Picture supply: Sam Robson, The Motley Idiot UK
Tesla’s been a really enriching share over the previous 15 years. Since 2010, it’s up about 20,500%, even after accounting for the latest 40% drop. For NIO (NYSE: NIO) nevertheless, the inventory market story has been very completely different. It has misplaced over half its worth since itemizing in 2018.
To date this yr, NIO inventory’s fallen 14% and now trades for simply $3.75. For context, it reached $61 again within the pandemic tech bubble of 2021, which means the peak-to-trough loss here’s a staggering 93%!
Nevertheless, the Chinese language electrical car (EV) maker continues to be rising its gross sales strongly and plans international growth. So might shopping for the inventory at $3 be like me getting in on a younger Tesla again within the day?
Issues I like
NIO’s bread and butter is making good, premium EVs. Nevertheless, it’s additionally launched two sub-brands: Onvo, which targets the mainstream household market; and Firefly, a high-end model targeted on smaller automobiles. It has huge plans to increase its manufacturers internationally over the subsequent few years, presumably emulating bigger rival BYD‘s success.
The $7.8bn-capitalised firm has pioneered battery-swapping know-how, permitting prospects to swap out a depleted battery for a brand new one in a couple of minutes. It now has 3,245 swap stations, and administration says this provides it a “competitive edge” within the battery EV market.
It’s additionally constructed plenty of NIO Homes, that are a mix of showroom and neighborhood hub for NIO customers and the broader neighborhood. Many have libraries, cafés and convention rooms. I like distinctive corporations like this, particularly revolutionary ones run by founders (NIO’s William Li has been known as the ‘Elon Musk of China’).
In 2024, income jumped 18.2% yr on yr to $9bn, with 221,970 automobiles bought (a 38.7% improve). In the meantime, the car margin improved to 12.3% from 9.5% for the earlier yr. And it’s concentrating on a doubling of NIO automotive gross sales in 2025.
And what I don’t like
On the opposite aspect of the ledger although, NIO reported a $3bn web loss final yr. That was 8% increased than the yr earlier than, which means the EV maker stays deeply unprofitable.
Furthermore, it’s arduous sufficient establishing one new automotive model, by no means thoughts efficiently advertising and marketing and scaling three of them. Then there are these NIO Homes, its personal smartphone, a life-style model known as NIO Life, and extra. My concern is that the agency’s attempting to do far an excessive amount of.
One other huge worry I’ve is BYD’s new ultra-fast charging tech, which it says can ship 250 miles of vary in simply 5 minutes. In that case, that might someday make NIO’s battery-swap stations out of date. This raises doubts in my thoughts concerning the technique of continuous to roll out these expensive stations worldwide.
Falling knife
Sadly, I’d say the negatives outweigh the positives right here. Whereas NIO retains discovering methods to lift funds, it additionally continues to incinerate money at an alarming price. That can’t proceed for too many extra years.
If NIO can swing to a revenue in some unspecified time in the future, the inventory might explode increased. However what degree will or not it’s exploding from by then? $2? $1? It’s anybody’s guess at this level.
The inventory nonetheless appears extra like a falling knife to me than an enormous Tesla-esque winner within the making. I’m not going to purchase.
