On the surface, it should have been good news for Chinese electric car maker Nio (NYSE:NIO), especially as it worked to produce a deal to improve its ability to swap batteries. But investors weren’t taking it as good news at all, and Nio shares plunged over 5% in Wednesday afternoon’s trading.
Nio set up a deal between itself and Guangzhou Automobile Group, the fifth-largest producer of automobiles in China. It called for the duo to work together toward producing a line of swappable, chargeable batteries, and also to put together a new battery standard that will better serve such a policy.
Basically, in such a play, Nio envisions an environment in which electric vehicle drivers no longer recharge their onboard battery but pull out the old, dying battery and replace it with a freshly charged battery at a central station. Charging stations require a higher investment, but attempting to automate a battery swap station raises its costs substantially. It’s already made substantial moves on this front and recently succeeded in swapping over 30 million batteries.
Battery Deals Don’t Stop There
Meanwhile, just recently, Nio also revealed that it was working on a battery deal with BYD (OTHEROTC:BYDDF) to produce batteries for one of the Onvo vehicles that we heard about just a couple days ago. Specifically, the new BYD batteries would go into the Onvo L60, which is expected to make its debut later this month. While BYD has previously put most of its internally-produced batteries to work in its own vehicles, it seems that BYD is now increasingly interested in outsourcing some of that produce.
Is Nio a Buy, Hold, or Sell?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on NIO stock based on seven Buys, seven Holds, and two Sells assigned in the past three months, as indicated by the graphic below. After a 35.97% loss in its share price over the past year, the average NIO price target of $6.92 per share implies 32.82% upside potential.
