Business Model Helped NIO Stock Add 11 Times To Its Value This Year

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The Chinese electric car developer and manufacturer NIO Inc. (NIO) shares increased 14.05 percent this week thanks to a favorable statement by investment bank analyst J. P. Morgan.

In the luxury electric vehicle market in China, J. P. Morgan analyst Rebecca Wen believes NIO would be a “long-term winner.” NIO will gain a 30 percent stake of this segment by 2025. The current high valuation can therefore be justified, with NIO able to generate additional revenue through its content and services distribution network. Against that backdrop, J. P. Morgan issued an “Overweight” recommendation for NIO’s shares and increased the target price from $40 to $46.

NIO showcases features that set the business apart from rivals, including Tesla and an automatic replacement station for batteries is the first of all those features. It helps not only to easily replace a discharged battery with a charged one in around 3 minutes, but also to upgrade it by replacing it with a more advanced model. There were already 158 such NIO stations in China last week. The business is expanding its station network and providing new services and technology simultaneously. So, NIO launched a new 100 kWh battery on Friday, November 6. If the car owners have a subscription to a similar service which NIO introduced earlier in 2020, they can get the battery at the automatic replacement station at a discount. Station access is also sold via subscription. This auto monetization method will provide a steady cash flow for NIO that directly complements the financial proceeds from selling vehicles.

With the gain of 12.12 percent on Thursday, NIO Inc (NIO) closed the day at $48.30 with a market capitalization of $66.93 billion. The stock has added 1,104 percent to its value from beginning of the year, which rose to 2,442 percent in the past 52-weeks.

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