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NIO Stock Forecast 2023 – Major Room For Growth

NIO Stock forecast

It has become abundantly clear that NIO Inc. (NYSE: NIO) is setting its sights towards expanding in the Dutch market following its recent announcement of opening its first NIO Hub in the European country. NIO’s Dutch hub is far from being an outlier. Currently, the Netherlands hosts 5 NIO swapping stations which is the highest number of NIO’s swapping stations among European countries.  When news of the new facility became public, the stock ran 12% because investors saw the move as NIO doubling down on its European expansion. Having said that, the significance of this facility lies in the fact that it furthers NIO’s efforts to dominate the Dutch market. For this reason, the NIO stock forecast appears to be bright for 2023 and beyond.

NIO Stock News

Already a top EV manufacturer, NIO has been gaining more interest from investors recently after announcing its December deliveries. In this announcement, NIO delivered 15.8 thousand vehicles – new record high monthly delivery. In this way, NIO was able to deliver more than 40 thousand vehicles in Q4 2022 – a 60% YOY increase. Despite these promising numbers, NIO was significantly impacted by supply chain constraints resulting from the Covid outbreak in China after easing lockdowns and disruptions in delivery and registration procedures involving users. As a result, NIO had to slash its Q4 delivery expectations from 43-48 thousand to 38.5-39.5 thousand. 

Considering that the restrictions and lockdowns enforced by China have affected NIO and other EV manufacturers substantially, NIO stock forecast for 2023 appears to be bullish since China has eased these lockdowns. In this way, NIO could be set for a significant increase in production, allowing NIO stock to appreciate in value with more deliveries. For this reason, NIO stock could be one of the best-performing EV stocks in 2023 thanks to its vehicles’ capabilities.

On that note, NIO is currently planning to deliver 5 new vehicles based on its NIO Technology 2.0 platform while commencing the R&D of the NT3 platform in the first half of 2023. With this in mind, NIO has only shared two new EVs – EC7 and ES8 – which are set to be delivered starting May and June 2023 respectively. Through these efforts, NIO believes it could reach its milestones for 2023 and accelerate its deliveries in services in Europe. In light of these plans, NIO stock forecast appears to be bullish in 2023 and beyond considering its current PPS.

Known for its innovative technologies, NIO’s most prominent technology is its unique battery swapping technology which takes only 3 minutes to swap a fully charged battery. Another advantage of this technology is its ability to maintain the value of NIO’s EVs since the battery price represents more than 30% of the whole vehicle. In this way, NIO has a competitive advantage as its EVs would not be devalued as the battery is worn out. Based on this, NIO could be well-positioned to secure a significant share of the EV market once it ramps up production.

With the company’s deliveries growing rapidly, NIO has been actively building swap stations around the world. In 2022, NIO built 538 new stations of which 346 are located on highways. NIO is also looking to enhance swap stations and is currently working to deploy the third-generation battery swap station and 500kW ultra-fast chargers in March. The third-generation swap stations are expected to achieve more efficient vehicle-station coordination and are capable of performing up to 408 swaps per day. 

Meanwhile, the 500kW ultra-fast chargers are capable of charging 400V models in 20 minutes and 800V models in 12 minutes from 10% to 80%. With this in mind, NIO has built more than 13.3 thousand charging piles – making it the automobile brand with the most charging piles in China. Despite this, NIO has plans to build more than 1700 battery swap stations and more than 20 thousand power chargers in China which could allow the company to attract more customers for its EVs. In light of this, many investors are bullish NIO stock forecast could be the brightest it has ever been as the company continues developing its technologies.

With this in mind, NIO is working to make Power Swap Pilot for Highway available in the first half of 2023. When Navigate on Pilot is enabled, NIO’s EVs can automatically plan the route for battery swap, navigate to the power swap station, complete the battery swap and automatically drive out of the service area and back to the highway. Thanks to this technology, NIO could be well-positioned to witness an influx of new purchases which could propel the company to new records in deliveries and revenues in 2023.

