With or Without Apple Partnership, Nio Is Still a New Year Buy

Of all my stock-picking errors in 2020, no longer getting on the Nio (NYSE: NIO) bandwagon and recommending NIO stock sooner is considered one of my very top regrets.

A Nio (NIO) store at night in Shanghai, China.

A Nio (NIO) retailer at night in Shanghai, China.

Source: Robert Contrivance / Shutterstock.com

I waited till June to provide the Chinese electrical automotive (EV) maker the thumbs up. In hindsight, once it bought $1 billion in funding serve in April, I could per chance per chance also mute possess realized the tide had became positively. Nonetheless, that’s water below the bridge now.

Today time, NIO sits spherical $48.37, about 644% better than it’s low on Jun. 24.

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Now heading into 2021, the news suggests Apple (NASDAQ: AAPL) may per chance per chance also attach in tips a Chinese EV maker adore Nio as its strategic accomplice to construct an upcoming Apple automotive or truck. With or with out that partnership, even supposing, the EV maker may per chance per chance also mute attain brilliant excellent.

Here’s why.

Likely Apple Partnership and NIO Inventory

Though the Apple’s history of curiosity in automobiles goes the whole arrangement serve to Steve Jobs, the corporate ideal bought coming into into earnest with “Venture Titan” in 2014.

Several stops and begins since, Reuters no longer too long within the past reported that the corporate is transferring forward with plans for its hang self-riding automotive by 2024. They show cowl:

“Apple has progressed sufficient that it now aims to abolish a automotive for patrons, two of us conversant within the effort stated, asking no longer to be named because Apple’s plans are no longer public. Apple’s goal of organising a non-public automotive for the mass market contrasts with opponents much like Alphabet Inc’s Waymo, which has constructed robo-taxis to raise passengers for a driverless fling-hailing provider.

“Central to Apple’s approach is a new battery salvage that can per chance per chance per chance also ‘radically’ minimize the rate of batteries and construct better the automotive’s differ, constant with a third particular person who has considered Apple’s battery salvage.”

Nonetheless, given what’s took place in 2020, it doesn’t appear reasonable that Apple will meet its production goal. Merchants may per chance per chance also mute request a yr-or-two extend in a ideal-case field.

Plus, as of this day, there isn’t this kind of thing as a indication whether or no longer Apple will crawl it on my own (it does possess the monetary may per chance per chance also to realize so) or if this is able to per chance per chance well also accomplice with an organization adore Tesla (NASDAQ: TSLA), Volkswagen (OTCMKTS: VWAGY) or even Nio. Wedbush Securities analyst Dan Ives no longer too long within the past predicted the following:

“We imagine based fully totally on our investor conversations over the final few days that many on the Facet road would barely in finding Apple accomplice on the EV course, than start up building its hang automobiles/factories given the margin and monetary mannequin implications down the road, coupled with the strategic product threat spherical this kind of mountainous endeavor.“

Truly, Ives believes that the percentages of a strategic partnership are as excessive as 70%. Finally, were the partnership winning, you might per chance per chance then in finding Apple crawl to its hang manufacturing platform.

I’ll proceed to survey with curiosity for any developments in this house. Nonetheless, handicapping the at this point will be a futile endeavor. We’re to take into accounta good distance off from an announcement.

And within the meantime, NIO stock has lots of positives in retailer.

Nio Has Got a Lot on the Desk

In my most present article on NIO stock, I eminent that the corporate may per chance per chance even possess as many as 5 automobiles to sell by early 2022.

Already, the EV maker boasts the ES8, ES6 and EC6, with the latter officially launching on the discontinue of 2019 and exact deliveries beginning in September. In the third quarter of 2020, Nio delivered 12,206 automobiles. That’s nearly three instances better than its deliveries within the identical length a yr earlier.

Year-to-date (YTD), the corporate has delivered 26,375 automobiles — 114% better than within the first nine months of 2019. And it’s getting busier.

What’s more, the corporate is anticipated to start a new sedan in January at its annual “Nio Day.” On the heels of that, it’s also expected to start a second sedan at Nio Day 2022.

Finally, many mediate Nio Day 2021 will ship the start of a bigger and better battery, too, moreover to further news in regards to the automotive maker’s self sustaining riding efforts.

Truly, the change has gotten so staunch that analysts imagine it may per chance per chance per chance per chance per chance also blueprint shut a sizeable fragment of the top class EV market briefly teach. Investor’s Enterprise Every day experiences:

“JPMorgan expects the EV fragment of the whole China automotive market to quadruple to 20% in 2025 from below 5% in 2019. The prices of producing EVs and primitive automobiles will reach parity by 2023, pushed by decrease battery prices, the company says.”

CEO William Li projects the corporate will reach an annual production of 150,000 automobiles by the discontinue of 2021. Nio has also field an extended-differ goal of 300,000 yearly.

Evidently, with or with out Apple, this name is going to be busy for the following couple of years.

Backside Line

I proceed to read in regards to the deceleration of EV gross sales in 2020 due to Covid-19. Nonetheless, while that can per chance per chance be appropriate, the long-term outlook for EV gross sales mute appears vivid to me.

So, till proven in every other case, I will proceed to bang the drum for NIO stock. In my realizing, it remains an very top-attempting long-term steal.

On the date of e-newsletter, Will Ashworth did no longer possess (both straight away or in a roundabout arrangement) any positions within the securities mentioned listed right here.

Will Ashworth has written about investments rotund-time since 2008. Publications where he’s seemed encompass InvestorPlace, The Motley Fool Canada, Investopedia, Kiplinger, and several other others in both the U.S. and Canada. He particularly enjoys constructing mannequin portfolios that stand the take a look at of time. He lives in Halifax, Nova Scotia. At the time of this writing Will Ashworth did no longer serve a predicament in any of the aforementioned securities.

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