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A NIO es6 car is displayed at the Beijing Auto Show.
Wang Zhao / AFP via Getty Images
Chinese electric vehicle manufacturer
NIO
saw the stock price fall on Tuesday after reporting a dip in deliveries in February that seemed to be making investors nervous. But securities analysts focused on the global microchip shortage.
The NIO stock fell about 8% during afternoon trading on Tuesday. The S&P 500 and Dow Jones Industrial Average were down about 0.3% and 0.1%, respectively.
Wedbush analyst Dan Ives pointed out that the short-term deficit will be an overhang for not only NIO (ticker: NIO) but all of its competitors.
“The shortage of chips that affects the overall global automotive industry, as well as
Tesla
The recent price cuts have brought down some positive market dynamics for NIO… although we think this will be short-lived, ”Ives wrote in a Tuesday report. He continues to see “overwhelming” demand for electric vehicles in China and expects NIO and others to sell everything they make.
Barclays analyst Brian Johnson noted on Tuesday that IHS industry data provider estimates 1 million cars are at risk of not being built by 2021 due to the chip shortage.
In a earnings call on Monday, NIO officials said the company has enough chips to meet production targets in the second quarter; However, Johnson fears chips will still be in short supply as the year goes on.
Global auto companies make about 90 million cars a year. The IHS data point is one way to mitigate the chip shortage problem. IHS noted that extra supply, which added to the lost volume [first half 2021], is postponed until [the fourth quarter] and run in 2022, ”wrote Johnson.
However, Ives and Johnson don’t cover NIO. Deutsche Bank analyst Edison Yu does. He rates the company as Buy and has a target price of $ 70 for the stock.
Yu believes that, despite supply chain issues, NIO could reach 100,000 deliveries by 2021, although he forecasts 96,000. He expects monthly production to increase from about 7,500 to about 10,000 in the summer. “In the longer term, we see several areas of untapped growth,” Yu wrote. He predicts that more models and NIO cars will be sold around the world.
Goldman Sachs analyst Fei Fang isn’t as optimistic as Yu. Fang rates NIO shares of Hold and has a target price of $ 59.
However, Fang found the quarter to be solid and encouraged by the success of the battery-as-a-service business model. NIO sells an electric car without the cost of a battery and then essentially rents the battery to consumers for a monthly fee.
When the service launched, the monthly fee was 980 yuan, or about $ 140. The rate includes six battery changes per month. If we take variables into account, that’s about a driving range of up to 1500 miles.
About 55% of new NIO buyers choose the rental option and the percentage is growing every month, according to management. Fang wrote that the rental model improves the use of NIO’s 200 battery-swapped stations.
Write to Al Root at [email protected]