Electric vehicle maker Nio (NYSE:NIO) saw a dip in August deliveries and it led to a decline in NIO stock. However, Nio is not alone.
The majority of EV makers saw a dip in deliveries due to chip shortage that is likely to continue for the near future. But this dip is an ideal buying opportunity for Nio fans. NIO stock is up 22% this year and is currently trading at $38.
Despite the fall in delivery numbers, the company is making strong strategic partnerships in the industry and strengthening its position. One must not judge the automaker based on the August delivery numbers but look beyond it.
The company has strong growth potential and a bright future ahead. With that in mind, let’s take a look at what’s driving the growth for NIO stock.
This Is Only The Beginning
For EV makers, this is only the start of the growth. Considering the strong moves made by the government towards the promotion of EVs in the country, the demand is going to surge, and this is when Nio will be able to make the most of it. The company is currently working to expand its production capacity and in the next few years, it will be right where all the action is.
Nio has recently signed an agreement with Lotus, a British sports automaker. This partnership will allow Lotus to move towards an all-electric fleet. It is a $2.4 billion deal funded by Nio Capital and there will be four new Lotus vehicles hitting the market starting next year. The production will take place at the joint development facility in Wuhan, China.
This is a strong move by Nio and will only strengthen its position in the ever-expanding EV market. It has already marked its presence in Norway and is all set to expand there. However, the chip shortage may not allow the company to meet the expansion goals in the immediate future, but it will happen soon.
Revenue Growth Through Battery As A Service
The easiest way for an EV maker to reduce the cost of a car is through the battery. Nio is making smart moves towards battery innovation and is offering the battery-as-a-service model. It is a subscription plan for batteries that allows you to change the batteries. The company already has 158 battery swap stations and will continue to expand on it. This meets the needs of the customers and will drive growth for the company.
Nio recently opened a new charging line in the southwestern China region under the Power Up plan. It is the company’s third route under this plan, and it offers 15 charging stations as well as battery swap stations here. Nio aims to deploy more than 30,000 destination charging piles in China.
The company will also have its swap stations in Norway, where it is already selling its cars. The four swap stations in and around Oslo will be ready by the end of this year. It also plans to open the first Nio Service and delivery center in Oslo this month.
What Should You Do With NIO Stock?
Nio has strong fundamentals and an impressive lineup of products. I believe this dip is temporary and NIO stock will soon hit new highs. All EV makers are dealing with the chip shortage and once this issue is resolved, there is no stopping the growth of Nio.
It is one of the best EV stocks today and this dip is the perfect buying opportunity for those who are keen on investing in the EV industry.
Buy NIO stock in the dip and hold for the long term. The stock will reap gains in the future.
On the date of publication, Vandita Jadeja did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.