The Chinese EV manufacturer NIO (NYSE:NIO) has gained serious popularity on Wallstreet after debuting on the NYSE in late 2018. NIO’s success in delivering over 125,000 EV’s to date has driven the share price up 223.92% over the past year.
The EV innovator has also captured the attention of Wallstreet’s largest investment firms. Across the board of Wallstreet analysts, NIO maintains an average Buy rating. In particular, Morgan Stanley analyst Tim Hsiao set a street high target of $80 earlier this year -suggesting an upside of 77%.
With investor interest at a peak, this article will explore the NIO stock forecast for 2025.
EV demand in China to grow to 7.84 Million vehicles by 2025
One bullish aspect of NIO stock, is the companies strong delivery growth in China. In the first quarter of 2021, NIO delivered a record 21,896 vehicles representing a 111% YOY growth.
Interestingly, NIO captured a 23% share of China’s All-Electric SUV Market in April. NIO’s market share was 6% higher than Tesla’s market share, which currently sits at 17%.
In addition, NIO has seen a recent spike in demand for the ES8 model. In July, sales for the ES8 spiked by 13.8% month-on-month (MoM).
For the remainder of 2021, Citi analyst Jeff Chung expects NIO to deliver 93,000 vehicles. Furthermore, Chung estimates new energy vehicles sales in China to grow to 7.84 Million units. Chung believes this mega-trend in China will accelerate NIO vehicle deliveries over the next 5 years.
According to a Barrons report, analysts’ estimate that NIO is expected to sell close to 345,000 vehicles in the year 2025.
NIO targets 4,000 Battery Swap Stations by 2025
A battery swap station allows the user to quickly swap out their car battery for a fresh one rather than waiting for it to re-charge. Range anxiety, is a challenge EV manufacturers are currently facing as there is currently a deficit in charging stations across the globe.
NIO has currently built 300 battery swap stations in China and is looking to add an additional 3,700 stations. Of the 4,000 stations, NIO aims to build 1,000 outside China by 2025, extending NIO’s reach across the globe.
NIO’s battery as a service or BAAS provides flexibility to the emerging EV market, allowing customers to purchase NIO vehicles at a lower price while leasing the battery. This means batteries can be swapped with more efficient future battery models.
Morgan Stanley analyst Tim Hsiao noted that the BAAS will reduce the cost for the end-user “will see NIO’s incremental vehicle sales increase by 10-36% between 2021-2030”.
Revenue outlook for NIO stock
Firstly, across the board of analysts the average revenue forecast for 2021 expects the company to generate $5.41 Billion. This represents revenue growth of 112% year on year (YOY) from 2020.
Furthermore, analysts expect the company to generate $8.91 Billion in 2022. The catalysts for this revenue growth over the next 2 years include NIO’s new ET7 model which is expected to steal market share from Tesla’s Y model. The ET7 is expected to begin deliveries in the first quarter of 2022.
NIO is expected to deliver 70,000 ET7 units in 2022, bringing the company’s total deliveries to 170,000 units for the year according to China International Capital Corporation (CICC), China’s largest investment bank.
In addition, the fast growing demand for EV’s in China is also attributing to a positive revenue outlook. Analysts at Canalys forecast 1.9 million EVs will be sold in China in 2021. If we combine this with tumbling Tesla sales in China, we can conclude NIO has an opportunity to capture serious Chinese marketshare in 2021/22.
How is NIO combatting the semiconductor crisis risk to deliveries?
The global semiconductor shortage saw NIO’s Hefei factory close for a period of 5 working days in the first quarter of 2021. Although deliveries are currently still strong, investors should be cautious of the shortage and its potential impact on NIO’s financial growth.
It is worth noting the shortage is effecting companies across the entire Electric Vehicle and Technology sector. In saying this, investors are encouraged by the recent agreement renewal with NIO’s key manufacturers which will ramp up production in 2021.
“While the global supply chain still faces uncertainties, we have been working closely with our partners to improve the overall supply chain production capacity. Encouraged by the growing user demand, we remain committed to further expanding our power network, increasing our service and sales coverage, and more importantly, accelerating our product and technology development.”said William Bin Li, founder, chairman and chief executive officer of NIO in Q2 earnings.
What’s in the pipeline for NIO stock moving forward? – NIO stock forecast
In previous articled we have discussed the launch of NIO’s Battery-as-a-service and the 100kWh battery pack with proprietary thermal management and significant performance enhancement. These developments have enabled for lower initial purchase prices of vehicles and enhanced battery performance. Morgan Stanley analyst Tim Hsiao argues, reducing the cost for the end-user “will see NIO’s incremental vehicle sales increase by 10-36% between 2021-2030”.
Hsiao further noted that if NIO can ensure they are the BaaS leaders, then the company could set the industry standards. Ultimately bolstering NIO’s brand and market share in 2021, and beyond.
The Bottom Line – NIO stock forecast 2025
Overall, the bullish revenue forecasts and bolstering Chinese EV market is highlighting positive signs for long term investors. Furthermore, NIO is showing no signs of slowing with the ET7 expected to dominate the market in 2022 based on analyst forecasts.
However, the current shortage of semi-conductors and an increasing competition in China will continue to impact NIO stock. Therefore, it is essential that NIO can capitalise on Chinese market share by meeting the high demand for EV’s.
Written by Tyger Fitzpatrick – For full disclosure to our viewers, the author of this article has a long term position in the stock. The purpose of this article is for information purposes only and aims to encapsulate both the bullish and bearish arguments for transparency.
The information above is not financial advice and does not constitute as a recommendation. Youth Investment Group has no liability for personal financial interests or investment decisions. You should make your own investment decisions based upon your own research and what you believe is best for you.
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