A NIO es6 car is displayed at the Beijing Auto Show.
Wang Zhao/AFP via Getty Images
Chinese electric vehicle maker NIO watched its stock price drop Tuesday after reporting a dip in February deliveries that seemed to unnerve investors. But securities analysts were focusing on the global microchip shortage.
NIO stock was down about 8% in midday trading Tuesday. The S & P 500 and Dow Jones Industrial Average were off about 0.3% and 0.1%, respectively.
Wedbush analyst Dan Ives pointed out the shortage will be a near-term overhang for not only NIO (ticker: NIO) but all its competitors.
“The chip shortage which has impact the overall global auto industry, as well as Tesla ‘s recent price cuts, have dented some positive market dynamics for NIO …although we believe this will be short lived,” Ives wrote in a Tuesday report. He still sees “jaw dropping” EV demand in China and expects NIO, and others, to sell all they make.
Barclays analyst Brian Johnson noted Tuesday that industry data provider IHS estimates 1 million cars are at risk of not getting built in 2021 because of the chip shortage.
In an earnings call Monday, NIO officials said the company has enough chips to meet production goals through the second quarter; Johnson, however, fears chips will still be in short supply as the year wears on.
Global auto companies make roughly 90 million cars a year. The IHS data point is one way to size the chip-shortage problem. “IHS noted that additional supply, which could compensate for volume lost in [first half 2021], will be delayed until [the fourth quarter] and run into 2022,” wrote Johnson.
Ives and Johnson don’t cover NIO, though. Deutsche Bank analyst Edison Yu does. He rates the company as Buy and has a $70 price target for the stock.
Yu believes, despite supply-chain problems, NIO can hit 100,000 deliveries in 2021, though he is projecting 96,000. He expects monthly production to pick up from about 7,500 to roughly 10,000 by summer. “Longer term, we see several areas of untapped growth,” wrote Yu. He envisions more models and NIO cars being sold around the world.
Goldman Sachs analyst Fei Fang isn’t as bullish as Yu. Fang rates NIO shares Hold and has a $59 price target.
Fang, however, thought the quarter was solid and was encouraged by the success of the battery-as-a-service business model. NIO will sell an EV without the cost of a battery and then, essentially, rent the battery to consumers for a monthly charge.
When the service launched, the monthly fee was 980 yuan, or about $140. The fee includes six battery swaps a month. Accounting for variables, that is roughly up to 1,500 miles of driving range.
About 55% of new NIO buyers are selecting the rental option and the percentage is growing every month, according to management. Fang wrote that rental model is improving the utilization of NIO’s 200 battery-swapped stations.
Write to Al Root at [email protected]
