NIO, a renowned Chinese electric car manufacturing company, has been in the spotlight in the past two years. After launching its service, the company was often referred to as ‘’the Chinese Tesla.’’
However, as time progressed, NIO has gone through some serious ups and downs. Just until recently, many were wary of investing in this company or even purchasing its cars. This was due to the fact that its shares were declining and the company was unable to make the ends meet.
After being on the verge of bankruptcy, NIO has risen from the ashes and it is again being featured in mass media. This time, though, for a good reason.
In this blogpost on our rideshare website, we will see how NIO managed to stay alive contrary to public belief that it would fail rapidly. Moreover, we will analyze financial data and compare it to Tesla’s current situation.
What Sets NIO Apart from Tesla?
The first and main difference between the two is company maturity. NIO was founded in 2014, while Tesla has been around since 2003. However, even during this short period of its existence, NIO has managed to create a notable boom within the electric car industry.
NIO currently offers two electric car models, namely ES8 and ES6. These two cars are actually SUVs and their current price starts at $51,000.
NIO has been in the spotlight because they’ve been introducing various innovations when it comes to self-driving technology. One interesting thing to note is that the company also offers a battery replacement service, which is why many customers love it.
However, NIO’s maturity level becomes apparent when we start looking at its finances.
Currently, their net losses exceed the revenue. Namely, the company’s 2019 reports show that its revenue is around $1.1 billion, while its losses amount to $1.6 billion. Luckily, that didn’t stop them from manufacturing and selling cars. Last year, the company sold 20,565 which is 81% more than the year before.
NIO has to rely on raising occasional capital, otherwise, they might not be able to meet the demand. The company is also heavily financed by the Chinese government, which has invested around $1 billion so far.
Tesla, on the other hand, is more mature and stable compared to NIO, which is expected. After all, Tesla has been in business for almost two decades now. The growth within the company has been steady, though not perfect.
Regardless, Tesla has managed to up its production and deliveries, which grew by 50% in 2019.
When it comes to price management, it is important to note that Tesla has a substantial competitive advantage thanks to low battery costs, which are among the lowest in the whole industry.
Plus, Tesla has a lot more vehicles in use, and it’s one of the favorites when it comes to different rideshare options. This goes hand-in-hand with the difference in price since NIO is still more costly compared to Tesla.
Currently, Tesla models start at $38,000, which is $13,000 lower compared to NIO. Furthermore, Musk has promised an even cheaper electric car in the future that would only cost around $25,000.
NIO Stocks Have Been Skyrocketing
Many were scared of the company’s future because it almost experienced complete bankruptcy. Luckily, with the help of some investors and good strategic management, the company rose from ashes and started expanding, slowly but surely.
NIO has been selling cars mostly in the US and Asia in the past two years.
However, the company decided to spread its wings to Europe and perhaps other continents too.
Even though many of NIO’s US and UK executives and leaders decided to bail once the company was on a decline, after receiving the aforementioned investments, the company was still up-and-running.
Today, we are noticing a substantial increase in shares, which are up by a staggering 240% compared to last year. These improvements enabled NIO to start thinking bigger and to start planning an expansion into the European market. We’re yet to hear more about this business move.
Is NIO the New Tesla?
This is a difficult question to answer because there are so many different variables involved.
While we can say that these companies are true competitors, we can’t say for sure which one will eventually prevail. Musk is still leading the way, and just like NIO, he’s looking into expanding his business in Europe too.
This won’t necessarily hurt NIO’s expansion efforts, but it can make the transition much more difficult. Musk has already expanded Tesla’s operations to China, after which he announced that the next Tesla’s giga-factory will be opened in Berlin.
When it comes to stock, Tesla’s worth has increased by 378% compared to last year. Moreover, it managed to go over the $2,000 per share, while NIO shares were about 2% lower.
What’s to Come?
Because of the current pandemic, all industries, including the auto market, have been going through some difficulties. Just in China, car sales dropped by 12.7%. When we talk about new energy cars specifically, the sales dropped by 32.8%.
To ensure smoother sailing, China has allowed its manufacturers to sell vehicles without a battery, which is good for NIO.
NIO wants to launch a new option called ‘’battery-as-a-service,’’ which is like a subscription plan for its customers. They also offer a unique incentive for customers who are interested in joining the program.
All customers that decide to purchase the new battery plan will receive a $10,000 discount for their next NIO car purchase.
They hope that this innovation, alongside others they have been introducing, will bring in more customers and create a more stable business environment. We will be following the development of this situation daily, so make sure to check out our rideshare site for any updates.
Conclusion
NIO has been through the wringer, that’s for sure. However, despite all doubts and criticism, there is still some light at the end of the tunnel. NIO has been on a steady rise, so much so that they’re already considering expanding to Europe and other unexplored regions. We’re definitely excited to hear more about their expansion plans, as well as Musk’s new Berlin giga-factory.
If you’d like to keep up with all the latest news in the car industry, make sure to read up on our rideshare blog every week.
