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Nio stock has surged, but we’re more interested in its battery subscription

Friday, October 16, 2020 by Robinhood Snacks | Disclosures

Red pill or blue pill, Nio?... This six-year-old luxury EV maker is on both. Nio, sometimes called "the Tesla of China," has been on a wild ride this year. Kicking off 2020, Nio had a bad rap as a cash-bleeder:

  • Red pill: In December 2019, Nio stock had plunged more than 70% since going public in 2018. The company had lost $6B since its launch and was almost out of cash. Now...
  • Blue pill: Nio stock has soared ~700% since April 29, when it got a $1B cash injection from Chinese government-backed investors.
  • New pill: The stock is up 30% this week thanks to analyst upgrades on "strong order backlogs" and growth momentum.

Not quite Musky... Unlike Tesla, which recently reported four-straight profitable quarters, Nio has never notched a profit. In 2019, it delivered just ~20K cars compared to Tesla's ~367K. But Nio has a cool differentiator:

  • Battery Swapping: Nio's Battery-as-a-Service lets you swap your EV battery for a freshly charged one at one of its 130+ stations (instead of waiting for it to juice up).
  • The subscription costs ~$145/month, but you get $10K off the price of the actual car (since the battery is the most expensive part).
THE TAKEAWAY

The lifestyle brand factor is a huge part of it... Like Tesla, Nio has built a cult following. Before it ever sold a car, it spent millions on cranking out Nio hats and merch. It also created "Nio Houses," sleek showroom-clubhouses for Nio owners to chill in. Nio and Tesla have both grown by fueling deep brand love.