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Will Nio reclaim its share price heights of 2020?

The NIO share price is sliding this year but rebounded in May. Is this EV stock a good long term investment or does it still have a lot to prove?
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This article was originally published by Value The Markets

Chinese electric vehicle company NIO (NYSE: NIO) was a high-flying stock pick last summer, and its share price soared between May 2020 and January this year. But its share price is now down 36% from its 52-week high.

What’s so great about NIO?

NIO’s cars are stylish and well-liked by consumers. So far, it has designed five hot models:

  • eT7 Smart Electric Flagship Sedan
  • eC6 Smart Electric Coupe SUV
  • eS8 Smart Electric Flagship SUV
  • eS6 Smart Electric All-Round SUV
  • eP9 One of the fastest electric cars in the world (prototype)

In addition to the quality and design, NIO’s other attractive quality is its battery-as-a-service (BaaS) technology. NIO uses a battery pack called the CATL 100kWh battery using Cell-to-Pak technology. It’s lighter weight than competing batteries and holds more charge.

The company is also working on a 150 kWh battery pack with a projected range of 900km.

NIO runs its BaaS program through the Battery Asset Company. This company owns the batteries and leases them through its BaaS subscription to customers. There are benefits to paying a subscription because it provides cheaper upgrades and spreads the cost through affordable premiums.

NIO also offers a battery swap service which it’s building into the infrastructure around China. This is very attractive to consumers because stopping a long journey to recharge is a frustrating prospect. The solution involves swapping a depleted battery for a fully charged one, meaning the journey can continue in next to no time.

However, this does suggest the company must produce a much larger quantity of car batteries than competitors to meet supplies.

NIO’s focus is on its domestic market in China but will begin exporting to Norway in September. Furthermore, it has ambitious plans to expand internationally in the coming years.

Some of its Chinese competitors include Xpeng (NYSE: XPEV), Li Auto (NASDAQ: LI), SAIC-GM-Wuling Automobile Co (SS: 600104), and private company WM Motor.

NIO revenues

During Q1, the company achieved a 481.8% rise in revenues year-over-year. It expects year-over-year growth in Q2 to come in between 103% to 113%.

Last month NIO delivered 6,711 vehicles. This represents a 95.3% year-over-year growth.

NIO delivered 6,711 vehicles

As a newcomer, growth rates will naturally be higher, to begin with, and decline with time.

Additionally, the EV market is hugely competitive, with a fast-growing range of choices available to consumers. This, along with many traditional automakers jumping on the EV bandwagon, makes it more difficult for younger companies to succeed.

Even if growth surpasses expectations, the costs in vehicle production are very high. Meeting safety standards, intensive testing, and production cost all eat into profit margins.

Additionally, a global semiconductor shortage affects NIO’s production, contributing to this year’s share price decline.

Nevertheless, NIO does look to have a more substantial market share and quality of build than many smaller start-ups. And we can’t forget, many countries are pushing consumers to opt for EVs, which will encourage demand to rise in the coming years.

Is NIO a meme stock?

It seems being a hot stock at the end of January has given NIO meme stock status. Moreover, these past few days have seen an investor revival in so-called meme stocks, with many of them being driven higher by the collective power of retail investors.

But for many investors, NIO is much more than a passing craze. Some see it as a viable rival to Tesla (NASDAQ: TSLA).

Being Chinese makes it less appealing to those Western investors worried about geopolitical conflict and a lack of transparency in the Chinese business environment. But its location also gives it access to a massive untapped customer base.

Source: Robert –

How does the future look for NIO stock?

Wall Street analysts remain bullish on NIO’s future. The 12-month average price target is $59, which offers a potential 96% upside from here.

However, the company faces many headwinds, and much of its future growth potential may already be baked into the price.

It doesn’t own any factories of its own, while Tesla does. Instead, JAC Motor Company produces NIO’s EVs and last year produced 100,000 vehicles for NIO. Late last month, NIO signed a deal with JAC to up this capacity to 240,000 over the next three years. This raises its production capacity from 7,500 a month to 20,000 a month.

