Recently, few stock markets are more exciting than the electric vehicle (EV) industry, because mature automakers and new upstarts are struggling to take advantage of the growing demand for sustainable transportation. Wei Lai (New York Stock Exchange: NIO) The Chinese company’s goal is to sell its vehicles to the world’s largest consumer market, so it is an emerging company in the industry.
Since the beginning of April, Wei Lai’s share price has risen fivefold, and shareholders have unprecedented hopes for the development of electric vehicle companies in China. Tesla (NASDAQ: TSLA) Achievements made in the US market. However, because the stock price is rising so fast, Weilai Automobile needs to show investors some signs that its basic business prospects can keep up. In particular, the following three points will show NIO shareholders that the company has the stamina to become a long-term participant in the electric vehicle industry.
1. The number of vehicles delivered needs to increase significantly
The latest event that caused Weilai Automobile’s stock price to rise was its release of car delivery data for the second quarter. Investors are pleased to see an increase in delivery volume, especially considering the pressure on the economy caused by the coronavirus pandemic. More than 3,700 vehicles were delivered in June, up from less than 1,340 in June 2019. Overall, more than 10,300 vehicles were delivered in the second quarter, compared with 3,550 vehicles in the same period last year.
However, this is not the first time Weilai Automobile has sold 3,000 to 4,000 cars in a month. At the end of 2018, Weilai Automobile exceeded the 3,000 mark in November and December. Monthly sales figures for the second half of 2019 are more consistent month by month, but they remain basically in the range of 2,000 to 3,000.
In contrast to Tesla, Tesla’s car delivery in 2019 increased by 50%, and hope to deliver 500,000 cars this year. NIO is doing well as a new company, but it needs to go beyond its near-term scope and really start to establish demand for its model.
2. NIO needs to invest its capital well
Many upstart companies fail because they do not have sufficient funds to successfully conduct business. This is especially true in capital-intensive industries such as manufacturing.
However, NIO does not have this problem because it has continued financial support from private and public resources. In the private sector, the Chinese Internet giant Tencent Holdings (OTC: TCEH.Y) He has invested in Weilai Automobile many times, and increased his stake in Weilai Automobile to 15% only last month. The public sector joined the program through the Economic Development Fund to facilitate the company’s relocation to Anhui Province.
When many companies are short of cash, NIO has liquidity and investors are relieved. But this is not enough to prove a sharp rise in stock prices. NIO must also use Using these funds wisely and formulating expansion plans can prove the company’s ability to follow a strong strategic vision.
3. NIO needs new hot vehicles
NIO’s first electric car was an eight-seater SUV, called ES8, which attracted many audiences. However, when the automaker launched its ES6 six-seater SUV, it essentially eroded its past success, because ES8 sales almost stagnated, even if ES6 sales have been replaced.
NIO plans to move in a slightly different direction on its next model. Although Weilai Automobile calls EC6 “Coupe SUV”, EC6 will be a coupe model. It will provide long-distance driving capability of more than 380 miles and provide acceleration from 0 to 60 mph (about 4.7 seconds). This puts it at the same level as Tesla’s Model Y, and NIO definitely wants to position itself as an alternative to its US competitors.
Tesla’s success is partly because it offers such a wide range of different models. NIO needs to prove that it can make EC6 successful, and then needs to show a long-term strategy on how to make customers repeat customers.
Sight on the road
Weilai Automobile has a huge opportunity to profit from the lucrative Chinese electric vehicle market. If it can achieve these three goals, it will go a long way to show shareholders that it has the lasting ability to keep a distance from Tesla and other new companies in the automotive industry.