Nio has been called the Tesla (TSLA) of China. It makes sleek and innovative vehicles boasting features such as floating car displays, two-spoke steering wheels, invisible smart air vents, massage seats, sensors, radar, soft-opening doors, and autonomous driving.
A solid-state battery for its cars is coming in 2023 that will offer a 620-plus mile range, exceeding Tesla’s top range. In addition, the company recently announced it was expanding into Norway, its first foray outside China and into Europe.
The stock got a lift after Nio reported that car deliveries in May roughly doubled. Citi analyst Jeff Chung upgraded it to Buy from Neutral, raising his price target to $58.30 from $57.60.
Chung expects demand for Nio’s cars to gain ground in the coming months, so any weakness in the stock would be a buying opportunity. Citi also raised its 2021 new energy vehicle sales forecast in China to 2.52 million units from 1.79 million.
Deutsche Bank analyst Edison Yu believes Germany and Denmark could be the next destinations for Nio. However, investors “underappreciate the longer-term potential of the region,” he says.
German and other European automakers traditionally dominate the continent’s premium auto market. But EV’s arrival opens an opportunity to grab share. Moreover, Nio is “localizing its entire ecosystem” instead of exporting its cars to Europe.
While it will not be easy for an unknown brand to gain ground in Europe, smaller and weaker automakers that find it hard to go electric could be vulnerable to Nio, Yu contends. Also, he says, the company’s cars with its suite of features “could eventually resonate well with consumers.”
Yu notes that Nio has more than $7 billion in cash, giving it ample capital to expand in the continent. As a result, he has a Buy on the shares with a $60 price target.
Analysts overall regard Nio as one of the best green energy stocks, with the average recommendation a Strong Buy.