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Why NIO Stock Rose Again Tuesday

By Howard Smith - May 25, 2021 at 11:41AM

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Investors continue to digest news from yesterday that will help double production.

What happened

After jumping more than 5% Monday, shares of NIO (NIO 3.84%) again rose 5% early Tuesday morning. As of 10:25 a.m. EDT, the stock had pared some of those gains, but remained up about 3.5%. 

So what

Yesterday, the fast-growing Chinese electric vehicle maker said it had renewed its manufacturing partnership agreement with state-owned manufacturer Jianghuai Automobile Group (JAC). The three-year agreement extension through May 2024 will allow JAC to continue manufacturing NIO's three current SUV models as well as its upcoming ET7 luxury sedan and potentially new models. Also, due to growing demand for NIO vehicles, the extension will double current capacity to about 20,000 vehicles per month or 240,000 annually. 

NIO ET7 luxury electric sedan on display

The NIO ET7 luxury electric sedan will be available beginning early 2022. Image source: NIO.

Now what

NIO reported April deliveries of about 7,100 vehicles, an increase of 125% compared to the prior-year period. For the first quarter of 2021, NIO increased deliveries more than 420% versus the first quarter of 2020. The company has said that the global semiconductor shortage has affected recent production results. 

The current arrangement will continue with JAC manufacturing the vehicles and NIO being responsible for vehicle development and engineering, supply chain management, manufacturing techniques, and quality. Jianglai -- a joint venture between JAC and NIO -- is in charge of parts assembly and operation management.

With interest continuing to soar for its current electric SUV offerings and anticipation building for the upcoming ET7 sedan, investors today continue to cheer the agreement that will allow production to keep up with demand for NIO vehicles. 

Howard Smith owns shares of NIO Inc. The Motley Fool owns shares of and recommends NIO Inc. The Motley Fool has a disclosure policy.

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