NIO
Stock Market Analysis

Has NIO Day Proven That It Can Be The Next Tesla?

China is the fastest-growing EV market in the world, so it stands to reason that its own version of Tesla is on a tear.

Easily confused with the lead protagonist of the ‘Matrix’ series, NIO (NYSE: NIO) may not be a household name in Western society, but it is a leading player in the lucrative Chinese EV market. Despite a brush with death at the start of 2020, it has managed to turn things around and become one of the world’s most valuable automakers, with its value rising 1,110% in that time. 

On Saturday, NIO Day 2020 was held in Chengdu, China. NIO Day is an annual event to celebrate NIO, its friends, and its users —and it did not disappoint. 

The company unveiled its new all-electric sedan, dubbed the ET7, which is about the size of a Tesla Model S and boasts impressive features such as soft-closing doors, air filtration, and acoustic glass for a quiet ride. The ET7 also comes with a larger 150 kWh battery pack, which gives it a range of about 621 miles — much further than Tesla’s Model S maximum range of 402 miles. With range anxiety being a real thing for EV consumers, this could have a massive impact on the competition. 

Now that it’s got its sedan down, we’ve got one question…

…can NIO compete with Tesla?

That’s a very complicated question. If we’re talking about social media ‘memeability’ status or eccentricity of CEOs, then no, NIO doesn’t stand a chance against Tesla (NASDAQ: TSLA). 

If we’re talking about market opportunity and vehicle quality, well then that’s a far more open-ended answer, so let’s look at some big numbers.

  • Market cap: NIO ($84.6 billion) v.s. Tesla ($834.17 billion)
  • 2020 vehicle deliveries: NIO (43,728) v.s. Tesla (499,550).
  • Stock Growth: NIO (1,110%) v.s. Tesla (695%). 

As you can see, Tesla’s deliveries are roughly x10 that of NIO, so realistically they are nowhere close to each other in terms of revenue generation or size. However, even though Tesla is enjoying a lot of success in China, it is at risk as it does not have NIO’s advantage of being a home-grown company in the region. The Chinese government is very capricious towards foreign companies and will always favor local companies.

China has a population of roughly 1.4 billion people, presenting a massive addressable market for NIO in its domestic market alone. The EV market has been expanding even faster in China than in the U.S., with a 2020-2025 CAGR of 25%. The Chinese company will also face tailwinds from the government policy of having 50% of all new vehicle sales as “new-energy” vehicles by 2035 and the other half as hybrids. That number was only 5% in 2019 and a tenfold increase will certainly benefit the company, for which analysts project revenue of nearly $11 billion next year. 

It’s still early days for the EV market, which is projected to be worth $802.81 billion globally by 2027 — a CAGR of 22.6%. NIO is still a very small player in the space, but the sheer size of its addressable market means that it is also ripe for massive growth going forward. 

You can read more about NIO and other Tesla competitors here.

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MyWallSt operates a full disclosure policy. MyWallSt staff currently holds long positions in companies mentioned above. Read our full disclosure policy here

Jamie Adams
Jamie is the Content Editor here at MyWallSt. His favorite stock is Apple, which is also the first stock he ever bought. Jamie is not only a big fan of its products, but he believes that the tech giant has a whole lot more to give the world, and hasn't even scraped the surface of its potential.