Meanwhile, NIO and Hefei are building a technology park called NEO Park. This will have the capacity to produce one million EVs.

All-in-all the future for EVs looks bright, but there’s a lot of hope and hype around NIO. Unfortunately, it’s not yet profitable and still has plenty to prove. Whether it can reclaim its share price heights of 2020 remains to be seen.

The post Will Nio reclaim its share price heights of 2020? appeared first on Value the Markets.

Energy & Critical Metals

Daimler Truck’s powertrain plants in Germany will produce electric drive components

Following intensive talks, Daimler Truck AG and the Works Council have agreed that the three powertrain sites in Gaggenau, Kassel and Mannheim will specialize…

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Following intensive talks, Daimler Truck AG and the Works Council have agreed that the three powertrain sites in Gaggenau, Kassel and Mannheim will specialize in different components for electrified drives.

In the future, they will drive the global production of battery-electric and hydrogen-based drive systems in a production and technology network for electric drive components and battery systems, together with the sister plant in Detroit. Significant additional investments in future technologies at the Daimler Truck powertrain plants will drive technological change.

  • The Mercedes-Benz plant in Gaggenau, which specializes in heavy-duty commercial vehicle transmissions, will develop into a competence center for electric drive components as well as the assembly of hydrogen-based fuel cell drive components.

  • The Mercedes-Benz plant in Kassel is expanding its current focus on commercial vehicle axles and will become a competence centre for electric drive systems.

  • The Mercedes-Benz plant in Mannheim, specialized in commercial verhicle engines, is drawing on the more than 25 years of experience of the Competence Center for Emission-free Mobility (KEM) located at the plant and is focusing on battery technologies and high-voltage-systems.

Important scopes for alternative drives, such as the production of electrically driven axle systems, e-motors and inverters, as well as the assembly of fuel cell systems, will be integrated into the powertrain plants in the future, in addition to investments in the reprocessing and recycling of battery systems.

Our industry is undergoing a transformation toward CO2-neutral trucks. Since conventional drive systems will also be with us for some years to come, we are focusing the future orientation of our powertrain plants primarily on flexibility, cost-effectiveness and very well-trained employees. This had to be reconciled in our negotiations with the Works Council. With the production and technology network for electric drive components and battery systems in conjunction with the competence centers at the plants, we have succeeded in doing so. In this way, we are creating optimum conditions for maximum competitiveness for our plants and at the same time laying the foundations for a successful future.

—Yaris Pürsün, Head of Global Powertrain Operations Daimler Truck

Another element of the technology network for electric drive components and battery systems are the innovation laboratories (InnoLabs). In addition to the competence centers, these are being set up at all plants. They specialize in innovative production processes, new technologies and products.

The aim of the InnoLabs is to close the gap between prototype production and series development. Series start-ups are thus to be prepared with maximum efficiency so that products can be transferred from the prototype phase to series production as quickly as possible. With the InnoLab Battery located at the Mercedes-Benz plant in Mannheim, Daimler Truck AG will establish its own pilot battery cell production and thus lay an important foundation stone for future competence in battery technology.

In its transformation toward CO2-neutral transportation, Daimler Truck is focusing on two all-electric drive technologies: battery and hydrogen-based fuel cell. With these, every customer application can be covered with full flexibility in terms of routes—from well-plannable, urban distribution transport to multi-day transports that are difficult to plan. Which solution is used by the customer depends on the specific application.

As the first battery-electric truck, the Mercedes-Benz eActros for routes in distribution transport will go into series production at the Mercedes-Benz plant in Wörth in October 2021, followed by the eEconic next year. The battery-electric eActros LongHaul for long-distance transport will follow from the middle of the decade. Key components be manufactured at the powertrain plants in the future.

In addition to the products, the powertrain plants are to become CO2-neutral from 2022, just like all other European Daimler Truck plants. This will be made possible, among other things, by a green power concept at Daimler: CO2-free power procurement from renewable energy sources will form the basis for CO2-neutral production. As part of this, the sites will purchase electricity from wind and solar farms as well as hydropower plants from 2022 onwards. On the way to becoming green production sites, the Mercedes-Benz powertrain plants are also to operate CO2-free in the long term by successively establishing fully renewable energy systems over the next few years.

