Deutsche Bank Bullish as Nio Prepares Expansion

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By Michael Elkins

Electric vehicle company, Nio Inc. (NYSE:NIO) is down about 1% in pre-market trading Tuesday after a Deutsche Bank analyst reiterated a Buy rating and $45 price target on the stock.

In the note by Deutsche Bank, the analyst focused mainly on recent developments that show NIO pushing forward overseas. As NIO continues to prepare to enter several new markets before year-end, the analyst sees the company’s expansion as an underappreciated aspect of NIO's long-term growth prospects.

In Europe, Nio is preparing to enter Germany, Netherlands, Denmark, and Sweden (in addition to already being in Norway). The launch vehicle for these markets will be the flagship ET7 full-size sedan. The company will host an official launch event in Sep or early Oct with CEO/founder William Li attending in person. Deutsche Bank estimates that the first batch of ~200 cars already left port from China en route to Europe.

In a more under-the-radar development, the analyst wrote in the note that “CEO/founder William Li actually visited NIO's US headquarters in San Jose in recent weeks and was also seen scouting a potential location for NIO's first US store in downtown San Francisco.” NIO has previously indicated it will enter the US by 2025. There are currently at least 4 test vehicles on the ground with plans to install a swap station later in the year.

Normally, a visit to the U.S. wouldn’t garner too much attention. However, considering the logistical complications surrounding a visit to and from China during COVID, the analyst wrote in his note “we suspect the CEO's visit involved more than just a courtesy greeting and checking out property. We think perhaps NIO's desire to enter the US may be far greater than it appears especially given how competitive the domestic Chinese market is becoming. While geopolitics is certainly a risk, we are encouraged by CATL's reported decision to build a multi-billion dollar plan in North America to supply Tesla (NASDAQ:TSLA) and Ford (NYSE:F) with battery cells. The official announcement was reportedly delayed due to the Pelosi Taiwan incident but does not appear to be canceled which would support the notion that there is possibility for cooperation between the two countries on EVs, even in the backdrop of political tension.”