Although NIO is a top EV manufacturer in China, the company is looking to grow its popularity throughout the world and is currently working to penetrate the European market. In 2021, NIO launched its EVs in Norway – marking its entry into the European market – where its vehicles were well-received. Based on this, NIO has been working to expand its presence in Europe and currently offers its vehicles in Germany, the Netherlands, Denmark and Sweden. Looking to grow demand for its EVs, NIO intends to open new houses and spaces in 10 major European cities like Berlin, Frankfurt, Rotterdam, Copenhagen, and Stockholm. In this way, NIO could be poised to receive a significant boost in its revenues in 2023 – making NIO stock one of the most attractive EV stocks to watch this year.

With an aim of securing a significant share in the European EV market, NIO has been working to introduce its battery charging network in Europe. These efforts started with NIO’s deal with oil giant Shell to expand charging and battery swap stations in Europe and China. According to this deal, both companies will work in tandem to build 100 sites in China and build pilot battery swap sites in Europe. On that note, NIO intends to build 120 swap stations in Europe by the end of 2023 of which the company has successfully built 17 or 18 in 2022. However, NIO expects to build 1000 swap stations outside of China by 2025 – most of which will be in Europe. As the company continues working to introduce its EVs around the world, NIO stock appears to be bullish for 2023 and beyond.

*Updated May 16th, 2023

The Chinese EV maker’s deliveries have been slow of late because over the past few months, it has been transitioning all of its models to a second-generation platform, NT 2.0, and preparing its manufacturing lines to produce its upgraded 2023 models. NIO delivered 31,000 vehicles in Q1 2023, which is within the 31,000 – 33,000 projected range of the quarter. That was followed by NIO delivering only 6 thousand vehicles in April, dropping below the 10,000 mark that NIO operated above for two months. That may raise some questions about NIO’s ability to achieve the projected 250,000 deliveries target for 2023, Especially since NIO already missed on its projected deliveries in the latter half of last year.

Tesla (NASDAQ: TSLA) may pose a problem for NIO, as a price war is happening in the Chinese EV market. The American giant and NIO’s Chinese competitors are aggressively cutting prices while NIO is still selling its vehicles at a premium and refusing to cut its prices. This may affect NIO’s sales, which will make it harder for NIO to achieve its 250,000 delivery target. 

With the upcoming Q1 2023 earnings release on Friday, June 9th, NIO is expected to achieve its estimated revenue of $1.58 billion to 1.67 billion, as it already achieved its delivery estimate for Q1. That being said, NIO is expected to achieve lower gross margins as it was burdened with the transition to NT 2.0 and the launch of new products. Last month NIO started deliveries of its coupe SUV EC7, which was launched in December, ahead of its scheduled delivery date of mid-May, and is expected to start deliveries of the 2023 ET7 in May. NIO’s new model 2023 ES6 SUV is also available for pre-orders and is expected to launch in May with deliveries to start later this year. Because of the new product launches, NIO is expected to achieve slightly better Q2 deliveries with stronger Q3 and Q4 deliveries driven by its new and its updated products.

*Updated June 22, 2023

Abu Dhabi Investment

NIO caught investors by surprise when it announced receiving a $740 million investment from the Abu Dhabi government in exchange for a 7% stake in the company. Through this investment, NIO might regain some of the momentum it had in Q4 2022 since it has been struggling with deliveries so far this year – failing to push past the 10 thousand delivery threshold for two consecutive months. 

Based on this investment, a race for EV dominance in the Middle East might start as Saudi Arabia is backing American EV manufacturer Lucid (NASDAQ: LCID) through the Public Investment Fund (PIF). Through the PIF’s support, LCID is currently constructing a plant in Saudi Arabia that would produce 150 thousand vehicles annually and provided it with a 100 thousand vehicle delivery order from the Saudi government.

