Published on 22.03.2024

NIO Stock

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NIO's IPO

On September 12, 2018, NIO was listed on the NYSE through American depositary shares (ADSs) (NYSE: NIO, ISIN: US62914V1061) for $6.26 per ADS, raising $1.8 billion. This provided the opportunity to finance the investments that are essential for experimental electric vehicles. In early 2019, NIO was also listed on the Frankfurt Stock Exchange (N3IA.F) through ADSs. Since its start, the company has not yet turned a profit, yet larger investors like Tencent have previously been willing to invest in NIO. The Covid-19 pandemic significantly affected sales and was a challenge for the company, but NIO managed to overcome it successfully.

NIO's stormy journey is reflected in its turbulent price movements. After its IPO, the stock price dropped to around $1.50 just before the Covid-19 dip. Then the price soared in 2020. NIO was able to ride the wave of the overall rally in sustainability tech stocks. The company's revenue growth is a strong indicator of its continued performance. Plus, NIO is benefitting from China’s focus on battery technologies, as investments into the technology increased by 4000% in the last five years (since 2018).

NIO’s company strategy and future

NIO’s goal is to grow by offering a comprehensive range of vehicles to as many people as possible. Currently, the company’s primary market is China, but NIO has expanded internationally. For example, NIO has already opened specialised offices and research centres in the United States (US) and Europe. There are branches in Munich, Oslo and Oxford, among others. And in the US, NIO also has facilities in San Jose, Silicon Valley, where they develop and test autonomous driving.

As an electric car company (EV), NIO is working to make the car industry greener. To uphold its sustainable and affordable promise, NIO is expanding its activities. Noteworthy examples are NIO Life, a fashionable clothing line made entirely from residual materials from car production and NIO Power. The latter allows buyers to lease the batteries, making the cars more cost-effective. NIO also sets up battery swapping stations, enabling users to exchange depleted batteries for fully charged ones in no time, saving valuable charging time. Additionally, the batteries provide an impressively large driving range, comparable to that of fossil-fuel-powered cars.

NIO and Tesla

NIO still has ways to go catch up to Tesla, however, it has been gaining ground in recent years. The launch of the EP9 race car was beneficial for NIO, as Tesla does not have a comparable vehicle but aims to have a fast and flashy image. Starting in 2018, NIO introduced models that are similar to Tesla's but at a lower price point. Competition within the electrical automobile industry is certainly heating up. Yet it would be premature to consider NIO a threat to the market leader Tesla, as the company has been mainly focusing on the Chinese market. In addition, the current market for electric vehicles is far from saturated.

History of NIO

NIO was founded in 2014 under the name NextEV by Chinese entrepreneur William Bin Li in Shanghai, where its headquarters are still located. NIO was one of the first startups in China to develop fully electric vehicles. In 2016, the brand name NIO was introduced, which translates to 'the blue sky is coming', reflecting the company's optimism about a clean and inspiring future without the air pollution that plagues many Chinese cities. NextEV introduced its first model under this new name in 2016, the EP9. It was a flying start as one of the fastest electric cars in the world, earning the brand an instant premium status. From that moment on, NIO stood for pushing boundaries, breaking records, showcasing quality and demonstrating the possibilities of electric driving.

Once the name was established with the EP9, NIO started building models for the public. The company now focuses mainly on affordable electric mid-range cars. NIO has a clear mission to showcase the joy of car ownership by creating inspiring vehicles with superior performance, aesthetic design and unique driving characteristics. The vision is for electric cars to become the norm.

The information in this article is not written for advisory purposes, nor does it intend to recommend any investments. Please be aware that facts may have changed since the article was originally written. Investing involves risks (e.g price volatility, currency or liquidity risk). You can lose your invested funds. Consider your knowledge and experience when making investment decisions. Past performance is not a reliable indicator of future results. Markets are volatile and can fluctuate significantly due to economic, political, regulatory, or other developments.

Sources: NIO, Börse Frankfurt, Telegraaf, Yahoo Finance, Investor Place, YICAI Global

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