For a long time, Chinese electric vehicle manufacturer Nio Inc – ADR (NYSE:NIO) was in trouble but things have turned around for the company in recent times. That has also been reflected in the performance of its stock this year so far. Up until last Friday, the stock delivered gains of as much as 1200% in the year, and in such a situation, investors could do well to have a closer look at how that came about.
Key Developments
At this point, the company commands a market cap of $73.1 billion and is considered as one of the competitors of Tesla, the world’s preeminent electric vehicle company. NIO is far ahead of its Chinese electric vehicle rivals like Xpeng, which currently has a market cap of $23.6 billion.
The reason behind the remarkable rally in the NIO stock is primarily based on the company’s impressive financial results. In the third quarter, NIO managed to boost its sales by as much as 146% from the prior-year period. In addition to that, there is a lot of optimism among analysts with regards to the dominance of Chinese firms in the supply chain dynamics of the electric vehicle space.
At this point as many as 142 lithium-ion battery plants are being constructed globally and out of those 107 are being built in China. Experts believe that in the years to come supply chain will eventually become one of the most important aspects of the industry.
That will also see electric vehicles being promoted by many other countries across the world. Tesla projected that the electric vehicle market in China will constitute as much as 40% of its total sales by the year 2022.
The challenges posed by Tesla and a growing electric vehicle industry are going to be felt by Chinese manufacturers like NIO in the near future as well. However, at the same time, it remains to be seen how the company tackles the new paradigm in the industry. It is also necessary to point out that the NIO stock also experienced considerable volatility in November despite having boosted its deliveries for the month.
