Aussies going crazy for electric car maker, but it's not Tesla

Wondering who or what is Nio Inc? And why are its shares on absolute fire among Australian investors? Let's take a look.

| More on:

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Australian share investors are reportedly climbing over each other to buy shares in an electric car maker that's not Tesla Inc (NASDAQ: TSLA).

According to international trading platform eToro, Nio Inc (NYSE: NIO) was the most invested stock by Australian investors last month.

The Chinese company's stocks saw a 35% surge in trading activity, overtaking its better-known rival Tesla.

Growth story

eToro market analyst Josh Gilbert said the Nio share price had rocketed 40% upwards in October.

"The Chinese automotive manufacturer has had significant growth in 2020, with a (share price) increase of over 722% from January 1 to October 30," he said.

"JP Morgan analysts upgraded the price target for the stock to US$40 in the middle of October, which was close to double the price at the time of upgrade."

Nio has pushed up even further this month, already surpassing that target. It sat at US$41.63 at market close on Friday, after starting the year at US$3.72.

The spectacular rise in investor interest was backed up by its business growth, according to Gilbert.

"The company's sales are also soaring, with its Q3 vehicle deliveries increased by 154% from the same period last year," he said.

"And this isn't expected to stop any time soon, with recent guidance demonstrating that Nio Inc is looking to continuously expand its production capacity after a recent increase of 11%."

Why is Nio so popular?

Interestingly, some Nio cars are able to have their batteries swapped out, which is an alternative to plugging in an electric vehicle (EV) for hours to get it charged up. Tesla has not gone down that route with its publicly available cars.

Nio was established in 2014, and is called Weilai in its home country.

The Motley Fool's US motoring specialist John Rosevear said it has gone from "a near-broke startup trying to survive" to a now-stable company with plenty of cash for future growth.

"While NIO isn't the largest maker of EVs in China – and probably won't be – its upscale, tech-stuffed vehicles exist in a sweet spot of the market, where customers are willing to pay up for features and styling that NIO has so far been able to deliver," he said last week.

"That upscale focus (and growing credibility with upscale consumers) means its chances of getting to profitability, and of having good margins after that, are quite strong."

Nio will report its latest quarterly results on 17 November US time, where chief executive William Bin Li is expected to present plans for the next stage of growth.

Tony Yoo has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and recommends Tesla. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Share Market News

A happy young couple lie on a wooden deck using a skateboard for a pillow.
Share Gainers

These were the best-performing ASX 200 shares in March

These shares made their shareholders smile in March thanks to some very big gains.

Read more »

Businessman using a digital tablet with a graphical chart, symbolising the stock market.
Opinions

2 ASX shares I have been buying in 2024!

I’m a believer in the long-term outlook of these stocks.

Read more »

Stock market chart in green with a rising arrow symbolising a rising share price.
Share Gainers

Here are the top 10 ASX 200 shares today

It was a massive day for the ASX 200, with a new all-time high recorded.

Read more »

A man sits thoughtfully on the couch with a laptop on his lap.
Technology Shares

This ASX tech stock rocketed 60% in March! Can it keep on delivering?

After soaring in March, the ASX tech stock is now up 169% since this time last year.

Read more »

Broker Notes

Brokers name 3 ASX shares to buy now

Here's why brokers are feeling bullish about these three shares this week.

Read more »

A young man clasps his hand to his head with his eyes closed and a pained expression on his face as he clasps a laptop computer in front of him, seemingly learning of bad news or a poor investment.
Share Fallers

Why Burgundy Diamond Mines, Clarity Pharmaceuticals, EML, and Zip are sinking today

These ASX shares are ending the week in the red. But why?

Read more »

A young women pumps her fists in excitement after seeing some good news on her laptop.
Share Gainers

Why Mesoblast, Newmont, Pilbara Minerals, and Platinum shares are jumping

These ASX shares are ending the week strongly. But why?

Read more »

a young boy dressed up in a business suit and tie has a cute grin and holds two fingers up.
Opinions

2 of my top ASX 200 shares to consider buying before April

I would happily exchange dollars for these two shares right now.

Read more »