BofA's Takeaways On Nio's 2021 Plans

BofA's Takeaways On Nio's 2021 Plans

A Nio ES6 SUV. Courtesy photo. 

Nio Inc – ADR (NIOhas remained a favorite among Wall Street firms, with most remaining bullish on the Chinese electric vehicle maker. Following investor calls with the automaker's management, an analyst at BofA Securities shared key takeaways Friday. 

The Nio Analyst: Analyst Ming Hsun Lee maintained a Buy rating on Nio with a $54.70 price target. 

The Nio Thesis: BofA's positive view on Nio is predicated on its long-term share gain potential in the premium EV market and improving profitability along with "rising scale," Hsun Lee said in a Friday note.

Nio is planning to introduce its first sedan model and reveal more details on NP2 at its Nio Day scheduled for January 2021, the analyst said. The NP2 is Nio's next vehicle platform that's expected to boast advanced autonomous driving features, he said. The company is modeling vehicle gross margin of about 15%-20% over the long term, Hsun Lee said.

The company is open to adopting Lidar in the future, the analyst said. 

Nio plans to expand point of sales, including Nio Houses and Nio Spaces, from 187 to 200 by the end of 2020, and add another 100 in 2021, he said. 

The EV maker is planning to start building its second-generation battery swap stations in the second quarter of 2021, with 300 stations likely to be built in 2021, Hsun Lee said. The rapidly expanding battery swap network, according to the analyst, will further improve the Nio user experience.

Nio expressed confidence in defending its market share against traditional OEMs, which are planning a foray into the high-end EV market, as the company believes it takes a long time to build brand equity and consumer perception, according to BofA. 

NIO Price Action: At last check, Nio shares were advancing 0.64% to $54.04. 

Latest Ratings for NIO

Date Firm Action From To
Nov 2020 Deutsche Bank Maintains   Buy
Nov 2020 B of A Securities Maintains   Buy
Oct 2020 JP Morgan Upgrades Neutral Overweight
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William K. 1 month ago Member's comment

It will be very interesting to see how the NIO business plan works out in China, especially the battery swap portion of it. I see quite a few issues in the basic concept, and I predict a stumble and fall of the whole battery swap concept.

But that is based on my observations of how rentals work in the USA, and China is vastly different.