The company is certainly growing fast, with Revenue poised to double to about $5 billion in 2021 with deliveries growing fast ( Nio delivered a record 7,000 cars in December). The addressable market is also growing quickly, considering that China – Nio’s home country – has set a target that 25% of car sales by 2025 must be new energy vehicles that are not purely gasoline-driven. That being said, is Nio building a competitive advantage to justify its current valuation and fend off rivals as the market gets more crowded?
The company spent a good deal of time during its Nio Day event discussing the self-driving tech on its new sedan due in 2022 and a related monthly subscription program. The focus appeared to be more on the hardware such as high-resolution cameras, lidar sensors, and Nvidia processors – all of which are likely to be available to most other automakers. However, what really gives companies an edge in self-driving is the quality of software and the availability of vast amounts of data (miles driven) to improve algorithms. For perspective, Tesla has logged a total of 3 billion autonomous miles as of last April while Google’s Waymo logged about 20 million miles. It’s not clear how Nio will fare on these counts.
NIO offers the ability to swap out its car’s battery in about three minutes, the same time as it takes to fill your tank with gas! So, the main issue consumers have with electric vehicles (EV’s) is solved. Tesla by comparison gets its battery fully charged in about 80 minutes. NIO is also able to reduce the cost of its cars by offering the ability to lease the battery.
With all these goodies in place, I expect nio to go through the accumulation phase similar to that in August through september 2020. After that we can see more upside, because this company still has so much potential.