The Shanghai based Electric Vehicle manufacturer, NIO (NYSE:NIO) has gained serious popularity on Wallstreet after debuting on the NYSE in late 2018. NIO has delivered 145,000 EV’s to date and is competing with Tesla alongside its domestic competition for leading marketshare in China. The EV innovator has also captured the attention of Wallstreet’s largest investment firms, which maintain a Buy rating on their Nio Stock Forecast. More recently, Citi analyst Jeff Chung boosted Nio’s valuation to $87 a share, implying an upside exceeding 120%.
Despite the above mentioned bullish catalysts, NIO stock has struggled to maintain its 2020 momentum. Nio is trading 22.39% lower year-to-date, as the wider EV market has battled negative investor sentiment. With plenty of questions to be answered, this article will breakdown the Nio Stock Forecast for 2025.
Table of contents
- Electric Vehicle demand in China to grow to 7.84 Million vehicles by 2025
- NIO targets 4,000 Battery Swap Stations by 2025
- Revenue outlook for Nio Stock Forecast 2025
- Can Nio’s ET7 change the game?
- How is NIO combatting the semiconductor crisis?
- Catalysts for the Nio Stock Forecast 2025
- The Bottom Line – NIO Stock Forecast 2025
Electric Vehicle demand in China to grow to 7.84 Million vehicles by 2025
China, alongside North America and Europe are currently leading the charge in transitioning towards EV adoption. The adoption of EV’s in China is already widespread, and Nio aim to dominate this market over the next 5 years. In the third quarter of 2021, NIO delivered a record 24,439 vehicles doubling their previous performance YOY.
Interestingly, earlier this year we saw that NIO had captured a 23% share of China’s All-Electric SUV Market. NIO’s market share was 6% higher than Tesla’s, which highlights NIO’s dominance when it comes to a home ground advantage.
For 2021, Citi analyst Jeff Chung expects NIO to deliver 93,000 vehicles, which would double the companies 2020 delivery numbers. Furthermore, Chung forecasts new energy vehicles sales in China to grow to 7.84 Million units by 2025. The analyst believes this mega-trend in China will accelerate NIO vehicle deliveries not only in 2021, but through 2025 and beyond.
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. This is due to a deficit in charging stations, as charging infrastructure lags across 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 allows for battery swaps with more efficient future battery models, creating a greater customer experience.
The companies BAAS offering hasn’t gone unnoticed on Wallstreet. 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 Forecast 2025
After another strong quarterly performance in Q3, analysts expect NIO to generate $5.62 Billion for the 2021 fiscal year. If NIO can deliver on this forecast, it would represent a YOY growth of 112%. With a large percentage of EV companies still in a pre-revenue phase, Nio alongside its domestic competition have the first mover advantage in China.
In addition, analysts forecast the company to generate $9.59 Billion in 2022. The catalysts for this forecasted revenue growth include NIO’s new ET7 model which is expected to steal market share from Tesla’s Y model in 2022. The ET7 is expected to begin deliveries in the first quarter of 2022.
Can Nio’s ET7 change the game?
NIO expects the ET7 to drive revenue growth in 2022. NIO is expected to deliver an impressive 70,000 ET7 vehicles in its first year. This will bring 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. Research conducted by Canalys suggests that 1.9 million Electric Vehicles will be sold in China in 2021 alone, a year on year growth of 51%.
If we combine this with tumbling Tesla sales in China, we can conclude NIO has an opportunity to capture serious Chinese marketshare over the next 5 years. Nio’s greatest threat will be its onshore competition, competing with the likes of Xpeng and Li Auto.
As for long term forecasts, a Barrons report cites analysts’ estimate that NIO is expected to sell close to 345,000 vehicles in the year 2025, with the ET7 expected to do the heavy lifting in terms of sales.
How is NIO combatting the semiconductor crisis?
The global semiconductor shortage saw NIO’s Hefei factory close for a period of 5 working days in the first quarter of 2021. However, since its initial impacts Chinese EV companies have maintained strong delivery growth in recent months. However, further supply constraints will continue to squeeze the automotive industry. Nio has taken action in recent months by securing renewal of manufacturing contracts.
“Despite the continued supply chain volatilities, our teams and partners are working closely together to secure the supply and production for the fourth quarter of 2021. Meanwhile, we are fully dedicated to accelerating our products and technologies development and bringing the three new products based on NIO Technology Platform 2.0 to users in 2022 to lead the smart EV transformation and adoption,”said William Bin Li, founder, chairman and chief executive officer of NIO in Q3 earnings.
Catalysts for the Nio Stock Forecast 2025
In previous articles, we have discussed the launch of NIO’s Battery-as-a-service (BAAS). This development has enabled for lower initial purchase prices of vehicles, enhanced battery performance and a better user experience. 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 big catalyst in the companies pipeline is the launch of the ET7. According to reports, Nio could begin ET7 reservations as early as January 2022, while deliveries are expected at the later-half of the first quarter. The ET7 was first unveiled on November 19 at NIO House in Shenzhen’s Ping An Financial Center.
The Bottom Line – NIO Stock Forecast 2025
Overall, the bullish forecasts and bolstering Chinese EV market is highlighting positive signs for long term investors. Furthermore, NIO is showing no signs of slowing on their delivery front with the ET7 expected to dominate the market in 2022 and beyond based on analyst forecasts.
However, the current shortage of semi-conductors and an increasing competition in China will continue to challenge NIO stock. Therefore, it is essential for NIO to capitalise on Chinese market share by meeting the high demand for EV’s and beating its domestic competitors Li Auto and Xpeng.
Written by Tyger Fitzpatrick
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The content above is strictly for informational purposes only and is not financial advice nor does it constitute 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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