Similarly, the Abu Dhabi government could provide NIO with similar help allowing it to grow in the Middle East market. With this in mind, NIO stands to have an edge over LCID in such competition due to its production capabilities. While LCID cut its production target for 2023 to 10 thousand vehicles, NIO successfully produced 100 thousand vehicles in 2022 which shows that NIO may not find it hard to further scale production to meet the potential demand in the Middle East.

In this way, NIO would be able to enter the Middle East market in mass before LCID starts production in its Saudi Arabia plant which is expected to be completed in 2025. By doing so, NIO could capture a major market share in the Middle East – establishing itself as the EV leader in the region.

The chances of such support from the Abu Dhabi government are relatively high since the UAE is planning to invest more than $160 billion in its clean and sustainable energy vision which NIO perfectly aligns with. Based on this, the UAE might do its best to promote NIO to its citizens and neighboring countries which would lead to a substantial increase in sales.

Better Deliveries Outlook

Another reason investors should be bullish on the NIO stock forecast is the company’s improved delivery outlook after participating in the EV price war led by TSLA by announcing a ¥30 thousand price cut for all of its models earlier this month. Additionally, NIO successfully launched and began deliveries of the all-new ES6 model which could drive up sales in the second half of the year due to its impressive technology and features.

While NIO remains unlikely to meet its 250 thousand delivery target for 2023 due to its slow start this year, it is likely to have a record year in deliveries as a result of the expected stronger second half of the year.

However, the main focus should be 2024 and beyond as NIO is in a prime position to capitalize on the Chinese government’s decision to exempt NEVs purchased in 2024 and 2025 from purchase tax up to ¥30 thousand – with the exemption being halved and capped at ¥15,000 for purchases made in 2026 and 2027. 

The tax exemption is likely to result in increasing demand for EVs, and considering that the Chinese EV market has seen 55% growth in 2022, the Chinese market could grow even more in 2024. In this way, NIO could be well-positioned to increase its sales which could make the 250 thousand delivery target for 2023 more feasible in 2024. In light of this, the NIO stock forecast appears to be brighter than ever for the remainder of 2023 and beyond.

*Updated July 10th, 2023

Risk of Deflation In China

With inflation reaching zero in China and being on the brink of deflation, NIO and other Chinese EV manufacturers are at risk of seeing declining sales since it can discourage spending as consumers postpone purchases in anticipation of even lower prices.

Despite inflation reaching zero in China, NIO delivered 10,707 vehicles in June ending months of declining sales and failing to break the 10,000 delivery threshold for the past couple of months. While the risk of deflation will affect Chinese EV sales, the tax exemption for EV purchases that will start in 2024 may help mitigate some of its effects and prevent sales from plummeting. In light of this, NIO could maintain its momentum over the coming months which could see NIO stock run from current levels.

Lithium Battery Shortage

Another risk NIO may be facing is the expected shortage of lithium batteries that EV manufacturers may see as early as 2025 due to a lack of investment in the production of lithium. However, NIO may be able to navigate through this expected shortage since it bought 12% of the Australian lithium miner Greenwing Resources last year for $8.1 million. This deal is now proving its worth for NIO as it will help the company avoid or at least mitigate the shortage EV manufacturers will be seeing.

*Updated July 31st, 2023

NIO’s Dutch Tactic 

As things stand, NIO is set to open its Netherlands hub on Tuesday, August 8th. The hub is located in the Netherlands’ fourth largest city in terms of population, Utrecht. Having said that, the geographic significance of Utrecht lies in the fact that the city is in close proximity to Rotterdam, The Hague, and Amsterdam, which are the Netherlands’ three largest cities.

This location along with the fact that the Netherlands has one of the highest swap station densities since it is the only country with 5 swapping stations within a 40 thousand square km area as well as the stations being clustered around the most densely populated areas. This indicates that NIO is strengthening its grip on the Dutch market.

