Nio (NYSE:NIO) has a market cap more than 10 times smaller than that of Tesla (NASDAQ:TSLA). And even though investors continue to accumulate the stock, which is up over 15 times from its low, the EV giant of China has upside ahead.
In September, Nio posted 4,708 vehicles delivered in Sept. 2020. This is up 133.2% from last year. In the quarter, deliveries grew 154.3% Y/Y to 12,206 vehicles. Delivery of the ES6 outpaced the premium smart electric SUV, the ES8, by over two times. The positive momentum will likely continue for the rest of the year as China’s economy bounces back.
In the last quarter, Nio announced a battery-electric leasing program that cuts the base cost of the EV. The convenience of swapping out a battery will save customers time. The strong appeal suggests that Tesla will face heavy competition in China.
Global expansion is still in the future. For example, entering the U.S. market would increase Nio’s addressable market. But getting into this market is unlikely in the near-term, as the U.S. continues its protectionist stance. For now, Nio must grow unit sales, increase operating cash flow, and post profits. Once income outpaces cash to burn, Nio will have excess cash to invest in the business without selling shares that dilute existing shareholders.