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About
History
Differences between Investing vs Trading
About
History
Differences between Investing vs Trading
Nio is a Chinese firm based in Shanghai. Although it is best-known for manufacturing electric vehicles, Nio also has other divisions that deal with the likes of clothing and battery charging stations. The Nio story began in 2019, when it was founded by Chinese businessman William Li, attracting investment from companies like Tencent, Lenovo, and TPG.
They quickly revealed the NIO EP9 sports car as their first vehicle, before gaining a permit to test autonomous vehicles in California. At the same time, NIO has opened battery swap stations in China. They launched a $1.8 billion IPO in 2018 and announced $1 billion in funding from Chinese investors a couple of years later.
Among their subsequent moves, Nio has expanded into Norway and also set up a battery asset management company. Their plans to introduce self-driving cars with different levels of autonomy are still underway, and it is expected that they become one of the main players in this growing industry.
Traded on the NYSE under the NIO ticker, the Nio share price has been the subject of great debate since they were launched. Some analysts believe that they have long been under-valued when we take into account the growing market together with their improving sales and profit margins.
As with many tech firms, the first few years of Nio’s operations have seen them lose money regularly. However, all of the previous investments they received have allowed the company to carry on burning through their cash reserves while they wait to start turning a profit.
Fears that the Chinese regulators may force the Nio share listing off the New York exchange have been mentioned as a possible reason for their under-performing share price to date. However, it seems certain that the relative high quality of their vehicles and their growing market share in Asia will make Nio one of the leading names in the electric car business in the future.
Despite Tesla and Nio being the leading electric vehicle manufacturers in the world, Xpeng is now worth more than both combined. Xpeng's main selling point has been its low prices, which has allowed it to gain a significant market share in China.
The lack of profitability in its early years means that Nio hasn’t offered dividends to its shareholders. However, investors could see buying Nio stock as a way of getting stock with huge potential but a relatively large amount of risk in their portfolio.
You could also obtain the benefits of Nio stock price increases through trading in an ETF that includes this company together with other stock. This could be seen as an acceptable solution for someone who is interested in their potential but is worried about the potential risk involved in trading Nio shares directly on the exchange.
If you're looking to trade CFDs on NIO or Tesla, you'll need to consider a few things before making your decision. NIO is a Chinese company that manufactures electric vehicles, while Tesla is an American company that also specializes in electric vehicles. Both NIO and Tesla are leaders in the EV industry, but there are some key differences between the two companies that you should be aware of before trading.
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* The spreads provided are a reflection of the time-weighted average. Though Skilling attempts to provide competitive spreads during all trading hours, clients should note that these may vary and are susceptible to underlying market conditions. The above is provided for indicative purposes only. Clients are advised to check important news announcements on our Economic Calendar, which may result in the widening of spreads, amongst other instances.
The above spreads are applicable under normal trading conditions. Skilling has the right to amend the above spreads according to market conditions as per the 'Terms and Conditions'.
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FAQs
Are Nio shares a good investment?
Nio's share price has been volatile since it listed on the New York Stock Exchange in September 2018, but it has trended upward in recent months as investors have become more bullish on the electric vehicle industry. While it is not yet profitable, it is growing quickly and generating significant revenue. For example, Nio's sales nearly doubled year-over-year in 2020, and its revenues are expected to continue growing at a rapid pace in the coming years. Given Nio's strong growth prospects, many analysts believe that its shares are undervalued and offer an attractive investment opportunity.
Who owns most Nio shares?
According to public filings, the largest shareholder of Nio Inc. (NYSE: NIO) is Tencent Holdings Ltd (OTC: TCEHY), which owns 18.37% of the company. Tencent is a Chinese conglomerate with a diverse set of businesses, ranging from internet services, to gaming, to artificial intelligence. The company first invested in Nio in 2015, and has since increased its stake several times.
Other major shareholders include Hillhouse Capital Group (11.04%), Baillie Gifford & Co (8.63%), and New Enterprise Associates (5.56%). Nio went public on the New York Stock Exchange in September 2018, and its shares have been highly volatile since then. However, the stock is up over 700% since its lows in March 2020, as investors bet on the future of electric vehicles.
Do Nio shares pay dividends?
Nio does not currently offer shareholders dividends on their stock, nor does it have any plans to do so in the future. This is a common trend among many young companies, who often reinvest their profits back into the business in order to fuel growth. For Nio, this has meant investing in new technologies and expanding its manufacturing capabilities. While this strategy may not be ideal for income-seeking investors, it has helped the company become one of the leading players in the electric vehicle market.
What is the new EV battery sourcing rules?
As part of the Inflation Reduction Act, the Biden administration requires that 50% of the value of battery components must be produced or assembled in North America to qualify for a $3,750 credit. Likewise, 40% of the value of critical minerals must be sourced from the United States or a free trade partner for a separate $3,750 credit.
The rules are designed to decrease the US’ reliance on China for EV battery supply chains. Upon implementation, Volkswagen, BMW, Nissan, Rivian, Hyundai and Volvo electric vehicles all lost access to the full EV tax credits.
The US market is closed to Nio?
If European automakers are being locked out, Nio has very little chance of breaking into the US market. Especially as Nio founder Li believes that Nio and other Chinese firms have a cost advantage as high as 20% over their non-Chinese rivals. Precisely because of the supply chain and raw material control that the US is trying to break.
What is battery swaps?
Nio is one of a few electric vehicle makers that sees battery swapping as a viable alternative to charging stations, and aims to have 2,300 battery swapping stations in place by the end of 2023.
The idea is that drivers can simply swap drained battery packs for full ones in a five minute process rather than waiting in place for the full recharge time. Nio says it has automated the process down to as little as three minutes, not dissimilar to refuelling an ICE vehicle.
What is the Nio’s big battery plans?
The firm is also planning to build its first battery plant, as they look to cut their reliance on battery giant CATL. Sources report that Nio’s plant would have an annual capacity of 40 gigawatt hours (GWh) of batteries, enough for approximately 400,000 electric-vehicles.
When will Nio become profitable?
The EV maker is aiming for profitability by the end of 2023, based on estimates that Nio’s vehicle sales will double this year. However, with some very capital intensive expansion plans, the company may be forced to add to the already high levels of debt for funding. If sales disappoint then profitability may continue to be out of reach.
Likewise, plans to expand into Europe & the US could also be limited by protectionism, leaving the company to battle it out with other domestic-facing Chinese companies such as BYD.
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Manage risk with in-platform tools
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