some of them may seemed far fetched.
Bullish:
Beat Sales expectation
Merger or Acquisition
New Technology such as AI
New Model
Elimination of debt
Expansion of current manufacturing facilities
Opening sales into other countries
New institutional buyers
Bearish
More Public offerings
Sales slump
Other Chinese companies entering American Stock market
Balance sheet doesn’t improve
Insider selling
Institutional selling
Analyst’s Reports and Trader’s Sentiment
Nio is a relatively young company and most Market Research teams like MarketEdge or The Street do not track Nio. However I will include as much outside sentiment on nio as I can.