NIO
Stock Market Analysis

Is NIO Coming To America To Compete With Tesla?

NIO shares were trading higher yesterday on whispers of the company’s potential U.S. launch. 

NIO (NYSE: NIO) stock jumped over 4% on Tuesday after a Wall Street analyst reported a recent job listing that suggested that the company is planning on entering the U.S. market. Deutsche Bank analyst, Edison Yu, released a note that said that a post on NIO’s LinkedIn page indicated that the company’s “global ambitions are growing.” The advert, which has since been removed, was looking to hire someone to “formulate an action plan to enter the U.S. market.”

Analysts are still a little skeptical about this move and some feel that such an entry would be a hard endeavor for the company, especially given the current political tension between China and the U.S. However, the Chinese electric vehicle maker is committed to launching in Europe later this year too, with Norway being its most likely first stop.

Tesla and NIO compete in the Chinese market 

This move would certainly heat things up between the company and Tesla (NASDAQ: TSLA) as the two are already battling for the crown of top electric manufacturer in China. Currently, Tesla is the top-selling EV maker in China and sold 15,484 vehicles in the country in January. However, this figure was down from the 23,804 sold by the American company in December. Analysts predicted that this drop might have been caused by increased competition as home-grown companies, like NIO, narrow the gap. During the same period, NIO delivered 7,225 cars in January, four times as many from the year prior. January sales of plug-in cars in China tripled from the year earlier, reaching 158,000, making it the largest EV market in the world. 

Elon Musk has been put under pressure recently as Chinese authorities told Tesla on Monday that it needed to fix safety issues with its cars. Last week, Tesla recalled more than 36,126 of its Model S and Model X vehicles in the country due to touch-screen problems. The company has been hit by several rounds of recalls over the last year as complaints from customers over quality issues are mounting up. NIO has had its fair share of recalls too but if it can avoid more of these costly callbacks, it might help it rival Tesla. 

Tesla isn’t the only American-owned competition in China for NIO though. Just last month, Ford said it would build its Mustang Mach-E in the region to attract Chinese buyers. 

Read MyWallSt’s recent article on 3 Companies That Offer Investors A Cheaper Alternative To Tesla

Is NIO really a rival for Tesla? 

While NIO’s valuation is certainly high, investors are betting that the company will continue to grow in the domestic market, while eventually playing a bigger role in the global EV space. A move to the U.S. would certainly help with this idea. NIO has a great opportunity to leverage China’s low-cost manufacturing and the country’s ecosystem of battery and auto parts providers. 

If Tesla continues to be subjected to expensive recalls and pressure from the Chinese government, NIO may have an opportunity to take the lead while it also plans penetration of the U.S. market.

NIO shareholders are looking forward to seeing how the company performs when it releases its earnings on Monday, March 1st. 

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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

Nicole Byrne
Nicole Byrne
Nicole is a writer here at MyWallSt. Her favorite stock is Etsy because she loves its original and handmade items. She believes people are going to stop buying mass-produced items and start purchasing ‘one of a kind’ fashions and furnishings. In a world of sameness, Etsy has the advantage.