Nio Stock : The majority of electronic vehicles (EV) stocks retreated sharply in 2022. The threat of recessions impacted the markets and investors worried about the near-to medium-term outlook of growth businesses.
Nio (NIO -1.24 percent) stock is no different. The stock is down more than 60% in 2022. Do you think the dramatic fall is a sign of real concerns about the company or is it a buying opportunity?
Consistent growth in deliveries
Nio that began manufacturing its EVs in June of 2018, has been increasing its production regularly. The company based in China has delivered 273,741 electric vehicles to date. The company in November of 2022 shipped 14,178 electric cars, which was a 30% increase over the previous year.
This chart shows steady growth in the number of electric vehicles delivered by Nio since the year 2018. The fourth quarter of the year of 2018, Nio anticipates delivering between 43,000 to 48,000 vehicles. Therefore, the stock’s sharp decline this year isn’t justified.
Alongside the larger macroeconomic concerns related to the slowdown and increasing rates, a third reason that impacted Nio stock was China’s strict COVID-19 regulations. News about a relaxation of its zero-COVID rules led to Chinese stocks up.
Additionally the conflict between Ukraine and Russia has added more stress to the already stretched supply chain. Supply chain problems have harmed EV stocks considerably. The rising cost of batteries affected Nio’s profit margins in its third quarter.
Even though there are industry and market-related challenges, Nio is working hard to control these well. Nio has been improving on several areas.
The footprints are growing in Europe
Alongside being a part of the China market Nio expands its reach in Europe. European market. Nio has entered its entry into Norwegian market on September 20, 2021. In October 2022, the company launched its celebration, Nio Berlin, where it presented details of its products that are available for European markets, which included Germany as well as Sweden, Germany Netherlands, Denmark, and Sweden.
To establish its presence to expand its presence in Europe In order to establish its presence in Europe, the company plans to introduce three new models for Europe. European market. Its ET7, EL7, and ET5 launch received plenty of interest. ET7 deliveries have been underway, and delivery of EL7 as well as ET5 are expected to begin in January 2023.
Nio plans to construct 120 battery swap stations across Europe at 2023’s end. Nio has also created an R&D unit in Berlin. The company plans to build more Nio homes and facilities across the next 10 European cities within the near future.
While European automakers are leaders in the traditional vehicle segment — and that’s not just in Europe however in a number of countries around the world as wellNio is a leader in the traditional vehicle market. Nio is a great potential in the upcoming electric vehicle segment. Nio has developed an unique subscription model that is ideal that is geared towards Europe that has terms ranging of one month up to 60 months, in order to get into this important market.
Alongside EVs, Nio is also launching new businesses that are important to the company. These directly connected with its EV business include the production of chipsets and batteries on its own. It will also guarantee an uninterrupted supply, but will can also boost profits. Nio will also be entering the mobile phone business.
As these businesses grow, they will contribute to the company’s expansion. Additionally, the company could benefit from its existing R&D investment as well as the supply chain throughout all of its operations.
But there are substantial initial capital investment needed to create these. In the third quarter’s call, William Li, Nio’s CEO, said that the investment in these new ventures would be between three billion RMB to 4 billion RMB by 2023. In addition when Nio intends to increase its operations in Europe as well, its marketing and promotional activities will also grow, which will also increase marketing expenses.