At first glance, the Dutch market may not seem significant, especially since the population of the Netherlands is only around 17 million which is minuscule compared to European countries like France – 67 million – and Germany – 83.2 million. The reason for NIO’s Dutch fixation is simply due to the fact that the Netherlands has the third highest share of battery-electric vehicles in Europe which accounts for 2.8% of all cars in the Netherlands.

Additionally, the Netherlands has a zero-emission policy, which states that all new passenger vehicles must comply with zero-emission regulations by 2030. Once this policy is taken into consideration, NIO’s Dutch tactic becomes abundantly clear. The company’s investment in developing infrastructure in the Netherlands is likely made in anticipation of a sudden surge in demand due to the aforementioned zero-emission policy.

Once the policy takes effect, EV purchases will drastically rise due to a lack of alternatives. By placing 5 battery-swapping stations, NIO houses, and a NIO hub in the Netherlands, the EV maker is increasing its visibility while at the same time providing the necessary infrastructure for battery swapping and car maintenance ahead of time.

NIO Stock Financials

Q3 2022 Financials 

Looking into NIO’s Q3 earnings, the company reported $13.6 billion in assets, including $2.5 billion in cash. At the same time, NIO has $8.9 billion in liabilities – of which only $1.7 billion are long-term debt. As for its revenues, NIO reported $1.8 billion in Q3 and had a gross profit of $243.9 million. Meanwhile, operating costs were $787.9 million – leading the company to operate at a net loss of $577.8 million. As the company’s supply chain situation could be significantly improved in 2023, NIO could be on track to deliver better results in the future.

2022 Annual Financials 

In the 2022 annual report, NIO reported $8.5 billion in assets, including $2.8 billion in cash and cash equivalents. At the same time, NIO has $9.9 billion in liabilities – of which only $1.5 billion are long-term debt. As for its revenues, NIO reported $7.1 billion in 2022, a 33% growth YoY, and had a gross profit of $745 million. Meanwhile, operating costs were $3 billion, an almost 90% increase YoY – leading the company to operate at a net loss of $2.09 billion.

Q1 2023 Financials

In its Q1 2023 report, NIO’s assets increased 7.8% QoQ from ¥89 billion to ¥96 billion, and its cash and cash equivalents increased 35% QoQ from ¥14.7 billion to ¥19.9 billion. NIO’s total liabilities increased by 12.5% QoQ from ¥40 billion to ¥45 billion. 

Revenue also increased 7% YoY from ¥9.9 billion to ¥10.6 billion. Operating costs increased almost 30% from ¥12 billion to ¥15.7 billion, which contributed to the operating loss increase of 142% YoY from ¥2.1 billion to ¥5.1 billion. As a result, NIO’s net loss increased 176% YoY to ¥4.7 billion.

Media Sentiment 

@warrior_0719 is excited about NIO’s price movement.

@Braczyy is bullish on NIO’s potential to further run.

Technical Analysis

NIO Stock Chart

NIO stock is in a bullish trend and is trading in an upwards channel. Looking at the indicators, the stock is above the 200, 50, and 21 MAs which is a bullish indication. Meanwhile, the RSI is overbought at 81 and the MACD curling bearishly. 

NIO Stock Chart

As for the fundamentals, the stock might be poised for a run this month because its July deliveries are set to be released in the coming days. Considering the growing speculation that the company may announce the delivery of 20 thousand vehicles in July, the stock could further soar if these speculations prove to be true. With the stock trading near resistance, investors could wait for a breakout of the current resistance with a pullback to go long on the stock ahead of the release of its July deliveries.

NIO Stock Forecast 

NIO’s new Netherlands-based NIO hub is likely part of a larger Dutch tactic that anticipates a surge in demand due to the country’s zero-emission policy. As is, NIO has already established a network of facilities in the Netherlands that will help it capitalize on a possible sudden surge in demand. With growing speculations that the company may announce the delivery of 20 thousand vehicles in its July report, the NIO stock forecast could be bullish for the rest of 2023.

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