We recently compiled a list of the 8 Best EV Stocks To Buy Right Now. In this article, we are going to take a look at where NIO Inc. (NYSE:NIO) stands against the other EV stocks.
After a swift rise in the EV industry over the years, we saw a slowdown in its progress, especially in Europe and the USA. Nevertheless, it is just a matter of time before the technology takes over the traditional internal combustion engines (ICE).
While the growth has been slowing in the western part of the world, China has been working tirelessly to become the global leader in the EV industry. In a podcast episode of Everything Electric Show on October 20, Ford CEO Jim Farley discussed the ongoing transformation in the automotive industry.
He noted that while EV adoption continues to grow worldwide, significant changes have occurred regarding market dynamics. He emphasized China’s dominance in EV production, with 70% of global EVs manufactured there. A rapidly expanding sub-segment in China is electric vehicles with extended range (e-rev), which use a small combustion engine to power the batteries for longer trips.
This shift is reshaping global supply chains, brand preferences, and jobs, with geopolitical factors further influencing the industry’s future. Farley noted that these changes have become clearer over the past year.
We also discussed the country’s dominance in our article about small-cap EV stocks to invest in. Here is an excerpt from the article:
“While the growth in the US and Europe is slowing down, China is picking up a significant pace and dominating the EV landscape. According to a World Economic Forum report, Chinese EVs are much cheaper than their Western counterparts, with an average price of $34,400, compared to $55,242 in the U.S. The price gap is driven by lower labor costs, favorable government subsidies, and more affordable battery sourcing.
Chinese automakers now produce more than half of the world’s EVs and are using their cost advantages to potentially dominate the global market. As Chinese brands gain scale and expertise, their competitive pricing could allow them to challenge Western automakers.”
Read Also: 7 Best Delivery Stocks To Invest In Now and 10 High Growth Non-Tech Stocks That Are Profitable in 2024.
US Racing Against China’s Dominance
The United States government acknowledges the potential of EVs in the future of mobility and is trying its best to push for its development. On July 11, the Department of Energy (DOE) announced $1.7 billion in grants aimed at converting 11 auto plants in eight states to produce electric vehicles and components.
Reuters reported on October 22 that U.S. Energy Secretary Jennifer Granholm announced that the DOE is working quickly to finalize $1.7 billion in grants. The funds include $500 million for GM’s Michigan plant and $334.8 million for Stellantis’ Belvidere plant, with additional funds for the latter’s Indiana facility.
According to another Reuters report from September 23, Monroe Capital LLC announced plans to launch the Drive Forward Fund LP, aiming to raise up to $1 billion to provide loans to smaller auto suppliers transitioning from internal combustion engine vehicles to EVs.
The White House supports this initiative, emphasizing that it will offer affordable capital to help small and medium-sized auto manufacturers refinance, grow, and diversify and will benefit over 250,000 workers.
Moreover, new U.S. tariffs on Chinese EVs and stricter emissions regulations are pushing automakers to adapt their supply chains. Monroe CEO Ted Koenig highlighted the fund’s importance in cultivating growth and innovation among suppliers struggling to secure financing for EV production.
Our Methodology
For this article, we identified over 30 EV manufacturers using the Finviz stocks screener and narrowed our list to 8 stocks most widely held by institutional investors. The stocks are listed in ascending order of their hedge funds which was taken from Insider Monkey’s Q2 database of 912 elite hedge funds.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A fleet of eco-friendly electric cars, a symbol of the company’s commitment to sustainability.
NIO Inc. (NYSE:NIO)
Number of Hedge Funds Holders: 20
NIO Inc. (NYSE:NIO) specializes in premium smart electric vehicles and is renowned for its innovative battery swapping technology and Battery as a Service (BaaS) model, which offers flexible battery subscription options. The company’s vehicle lineup includes various SUVs and sedans.
The company operates in China and several European countries, with plans for further global expansion, which is supported by its research and development centers located in important areas worldwide. It takes the 7th spot on our list of best EV stocks.
In July 2023, NIO (NYSE:NIO) introduced a significant advancement in battery technology, a 150 kWh semi-solid-state battery that extends driving ranges to approximately 930 kilometers (578 miles) on a single charge. The technology combines the high energy density of solid-state batteries with the practicality of traditional lithium-ion batteries, which improves vehicle performance and allows current owners to upgrade their battery packs for improved range.
In Q3, the company achieved a new high with 61,855 vehicles delivered, marking an 11.6% growth from the previous year. In September alone, NIO (NYSE:NIO) delivered 21,181 vehicles, a 35.4% increase from the same month last year.
This total includes 20,349 vehicles from its premium brand and 832 from its newly launched family-oriented brand, ONVO. The ONVO brand introduced its first model, the L60, a mid-size smart electric SUV, on September 19, with deliveries beginning shortly after. With over 2,552 battery swap stations established in China, the company is positioned as a distinctive player in the EV charging and battery market.
Overall NIO ranks 7th on our list of the best EV stocks to buy. While we acknowledge the potential of NIO as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than NIO but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.