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Nio Stock: Buy, Sell, or Hold in 2022?

By Rekha Khandelwal – Dec 28, 2021 at 2:31AM

Key Points

  • Nio has delivered more than 150,000 electric vehicles so far.
  • The company is building a second manufacturing facility in Hefei.
  • The stock is more than 50% off its high price in 2021.

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Can Nio survive in the competitive electric vehicle market?

China is a huge and fast-growing electric vehicle (EV) market. From the start of 2021 through November, the number of EVs sold in China rose 178% year over year. China accounted for more than 40% of the global EV sales in the first half of the year. Consequently, all the top EV makers are trying to capture a share of this rapidly growing pie.

Nio (NIO -2.16%) has managed to make a place for itself in the domestic Chinese market. Let's discuss how the company may fare in 2022 and beyond.

Nio's impressive growth

Nio has grown significantly in the seven years since its founding in November 2014. The company, which launched its first production model in 2018, has delivered 156,581 vehicles so far through November. Of these, 80,940 vehicles were delivered in 2021 (as of the end of November). Nio's year-to-date deliveries through Nov. 30 rose 120.4% year over year. Despite its competition, the impressive growth points toward a robust demand for Nio's cars.

A person charging a blue electric car.

Image source: Getty Images.

Nio currently sells three models -- the ES8, which is a six- or seven-seat SUV; the ES6, a five-seat SUV; and the EC6, a five-seat coupe SUV. Of these, the ES6 has been Nio's top-selling model this year.

In 2022, Nio plans to introduce three new models. The company will start order confirmation of the ET7, a luxury sedan, in January and start deliveries at the end of March. Further, the company recently unveiled the ET5, a midsize sedan. Deliveries of the ET5 are expected to commence in September 2022. The third planned model for 2022 is not yet unveiled. Overall, Nio has a solid product lineup for 2022, which should help boost its sales.

Beyond the Chinese market, Nio started deliveries of the ES8 in Norway in September. In 2022, the company plans to enter five more countries in Europe. 

What could support Nio's long-term growth

Nio has grown significantly over the years, and the company has solid plans for the coming years. However, the company faces tremendous competition from EV start-ups as well as legacy car companies. Nio's quality products, cutting-edge technology, and a strong network of swapping and charging stations could give it an edge over the competition.

Some attractive technology features of the recently unveiled ET5 include a digital cockpit with AR and VR technologies, a monthly subscription for autonomous driving updates, and various battery options from a 75-kilowatt-hour (kWh) standard range battery to a 150-kWh battery, which can offer a rated range of 620 miles. 

The company has installed 700 battery swapping stations so far, more than 3,000 fast chargers, and 3,319 destination chargers across the country. Moreover, it has connected with over 430,000 third-party charging stations. By the end of 2022, Nio intends to have over 1,300 battery swap stations, 6,000 fast chargers, and 10,000 destination chargers. 

Users can swap a discharged battery with a charged one or go for an upgraded battery at Nio's battery swap stations. It takes just three minutes to swap a battery. Swapping the battery is an attractive option in China, as evidenced by over 5.3 million swaps done at Nio swap stations so far. 

Finally, Nio is expanding its production capacity to meet the growing demand for its cars. The company is building a second manufacturing facility at NeoPark in Hefei. The facility is expected to become operational in the third quarter of 2022. 

The EV stock looks attractive

As of this writing, Nio stock is more than 50% off its high price in 2021. It still sports a price-to-sales ratio of 9, which isn't cheap.

NIO P/S Ratio Chart

NIO P/S Ratio data by YCharts.

However, the P/S ratio has improved significantly from the stock's ratio at the start of the year, which was over 30. Similarly, Nio's market capitalization looks better than that of Lucid or Rivian, both of which have very little sales history.

All in all, 2022 could be a good time to add Nio stock to your EV portfolio.

Rekha Khandelwal has no position in any of the stocks mentioned. The Motley Fool owns and recommends NIO Inc. The Motley Fool has a disclosure policy.

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