After hosting a conference call with NIO, Bank of America released a new note on Monday reiterating its $31 price target on the shares, which represents an upside potential of 48.60% based on the current price of $20.88.
The call with the Shanghai-based EV maker covered NIO’s sub-branding, the launch of a new model in 2023, autonomous driving, and increased production capacity.
According to the note released, the company “indicated there could be more surprises in terms of new product launches in 2023, besides the existing pipeline” and confirmed the arrival of new versions of ES8, ES6, and EC6 based on NT2.0 platform next year.
New model launches on track, mass-market brand in 2H24
We hosted a conference call for NIO management on 11 July, and we provide below our key takeaways. NIO indicated there could be more surprises in terms of new product launches in 2023, besides the existing pipeline. NIO said it will launch new versions of ES8, ES6, and EC6 based on NT2.0 platform in 2023. It will have models equipped with 800-voltage fast-charging features and launch/deliver mass-market brand products in 2H24. The product launches could be speed up as NIO has multiple re-useable design/elements, such as smart hardware, -motor/powertrain, and battery technology. We maintain Buy.
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Capacity expansion on track; confident on sales ramp-up
NIO has increased its daily production capacity from 400 units to 600 units in June, and management saw strong orders for both ES7 and ET7, with ET7 order backlog pushing its capacity allocation towards the upper limit. NIO believes it is on track for ramping up capacity and pushing monthly delivery growth in 2H22.
Targets EBITDA break even in 4Q23 and turn profit in 2025
Management expects the design GPM of NT2 would be 25% when its quarterly shipment reaches 100K. NT2’s design GPM is higher than NTI’s design GPM of 20% without
factoring in the raw material price hike impact. NIO is targeting EBITDA to break even in 4Q23, with a quarterly delivery of over 100k units, similar to what its rival Tesla achieved previously. It also expects to turn profitable in 2025.
Autonomous driving: NOP to be rolled out city by city
NIO indicated its NOP (navigate on pilot) function in urban areas will be gradually rolled out city by city. The service could speed up after its launch in first several cities.
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Although Shenzhen government took initiatives on launching autonomous driving (AD) regulation last week, NIO believes more related policy/regulation from the central govemment will be more meaningful to push the development for next -level AD. It will also start the business model of AD as a service in the future to charge a monthly fee of RMB680 to its users, which should boost revenue growth and margin enhancement.
NIO Power Day recap: sharing 800-voltage fast-charging
NIO also highlighted its key message on its 2022 NIO Power Day event: plans to deliver its self-developed 800-voltage fast-charging technology. At the same time, it would share with other OEMs to co-use the charging infrastructure and reach economies of scale together.
Earlier today, the EV maker said it has decided to “form an independent committee, consisting of independent directors to oversee an independent investigation regarding the allegations made in the Short Seller Report“. NIO added that will provide updates on the Independent Investigation in due course consistent with the requirements of applicable rules and regulations of the three Exchanges.