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NIO Reveals New Electric Vehicle: 'A Competitive Product In A Premium Segment'

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NIO Reveals New Electric Vehicle: 'A Competitive Product In A Premium Segment'
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Bruno Mars helped Chinese electric car maker Nio Inc - ADR (NYSE: NIO) with the reveal of its second electric vehicle in Shanghai over the wekeend. 

For now, Mars can’t sing about taking a NIO for a ride to Harlem, Hollywood or Jackson, Mississippi — it’s not available in the United States — but the company, seen as a rival to Tesla Inc (NASDAQ: TSLA), is pumping out cars and building EV infrastructure in China that's impressing industry watchers.

A More Affordable EV

CEO William Li introduced the new all-electric SUV, the five-seat ES6, at a show attended by more than 10,000 people. The vehicle resembles the company’s larger first offering, the ES8, but is more affordable, priced around $52,000 before government subsidies. That’s about $14,000 less than the ES8. A performance version of the ES6 will sell for $58,000. Deliveries start in June.

NIO, which went public earlier this year, also announced a battery upgrade plan for the larger ES8 that will allow drivers to swap their 70-kWH battery pack for a more powerful 84-kWH pack. ES6 buyers will have the option of either battery pack, giving the vehicle a range of just over 250 miles with the low-storage option and about 315 miles with the more powerful battery.

BofA Stays Neutral 

The new EV beat expectations in price and driving range, Bank of America Merrill Lynch analyst Ming Hsun Lee said in a Monday note.

“We see the ES6 as a competitive product in the premium segment,” the analyst said. 

BofA maintained a Neutral rating on NIO with an $8 price target.

The stance is based on the following factors, Hsun Lee said: 

  • An expectation of continued negative free cash flow through 2021.
  • An "unproven track record when facing more competition," in light of peer luxury brands localizing Chinese manufacturing of EVs beginning in 2020 and 2021. 
  • A valuation that already factors in high sales growth in the next two years. 
  • Another potential challenge for NIO comes in the form of American cars, as the Chinese government recently announced the lowering of tariffs on American vehicles from 40 percent to 25 percent for three months beginning Jan. 1, the analyst said. 

NIO's Growing Electric Infrastructure 

NIO is one of the few electric car companies in China that has actually delivered cars — nearly 10,000 so far.

For those watching the EV market, NIO's update on its battery infrastructure is perhaps just as interesting as the ES6's rollout.

NIO said it now has 26 “NIO Houses and experience stores” where drivers can swap out a battery for a fully charged one. And more are coming.

“In 2019, NIO plans to open even more locations, set to total 70 by the end of the year,” the company said in a press release. “In addition to the existing battery swap stations along the G4 Expressway, NIO will set up even more stations along certain expressways in 2019 to meet user demand.”

The company also highlighted its growing network of service centers across China, which it says will number more than 300 sometime next year.

The ES6 will have a virtual assistant, Nomi, that can respond to voice commands for controlling the radio and answering certain questions. It also releases a scent when drivers are tired to help perk them up.

NIO shares were down more than 7 percent at $7.15 at the time of publication Monday. 

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Latest Ratings for NIO

DateFirmActionFromTo
Sep 2018BernsteinInitiates Coverage OnUnderperform

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