“Chinese electric-car maker Nio Inc. is poised to outperform peers on Monday after the company unveiled a new luxury sedan and a bigger volume battery pack over the weekend,” Bloomberg writes.
Why It Matters: The sedan unveiling was expected. The battery technology, however, stole the show. Nio also introduced an “upgraded autopilot system and the second iteration of its battery-swap station that allows people to change the battery in their vehicle rather than re-charge it.”
Wedbush Analyst Daniel Ives: “Nio introduced a more powerful 150 kilowatt-hour battery pack — an improvement on the 100 kWh battery pack the company launched in November — which will give Nio’s vehicles a claimed range of 625 miles.”
- The base version of Tesla’s Model 3 can go 263 miles on a single charge.
More About The Sedan: Nio announced its new model, the ET7. It will start at 448,000 yuan (around $69,000) and deliveries will start Q1 2022.
- It’s seen as a direct rival to Tesla.
The Takeaway: “Nio’s American Depositary Receipts jumped more than 8% in premarket trading, while most other EV stocks were lower, including market leader Tesla Inc. If the gains hold in regular trading, the company’s ADRs would touch a fresh record after closing at an all-time high of $58.92 on Friday.”
NIO ($NIO) is currently trading at a $100 billion valuation on an expected $5 billion in 2021 Sales and $800 million in expected Gross Profit.
That represents a valuation of over 125x forward Gross Profit. Compare that to Tesla ($TSLA) trading at an expected 78x forward Gross Profit, but with half the expected growth.
We could get into DCF details, but at this point, the only way you can justify owning these stocks is if you believe they become a top 5 global auto manufacturer and also become big in additional markets such as autonomous driving and energy storage.
NIO might have a chance to run at being a top 5 auto manufacturer, but when it comes to being dominant in additional markets, I give heavy preference to Tesla.