Shares of NIO Inc. (NIO, Financial) have been trading in the green in recent weeks on the back of several positive developments.
Perhaps what has investors excited is the addition of its semi-solid-state battery to the user manual. Despite its stumbles in the past, NIO is now primed to incorporate a 150 kilowatt hour solid-state battery pack into its electric vehicles, a plan first announced two and a half years ago.
This innovation is set to debut in the forthcoming ES6 SUV, in line with recent assurances from NIO CEO Li Bin. Customers in China can anticipate the option of this solid-state battery pack in their new vehicles as early as this month.
Building momentum with increased deliveries
Building upon its solid momentum, NIO showcased a remarkable 74% surge in deliveries for June, breaching the significant 10,000 delivery threshold. China Passenger Car Association data further emphasizes this robust performance.
The CPCA reported a noteworthy 10% month-over-month rise in retail sales of new energy vehicles last month. Such trends suggest Chinese EV players are stepping into the second half of the year with heightened delivery and sales momentum. Hence, there is much for investors to look forward to in the coming months.
Solid-state batteries could be a game changer
The Chinese EV behemoth originally unveiled a high-impact 150 kWh solid-state battery pack at its NIO Day event in 2021. The pack, a seamless blend of solid-state cells and the design of traditional lithium-ion cells, sparked hope for a single-charge range of 1,000 kilometers (620 miles). However, commercialization hurdles put its rollout on a back burner.
Fast-forward to May of this year, NIO fired up the excitement again when it submitted a filing with China's Ministry of Industry and Information Technology. The filing cited plans to sell three EV models equipped with enhanced battery capabilities from WeLion, an up-and-coming solid-state battery developer.
The unveiling of NIO's ES6 SUV at the month's end showed the vehicle would be the first to offer the highly anticipated solid-state pack. Further, the specifications in the company's latest EV user manuals indicate the battery is significantly heavier but more energy-dense than the currently offered 100 kWh lithium-ion packs by CATL.
Despite the solid-state pack weighing more than the lithium-ion version, its energy density stands at a commendable 261 watt ours per kilogram, roughly 44.44% higher than the 180 Wh/kg offered by the lithium-ion pack.
Delivery of solid-state battery packs begins
Further underlining the tangible progress, WeLion announced on July 1 it had officially begun delivering the 150 kWh packs to NIO, fueling speculation that a July roll-out might be on the cards. With a signed annual order in place, the company seems poised to deliver on its solid-state promise finally.
June delivery growth was impressive
NIO reported it delivered 10,707 vehicles in June, marking a massive 74% increase month over month. Though this fell short by 17.4% compared to last year, it was an encouraging rebound every quarter.
The second quarter saw total deliveries reach an impressive 23,520 vehicles, albeit at the lower end of the guidance set. Nevertheless, June was notable as it represented the first month since March that the company breached the 10,000 EV delivery mark.
Of the total, 6,383 units were premium smart electric SUVs, while 4,324 were premium smart electric sedans.
Challenges and strategic moves
Despite its stellar performance, NIO, like its counterparts in the EV sphere, faces the challenge of deteriorating vehicle margins due to rising inflationary pressures and growing competition. However, the company is not resting on its laurels as it struck an incredibly exciting deal with Abu Dhabi-based CYVN Holdings.
This partnership will see CYVN owning 7% of NIO, bolstering the company's balance sheet while also paving the way for a potent foothold in the burgeoning United Arab Emirates market. Layer that up with the potential revenue from its battery charging stations, and you have a mighty encouraging future for the Chinese EV player.
With these strategic maneuvers, NIO seems to be on the right track to sell substantially more cars than in 2022 and follow through on its objectives. Hence, its position is still a heartening narrative of month-on-month growth and future potential.
Takeaway
NIO is making headlines with its promising comeback, and there is more than one reason for investors to cheer. The EV titan is finally making good on its long-anticipated promise of integrating a solid-state battery pack into its EVs, as confirmed by recent updates to its user manuals. This innovative leap will feature in the forthcoming ES6 SUV, a development that sparked excitement across the market.
Moreover, its stellar June deliveries hit a notable 74% surge, breaching the 10,000 delivery threshold. New data from CPCA underscores this powerful performance, reporting a 10% month-over-month increase in new EV sales. Consequently, Chinese EV players such as NIO are stepping into the second half of the year with stronger momentum than they started the first half with.
In short, with a powerful battery upgrade on the horizon and robust delivery stats backing its progress, NIO is a stock to watch. So while challenges lie ahead, the company's strategic moves and steady growth narrative support a rosy outlook for the stock.
