Nio: Big Year at the Gate

·2 min read

With 2021 drawing to a close, it has been a disappointment for Nio (NIO) investors, with shares down 18% on a year-to-date basis.

However, following talks with NIO's CFO, Mizuho analyst Vijay Rakesh is confident 2022 will be a “big year” for the company dubbed the Chinese Tesla.

Rakesh reiterated a Buy rating on NIO shares along with a $65 price target. This target brings the upside potential to ~61%. (To watch Rakesh’s track record, click here)

So, what’s behind the exuberant take?

Well, first of all, in 2022 there should be three new vehicle model launches, and amongst them the analyst expects a “higher-volume, lower-priced ET5 sedan.”

The focus on growth also means an expansion to current capacity. Rakesh anticipates production rates will triple from 400 a day at the end of the year to 1,200 a day by the end of 2022.

Nio has also set its sights on global expansion. The company has already set up shop in EV friendly Norway with Germany next and further European hubs are planned for next year. Rakesh thinks Sweden, Netherlands, France, and the UK are all on the list of near future destinations.

There should also be “new tech launches” and the introduction of a 150kWh solid-state battery.

On the battery swap station front, there are already 620 installed in China, with the current deployment rate at around 200 per quarter. Through 2023, the company is targeting 3,000 Chinese stations. Next year, It is also aiming to have 20 stations in Norway and expects to reach 1,000 station overseas by the end of 2023.

Over the long-term Nio believes that a 50/50 China/overseas revenue split is a reasonable objective while the company is also targeting long-term vehicle gross margins of 25%. “We believe key drivers to its gross-margin target will be achieving volume ramp at its Neo Park facility, which should add additional capacity, as well as a successful global ramp,” the 5-star analyst opined.

Rakesh is far from the only NIO bull on Wall Street. Barring one skeptic, all 7 other recent reviews are positive, resulting in the stock’s Strong Buy consensus rating. Given the average price target comes in at $60.44, the analysts expect shares to appreciate ~50% in the year ahead. (See Nio stock analysis on TipRanks)

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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.

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