Why NIO Stock Is Higher Today

NIO’s contemporary contend with its manufacturing companion has a bullish clause.

What happened

Shares of NIO (NYSE:NIO) bear been engaging greater on Monday after the Chinese language electric-automotive maker talked about that its manufacturing companion had agreed to double its manufacturing skill to amass to 240,000 NIOs per 365 days. 

As of 1: 15 p.m. EDT, NIO’s American depositary shares bear been up about 5.7% from Friday’s closing note.

So what

Some background: NIO doesn’t catch a factory; its autos are manufactured below contract by a joint mission with authorities-owned automaker Jianghuai Automobile Community, or JAC, in a JAC-owned factory within the industrial metropolis of Hefei, finish to NIO’s headquarters. 

NIO talked about on Monday morning that it has signed a contemporary three-365 days contract with JAC to proceed that blueprint through (a minimum of) Would possibly maybe presumably also of 2024. As share of the deal, JAC has agreed to lengthen the manufacturing skill of the factory to 240,000 autos per 365 days, or 20,000 per month — double its contemporary skill. 

The 100,000th NIO, an ES8 SUV, is shown rolling off a factory production line under a commemorative banner.

The JAC-owned NIO factory built its 100,000th automotive in April. NIO and JAC talked about they’ve agreed to proceed the connection for three more years. Image source: NIO.

NIO and JAC did now not enlighten when that skill lengthen will be in feature, however the announcement is seemingly why NIO’s inventory is buying and selling greater at the contemporary time. 

Now what

Auto investors who be conscious NIO know that the corporate has been working since gradual last 365 days to lengthen output at JAC’s factory amid quick-rising quiz for its smooth electric SUVs. The corporate become as soon as ready to lengthen the manufacturing rate from about 5,000 autos a month to 7,500 per month in early January and has pushed it greater since. 

At a ceremony to notice the 100,000th NIO built at the factory in early April, CEO William Li Bin talked about that the factory can now build about 10,000 NIOs per month. Nonetheless, Li talked about, manufacturing has but to hit that figure this skill that of an ongoing worldwide shortage of automotive semiconductors. 

NIO and most other affected automakers now query the chip shortage to last into 2022, though affords are anticipated to make stronger a little within the second half of this 365 days. 

This article represents the draw of the creator, who could honest disagree with the “legit” recommendation feature of a Motley Idiot top class advisory service. We’re motley! Questioning an investing thesis — even one of our catch — helps us all mediate seriously about investing and catch choices that abet us change into smarter, happier, and richer.

John Rosevear has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends NIO Inc. The Motley Fool has a disclosure policy.”>

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