What happened
After sinking lower over the past couple of trading days, Nio (NIO 2.30%) stock regained some ground this morning and was trading up 3.3% as of 12:20 p.m. ET.
A mix of macro and company-specific news is sending shares of the China-based electric vehicle (EV) manufacturer higher today. Specifically, Nio is trying to gain a foothold in parts of China often ignored by other EV makers -- even as the nation tries to rethink its COVID-19 policies and allow auto companies to resume production. Both developments are important for Nio.
So what
Nio shares plunged last week after the company suspended production amid lockdowns in China just days after postponing the launch of its ES7 SUV by a month.
To be fair, this shouldn't have come as a surprise as other automakers including Nio's arch rival Tesla had already suspended operations in Shanghai in late March. Yet, investors feared slow production could hurt Nio's 2022 growth plans.
This morning, though, a local Chinese media outlet confirmed that Tesla has resumed production at its Shanghai Gigafactory, as reported by EV-focused portal CnEvPost.
In a departure from its zero-COVID policy that has crippled manufacturing activity in China, the nation's industrial development authority has drawn "white lists" of 666 companies that it wants to resume production to shore up manufacturing in the nation. Tesla is on the list.
Image source: Nio.
In another equally important development, CnEvPost reports that China's industry regulator has decided to step in to tackle the problem of surging raw material prices that have hit the automotive industry, particularly new energy vehicles (NEVs), really hard. NEV makers including Nio have been forced to delay launches and raise prices of vehicles in recent weeks to combat inflationary pressures.
Now what
There's only so much Nio can do about macro challenges like raw material costs and COVID-19 lockdowns, but the company is taking no chances to leave a mark where it matters. Even as it navigates supply chain challenges, Nio's data from April 19 reveals it added 23 battery swap stations in one year in China's northern provinces, according to CnEvPost. EV makers have typically stayed away from the region given its extreme cold weather conditions, but Nio has big plans under the "Power North" plan it launched last year.
Nio's subscription-based battery-as-a-service (BaaS) program is a major draw as it allows customers to buy cars without batteries for a lower price and then rent and swap batteries at Nio's swapping stations as needed. Nio, in fact, currently owns 63% of all battery swapping stations in China, and the BaaS program could be just one of the growth catalysts for Nio in the long term.
