The Shanghai based Electric Vehicle manufacturer NIO (NYSE:NIO), has struggled to maintain investor sentiment this year with the wider tech market in turmoil. With plenty of questions to be answered, this article will breakdown the Nio Stock Forecast over the next few years through to 2025.
Wallstreet Remains Upbeat on the NIO Stock Forecast
Despite the companies 2022 market performance to date, NIO has now sold over 192,000 EV’s. In fact, NIO is currently competing with Tesla and 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 the Nio Stock Forecast.
More recently, Barclays analyst Jiong Shao opened Nio’s valuation at $34 a share, implying an upside exceeding 70%. The analyst noted Nio and its domestic competitors have a rare opportunity to dominate both EV sales in China and across the globe over the coming years.
Nio Stock Forecast: Why the ET7 is a key focus for investors
The China International Capital Corporation (CICC), China’s largest investment bank, expects Nio to deliver 70,000 ET7’s in 2022. With a luxury price tag of $69,200 USD, estimates expect the ET7 to generate Nio $4.8 Billion in 2022 alone. In addition, the fast growing demand for EV’s in China is opening up opportunities in the luxury EV sub market. Research conducted by Canalys suggests that 1.9 million Electric Vehicles were 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, analysts’ estimate that NIO shipments will increase to 800,000 by 2030. Over the coming years, the ET7 and ET5 expected to do the heavy lifting in terms of sales.
EV Sales in China to Grow to 7.8 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. Interestingly, NIO had captured a 23% share of China’s All-Electric SUV Market in August last year. NIO’s market share was 6% higher than Tesla’s, which highlights NIO’s dominance when it comes to a home ground advantage.
In addition, China is becoming one of the largest and lucrative EV market opportunities in the world. Citi analyst Jeff Chung forecasts new energy vehicles sales in China to grow to 7.84 Million units by 2025.
NIO to build 4,000 Battery Swap Stations
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 (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”. Ultimately, the BAAS system is one of which is not heavily adopted amongst EV manufacturers. This genius market opportunity reduces vehicle costs while generating subscription revenues and building customer loyalty.
How is NIO fairing amongst supply chain concerns?
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.
Further supply constraints will continue to squeeze the automotive industry as COVID-19 continues to impede the global labour force. Nio has taken action against supply constraints by securing renewal of manufacturing contracts. However, the semiconductor crisis is expected to worsen in 2022 with the Ukraine crisis squeezing the availability of essential materials.
What are the main catalysts for Nio Stock
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 through 2025, and beyond.
The big catalyst in the companies pipeline is the launch of the ET7 and ET5. Nio will begin ET7 deliveries on March 28, while the ET5 will begin deliveries in September. The launch will be assisted as Nio expands sales to Germany, the Netherlands, Sweden and Denmark.
NIO Stock Forecast 2025: The Bottom Line
Overall, the bullish forecasts from Wallstreet analysts alongside a growing Chinese EV market highlights positive signs for long term investors. Furthermore, NIO is showing no signs of slowing on their delivery front with the ET7 and ET5 expected to dominate the market in 2022.
However, the current shortage of semi-conductors and an increasing competition in China will continue to challenge NIO stock. Furthermore, Russian-Ukraine Tensions have withered the little investor sentiment left in the market right now.
Investors currently face both inflationary and supply constraint concerns which can effect the risk-return outlook on a stock. In addition, the SEC cracking down on international compliance for US listed stocks. Despite this, Nio and its Chinese counterparts are on the offensive this morning with Nio Stock trading 20% high pre-market, recovering losses seen earlier this year.
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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.