What happened
Nio (NIO -5.00%) stock popped again today, and was trading up 5.5% as of noon ET Wednesday. Shares of the electric vehicle (EV) maker zoomed by double digits ahead of today's product launch event. Suffice to say, Nio managed to impressed investors -- it didn't just launch a new EV, but also announced upgrades to existing ones along with a price hike.
Meanwhile, at least two analysts reiterated their bullish views on Nio today as they see much stronger days ahead for the EV maker.
So what
Nio unveiled its new SUV, the ES7, today. The mid- to large-size SUV that will rival BMW X5L is now open for preorders, with Nio targeting Aug. 28 as the date of first delivery.
Going by the buzz on social media, many are surprised by the ES7's stylish design. It is also Nio's fastest SUV to date, and is among the first passenger cars in China certified to tow a caravan or trailer.
Image source: Nio.
As I mentioned yesterday, the pricing of the ES7 was one of the most important factors to look out for as Nio's sales mix lately was skewing toward its low-priced trims. That where things get interesting.
Nio has priced the ES7 along the lines of its larger SUV, the ES8, but its price under battery-as-a-service (BaaS) is still higher than that of the ES8. BaaS is a subscription-based rental program that gives prospective customers an option to buy vehicles without batteries at lower prices and instead rent and swap batteries when required.
An equally big takeaway from today's launch event, though, was Nio announcing an upgrade to existing models with an advanced in-vehicle intelligence digital system called Alder, which includes a digital cockpit controller and better sensing capabilities and hardware, among other things.
Nio made two smart moves today.
First, since it's building cars with Alder now, it has raised prices of 2022 models of existing SUVs, the ES8, ES6, and EC6.
Second, to ensure existing car owners don't feel let down, Nio is offering existing SUV owners an option to upgrade their cars to include Alder for a low cost, such that their effective cost of car after the Alder upgrade will still be lower than the 2022 model prices. It looks like a calculated move on Nio's part to retain customer loyalty.
Now what
While the ES7 should start contributing to Nio's top line later this year, Deutsche Bank analyst Edison Yu projects Nio's sedans, the ES7 and ET5, will become the "most desired premium cars in China this year, according to The Fly.
Yu believes Nio is "embarking on the most important product cycle in the company's history," and that Nio's deliveries should rapidly pick up pace as the year progresses. Yu has a price target of $45 a share on Nio. Mizuho analyst Vijay Rakesh also sees Nio growing faster in the second half of 2022 as lockdowns in China ease.
Despite Nio already projecting a strong rebound in deliveries and margins from the third quarter, the EV stock plunged after first-quarter earnings. Investors bought the stock ahead of the launch event, though. Thankfully, Nio didn't disappoint investors who bought the promising growth stock on the dip.
