NIO, XPENG (XPEV), Li Auto (LI): 3 EV stocks to power the future

With 5G and China’s internet based cities on the way, NIO, XPENG (XPEV), & Li Auto (LI) are in a great position to capitalize the rollout of 5G and electric vehicles.

NIO

Nio is often considered the winner of Electric Vehicles due to it’s flexible business models. The company garnered bullish endorsement from J.P. Morgan analyst Rebecca Wen, as she raised the price target.

Wen raised her price target to $46 from $41.

“We believe Nio will be a long-term winner in the premium EV space, with ~ 30% market share by 2025, A higher valuation can be justified as Nio is leading the transformation of its business model in China’s smart EV market — from direct sales currently to potential monetization of both ‘B’ and ‘C’ customers through its platform and content offering in the future — similar to the phenomenon we witness in e-commerce business now.” 

Rebecca Wen, Analyst at J.P. Morgan

Since it began making and selling electric cars in China, NIO has made battery swapping part of its business model. This surprised some people who previously saw battery swapping elsewhere fail, and many thought that NIO’s battery swapping business would be promptly shut down. That was not the case. Today, NIO has 158 automated battery exchange stations located along major highways and in major cities throughout the country.

Exchanging a battery means a driver who is running low on electrons can have a fully charged battery installed and continue on with a journey in about 6 minutes. That’s not even enough time to go to the bathroom and get a snack or a coffee. To date, NIO has completed nearly 1.2 million battery exchanges.

Until now, customers had a choice of a 70 kWh battery or an 84 kWh battery. Now they can upgrade to a 100 kWh for a one-time fee of $8,774, or pay for it in monthly installments of $133. They also have the option of paying a yearly fee of $1,207. When installed in the EC6, the company’s most efficient model, range on a single charge is 382 miles NEDC.

The NIO battery exchange program can work for drivers in other ways, as well. Let’s say a driver needs extra range for a month or two. The larger battery can be installed, used as long as necessary, then a smaller, less expensive battery can be re-installed when the need for more range is over. No other manufacturer offers its customers such flexibility.

NIO also offers customers the option of purchasing a new car without a battery, then leasing the battery they prefer. For instance, they can buy a car for $19,365 less than the list price with the new 100 kWh battery and add the battery on a subscription basis for $224 a month. If they prefer the 70 kWh battery, the monthly subscription cost is just $148.

A customer who upgrades to the new 100 kWh battery is getting much more than additional range. Its patented cell-to-pack design results in a 37% higher energy density than the company’s 70 kWh battery. It also features better thermal runaway management, plus a highly integrated design that streamlines the manufacturing by 40% and improves space utilization by 20%. Its thermal management system improves performance and extends the lifetime of the battery. A cloud-based bi-directional battery management system allows smart adjustments based on actual driving and weather conditions to improve the battery’s performance under all circumstances. The new battery has been awarded more than 300 patents for its novel, cutting edge technology.

The battery-as-a-service model has made NIO highly competitive in the premium sector of the electric car market and allowed it to set new monthly and quarterly sales records over the past 6 months. Creative thinking and flexible battery options are a big part of that sales success.

XPENG (XPEV)

To start off, last month, Xpeng produced its 10,000th electric vehicle at its new Zhaoqing Smart Factory. That happened in not even 160 days after the company built the factory, which Xpeng claims is the quickest a Chinese electric vehicle startup has hit that mark.

“The completion of 10,000 P7s reinforces XPeng’s position as a leading smart EV brand, demonstrating its strong capability in supply chain management, smart manufacturing and quality control, Chairman He Xiaopeng said,”

Going into Xpeng’s recent IPO in the US, I took a few deep dives into the company. One of my top takeaways was that Xpeng is one of the only companies focused so thoroughly on the “smart tech” side of new electric vehicles. The CEO of the company echoes those points in Xpeng’s news release about the 10,000-P7 milestone: “The Smart EV market in China is at a crossroads, where companies focusing on differentiated products and quality services stand out from the rest, and we see it an irreversible trend,” CEO He Xiaopeng added.

Li Auto (LI)

Vehicle sales in China rose 12.5% in October, versus the prior-year period. But sales of new-energy vehicles — which include battery-powered EVs, fuel-cell cars, and plug-in hybrids — more than doubled to 160,000. According to the China Association of Automobile Manufacturers, sales of new-energy vehicles are expected to rise to about 1.1 million units this year.

Li Auto reported last week that it delivered a total of 8,660 vehicles in the third quarter, including 3,692 of its Li ONE in October, which it called a “steady increase” over September. It also said it received a record number of orders in October. 

Other Chinese EV automakers are echoing that growth. NIO reported it doubled its EV deliveries in October, compared to 2019. Year-to-date through October, NIO said deliveries are up 111% to 31,430. In its first quarterly report as a public company, XPeng said its third-quarter vehicle deliveries jumped 266% compared with the prior-year period. Shares of Xpeng and NIO were also surging today. 

Li Auto continues to grow its network. As of Oct. 31, the company had 41 retail stores across 36 cities. It said it plans to continue strengthening its direct sales and servicing network as it increases its presence in China.


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Tim Rolle
Investor of 6 years and Managing Editor of Money Midnight, a news outlet focused on highly profitable investment ideas and bold underground research.
Articles: 113

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