Shares of a Chinese electric vehicle manufacturer NIO (NYSE: NIO) jumped on Tuesday after a key Wall Street analyst said the company could become “the next iconic car brand,” at least in China.
Is he right? Let’s take a look
Does NIO compare to Tesla in China?
Deutsche Bank analyst Edison Yu initially initiated NIO coverage on September 8 with a purchase rating and a price tag of $ 24. In a new note on September 29, Yu wrote that investors had rejected his initial rating, saying the company’s brand did not attract the levels of excitement and loyalty that Tesla and German luxury brands are enjoyed by Chinese consumers.
Yu admitted that there was some truth in that. But, he said, NIO is still a new company and believes that perceptions of its brand are moving in the right direction.
Yu said there was “convincing evidence”
“Like [battery-electric vehicle] Increasing adoption and word of mouth, we believe that NIO can take a significant share in the premium segment as consumers begin to understand the value proposition and quality of their products and services, ”writes Yu.
Yu believes that although the NIO is still not at the level of Tesla, it is the leading company in the so-called. “Fab four” from high-quality Chinese electric vehicle manufacturers, a group that includes NIO, Xpeng,, Li Auto, and a private WM Motor. Yu maintains its buy rating and price of $ 24 for NIO shares.
Could NIO really be the next iconic car brand?
NIO came long way in the last year. The company has overcome quality concerns, including an expensive withdrawal, a severe cash crisis and nationwide shutdowns amid the COVID-19 pandemic earlier this year. She now has a lot of money in the bank and growing sales – and a growing sense among car investors that CEO William Bin Lee and his team are leading the company in a very good direction.
NIO cars have an attractive design, long lists of high-tech features, good range and some attractive twists, including a fast-growing network of automated battery replacement stations that can “recharge” NIO in about 3 minutes – and batteries – on a subscription basis. a service that reduces the initial purchase cost. The company has placed a strong emphasis on customer service, going beyond the automotive company’s usual experience with brick and mortar centers that should serve as gathering places for enthusiast owners.
The NIO still has a long way to go, of course. For starters, it still hasn’t delivered more than 4,000 vehicles in a month (although it could get there in September.) It still doesn’t have its own factory and works – it pays another carmaker to produce its vehicles, an arrangement that if nothing else, eat in your fields.
The result: There is a risk, but good things are happening here
All in all, I think there are a lot of things here that car investors like. The NIO is still small enough to be best thought of as a speculative investment (in other words, don’t charge the boat). But I think the company has shown us enough with its progress over the last six or seven months to gain some confidence that it will continue to work well – and if it does, it should gain a good share of China’s high-quality electric car market like this. market grows over the next few years.