Nio Inc. (NIO)

Company website 2020 Financial Report Stock Analysis

74641

Sold

The number of EVs that Nio sold as of the end of 2020

172

Battery Swap Stations

The number of Nio-owned battery swap stations covering 74 cities, through which Nio completed over 1.4 million battery swaps by the end of 2020

46.3^%

CAGR

in Nio's EV sales between 2018 - 2020

View Our Analysis

The Path to Drawdown: Electric Vehicles

The first electric vehicle (EV) prototype was made in 1828, but not being able to surmount the challenge of building a lightweight, durable battery with adequate range meant that internal combustion engines have dominated the automotive and transport landscape since the 1920s.

Today that picture is changing. Thanks to supportive policies and falling costs, there are millions EVs on the road. The difference in their impact on the climate is remarkable. Compared to petroleum-based vehicles, CO2 emissions drop by 50% if an EV’s power comes from the conventional grid. If powered by solar energy, emissions are cut by 95%. Once households purchase EVs, the operating costs for those cars are often cheaper than gas-based cars, too.

What once used to be a roadbump for EVs -- the question of how far the car can travel on a single charge -- is now much less of a concern. The average range of a battery electric vehicle produced in 2020 is about 217.5 miles, up from 124 miles in 2015.

What’s making this increase in mileage possible is the continuing development in battery capacity. Global EV battery capacity is expected to increase from around 170 GWh per year today to 1.5 TWh per year in 2030. At the same time, the cost of batteries is falling as their production reaches greater scale.

To be on track to remain under 1.5ºC of warming, 100% of passenger cars and vans (p. 138) need to be running on electricity by 2050. This is a jump from 5% of cars and 0% of vans in 2020, respectively. Accomplishing this overhaul of the transportation landscape means EV production and ownership need to continue to expand over the next three decades:

<::marker> 11 million EV cars and vans were on the road in 2020
<::marker> 2 billion EV cars and vans (100% of total global sales) need to be on the road by 2050

This would require a CAGR of 18.94% from 2018-2050

About

Nio Inc. (stock ticker: NIO) is a Chinese multinational automobile manufacturer headquartered in Shanghai, specializing in designing and jointly manufacturing electric vehicles. They also integrate self-driving systems in their EVs, as well as building charging and battery swap stations in China. In 2021, Nio also plans to deliver cars to Norway.

NIO's Role in Drawdown

Nio’s EV sales have grown at a remarkable speed since its first delivery in 2018. Aided by the release of new models, its delivery has grown from over 11,300 vehicles in 2018 to 43,700 in 2020. Nio’s EV sales accounted for 0.4% of the rapidly expanding global EV market.

For Nio to maintain this market share in the growth of the EV landscape projected by the IEA by 2050, it will need to sell over 1.39 million vehicles in 2030, and 7.95 billion vehicles in 2050. This increase would imply a 41.34% CAGR between now and 2030, and 9.11% CAGR between 2030 and 2050. Given that Nio’s sales have grown by 56.78% year-on-year between 2018 and 2020, that growth may be a realistic goal.

NIO: What We Like

Aside from its aggressive EV sales, we particularly like Nios’ battery swapping and Battery as a Service (p. 63-64) segments:

<::marker> The battery swapping segment is a series of battery swapping stations in Chinese cities, where drivers of Nio vehicles can charge, swap, and upgrade their batteries.
<::marker> Battery as a Service, launched in 2020, is a subscription service where drivers can purchase EVs and subscribe for the usage of battery packs separately. Users can purchase EVs at a lower price while enjoying flexible battery upgrade options and assurance of battery performance.

What We Want to See Improve

Track Sustainability Metrics

We are excited about Nio’s entry into the Chinese and global EV market. But we have no idea how Nio’s operations directly contribute to climate change or ecological sustainability because so far they haven’t published any sustainability metrics. In particular, we want to see data on their scope 1, 2 and 3 GHG emissions, avoided emissions, waste management and water use.

Publish Information about Suppliers

Similarly, aside from Nio’s joint manufacturing partners (pp. 71-72), there is very little information about Nio’s suppliers. As a company dedicated to reducing emissions from transportation, Nio should provide information about its materials suppliers so that investors can understand the climate impact of its entire supply chain. They can then potentially persuade these suppliers to begin reducing their own emissions.

Set Clear Targets

Finally, once these key metrics are collected and published, Nio should set clear targets for reducing emissions and enhancing ecological sustainability by a concrete timeline. This would allow climate-conscious investors to hold Nio accountable.

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5.00%	Tesla Motors, Inc. (TSLA)	Tesla Motors makes EVs, battery energy storage, solar panels and solar roof tiles. They’ve done the most to make EVs cool
4.12%	Nio Inc. (NIO)	Nio Inc. makes EVs and integrate self-driving systems in EVs. They’re helping to electrify the transport system
2.55%	XPeng Inc. (XPEV)	XPeng makes electric passenger cars and SUVs with a long range and autonomous driving capabilities. They’re helping electrify transport
0.69%	Lennox International (LII)	Lennox makes high-efficiency heating, ventilation, air conditioning and refrigeration products, helping building managers cut energy use and emissions
0.66%	Arrival (ARVL)	Arrival makes commercial electric vans and buses through an innovative and efficient manufacturing process. They’re helping electrify transportation
0.30%	Fisker Inc. (FSR)	Fisker makes luxury and high-end electric cars and SUVs with a long range. They’re pushing the electrification of transportation
0.17%	The Lion Electric Company (LEV)	LEV makes electric trucks, school buses and minibuses in North America. They also make batteries and EV charging infrastructure, all key Drawdown solutions
0.16%	Proterra Inc. (PTRA)	Proterra offers electric transit buses, EV batteries and energy storage, as well as EV charging solutions - all key to electrifying transportation
0.12%	Canoo Inc. (GOEV)	Canoo makes a range of electric vehicles designed for families and commercial uses. They’re helping electrify transportation
0.05%	XL Fleet Corp. (XL)	XL Fleet makes hybrid and electric systems so that leading automakers can make more low and zero-emission vehicles
0.03%	Arcimoto, Inc. (FUV)	Arcimoto makes ultra-efficient, fun, pure electric vehicles for passenger transportation. They’re helping electrify transportation.
0.03%	Lightning eMotors, Inc. (ZEV)	Lightning eMotors makes electric commercial vehicles and charging solutions for those vehicles. They're helping electrify transportation
0.02%	Ayro, Inc. (AYRO)	Ayro makes EVs designed for narrow paths, college campus walkways, and last-mile delivery. EVs are key in electrifying transportation
0.02%	GreenPower Motor Company Inc. (GP)	GP makes electric commercial vehicles for delivery, public transit, schools, micro-transit, and shuttles. They’re helping electrify transportation
0.02%	Jiuzi Holdings, Inc. (JZXN)	Jiuzi Holdings and their subsidiaries make EVs for the Chinese market. They’re helping electrify transportation