Why Nio shares are on fire today

What happened

child (LITTLE BOY 7.50%) The stock resurfaced today and was trading up 5.5% as of noon Wednesday ET. Shares of the electric vehicle (EV) maker surged double digits ahead of today’s product launch event. Suffice to say, Nio managed to impress investors: not only did it launch a new electric vehicle, but it also announced upgrades to existing ones along with a price increase.

Meanwhile, at least two analysts reiterated their bullish views on Nio today as they see much stronger days for the electric vehicle maker.

And that

Nio today presented its new SUV, the ES7. The mid-size to large SUV that will compete BMW X5L is now open for pre-orders, with Nio targeting August 28 as the first delivery date.

Following the buzz on social media, many are surprised by the stylish design of the ES7. It is also Nio’s fastest SUV to date and among the first passenger cars in China certified to tow a camper or trailer.

Nio ES7 SUV.

Image source: Nio.

As I mentioned yesterday, the price of the ES7 was one of the biggest factors to consider, as Nio’s sales mix lately has been leaning towards its low-priced models. That’s where things get interesting.

Nio has priced the ES7 in line with its larger SUV, the ES8, but its price under Battery as a Service (BaaS) is still higher than the ES8. BaaS is a subscription-based rental program that gives prospective customers the option to purchase vehicles without batteries at lower prices and instead rent and swap batteries when needed.

However, an equally important takeaway from today’s launch event was that Nio announced an upgrade to existing models with an advanced digital in-vehicle intelligence system called Alder, which includes a digital cockpit controller and better sensing and hardware capabilities. , among other things.

Nio made two smart moves today.

First, since it is now building cars with Alder, it has increased prices on the 2022 models of existing SUVs, the ES8, ES6 and EC6.

Second, to ensure that existing car owners don’t feel shortchanged, Nio offers existing SUV owners an option to upgrade their cars to include Alder for a low cost, so that their effective car cost after the Alder upgrade will still be lower than the 2022 model prices. It seems like a calculated move on Nio’s part to retain customer loyalty.

Now what

While the ES7 should start contributing to Nio’s top line later this year, german bank Analyst Edison Yu projects that Nio’s sedans, the ES7 and ET5, will become the “most desired premium cars in China this year, according to The Fly.

Yu believes that Nio is “embarking on the most important product cycle in the company’s history” and that Nio deliveries should increase rapidly as the year progresses. Yu has a price target of $45 per share on Nio. Mizuho Analyst Vijay Rakesh also sees Nio growing faster in the second half of 2022 as lockdowns in China ease.

Despite Nio already projecting a strong rebound in deliveries and margins from the third quarter, EV shares slumped after first-quarter gains. However, investors bought the shares before the launch event. Fortunately, Nio did not disappoint investors who bought the promising growth stocks in the fall.

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