The sister plant in Detroit, which is part of the global production network for powertrain components, will continue to strengthen its role in the US market and, as a competence center for electric powertrain components, make an important contribution to shaping sustainable transportation in the American market.

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Energy & Critical Metals

Tata Steel contracts for 27 electric trucks for transportation of finished steel in India

As part of its sustainability initiative, Tata Steel is partnering with an Indian start-up to deploy electric trucks for its steel transportin India. This…

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As part of its sustainability initiative, Tata Steel is partnering with an Indian start-up to deploy electric trucks for its steel transportin India. This marks the first use of EVs by any steel producer in the country for transportation of finished steel.

The electric trucks feature a 230.4 kWh Lithium-ion battery pack with a cooling system and a battery management system giving it capability to operate at ambient temperatures upto 60 °C (140 °F). The battery pack will be powered by a 160-kWh charger setup which would be able to charge the battery from 0 to 100% in 90 min. With zero tail-pipe emission, each electric vehicle would reduce the GHG footprint by more than 125 tCO2e every year.

Tata Steel has contracted for 27 EVs, each with a carrying capacity 35 tonnes of steel (minimum capacity). The company plans to deploy 15 EVs at its Jamshedpur plant and 12 EVs at its Sahibabad plant. The first set of EVs for Tata Steel are being put in operation between Tata Steel BSL’s Sahibabad Plant and Pilkhuwa Stockyard in Uttar Pradesh.

At a virtual ceremony organized on July 29, Tata Steel formally flagged-off the loaded vehicle at the Pilkhuwa Stockyard to move to the Sahibabad plant, 38 km away.

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Energy & Critical Metals

Tesla Is Hiking Prices In The U.S. While Slashing Them In China

Tesla Is Hiking Prices In The U.S. While Slashing Them In China

After posting its most recent earnings "beat", Tesla is taking on two starkly…

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Tesla Is Hiking Prices In The U.S. While Slashing Them In China

After posting its most recent earnings "beat", Tesla is taking on two starkly different strategies for its U.S. and its China business. 

In the United States, the automaker is raising prices in an attempt to boost profit margins, while in China it is keeping prices steady in what is likely an attempt to drum up more demand, Reuters reported

So far, Tesla has raised the price of its Model 3 and Model Y "about a dozen times" in the U.S. this year, the report notes. At the same time, the company also introduced an affordable version of its Model Y in China.

Tesla isn't just facing increased scrutiny in China from its citizens and the government, but is also running face-first into a wall of Chinese EV competitors. 

Toni Sacconaghi of Bernstein has questioned demand in China as a result of the introduction of the lower priced Model Y. He has said that the model "may make sustained margin improvement difficult". Chinese owners were "were less enthusiastic and had lower repurchase intentions than owners in the United States and Europe," a Bernstein survey recently showed.

Meanwhile in the U.S., Tesla continues to raise the price of its Model Y long range, which is now priced at $53,990. In China, the more affordable Model Y is priced at $42,394.

Roth Capital Partners analyst Craig Irwin told Reuters: "I think Tesla is looking to be as competitive as it can be in China. Lower prices will be a part of that aggressive market positioning. There is a very large difference in battery prices in the U.S. and China, as well as local vehicle manufacturing costs."

Hargreaves Lansdown analyst Nicholas Hyett added: "It wasn't so long ago that the group was trimming prices in the U.S. to gain scale and maximize profitability, and it feels like we're now seeing that in China too."

Gene Munster at Loup Ventures attests that the lower prices in China could "have a lasting effect" for the company in the country: "Teslas are on average 3x the cost of a typical EV made in China so they have to be priced less than the U.S. to compete. Prices of Teslas in China will be below (the) rest of the world for the next decade."

Tesla's market share in China has fallen to 11% in the battery electric vehicle market. China makes up 44% of the global EV market. 




Tyler Durden Fri, 07/30/2021 - 10:36
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