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

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.

More reading

• Don’t fall in love with a charismatic CEO, says fundie
• Tesla (NASDAQ:TSLA), Fastly (NYSE:FSLY) among most popular US shares last week
• ASX stock of the day: Strategic Elements (ASX:SOR) surges 170% on new self-charging battery
• Tesla knocks Q3 earnings out of the park
• Could Tesla deliveries surge 70% next year?

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.

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