What happened

Shares of Chinese electric-vehicle maker NIO (NYSE:NIO) were moving higher on Monday, amid a broad U.S.-market rally and following a bullish note from a J.P. Morgan analyst. As of 11 a.m. EST, NIO's American depositary shares were up about 6.2% from Friday's closing price.

So what

In a new note on Monday morning, J.P. Morgan analyst Rebecca Wen raised her price target on NIO to $46 from $40, while maintaining an overweight rating on the shares. 

Wen wrote that she believes that NIO will be a "long-term winner" in China's upscale-electric-vehicle market, with a roughly 30% share of the segment by 2025. She believes that "a high valuation can be justified," as NIO is transforming its business model to capture additional revenue through its "platform and content offering," in addition to direct sales of vehicles. 

A NIO ES8, an upscale electric SUV, inside one of the company's automated battery-swap stations.

As of last Friday, NIO had 158 of its automated battery-swap stations up and running in China. The stations can "recharge" a NIO vehicle by swapping its battery in about three minutes. Image source: NIO.

NIO said on Friday that it's adding a 100 kilowatt-hour (kWh) battery pack as an upgrade option to its subscription battery-swap service. Earlier this year, the company rolled out the service, which allows consumers to purchase a NIO vehicle without a battery pack (and thus at a substantial upfront discount), while paying a monthly fee for access to the company's automated battery-swap stations.

Now what

Auto investors following NIO will want to pay close attention to the company's third-quarter earnings report, scheduled for next Tuesday, Nov. 17. The earnings report itself should be good -- NIO's sales hit record levels in the quarter. But the real news, given the company's recent fast pace of innovation, may be around its outlook for the remainder of 2020 and into next year.

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