Shares in this article
Successful year for Tesla and NIO
2020 was an excellent year for the US electric car manufacturer Tesla, culminating in its inclusion in the S&P 500 index, weighted according to the market capitalization of the companies in it, on December 21. And the Chinese competitor NIO can also look back on a successful year. Both companies are not resting on their success, however, but have already forged big plans for 2021. But according to “#MarketWatch” columnist Jeff Reeves, only one of the two electric car manufacturers is the first choice for the coming year – namely the industry star NIO. It should be noted that Tesla is a pioneer in the electric vehicle business and has driven the development of the sector – especially in comparison to conventional automakers who only jumped on the road to success later -, but does not represent the industry alone. So it is a fallacy that higher sales of electric cars automatically mean a higher market value for Tesla.
The -expansion of the market position in China is also rather sluggish for the company. “ Although there was a lot of fuss about the Chinese-made Model 3 vehicles, Tesla only sold about 21,600 of these cars in November. That was good enough to claim the third largest market share, but it is certainly not a game changer,” so Reeves. Meanwhile, the market itself is developing splendidly:
The -total sales figures for all electric vehicles in China are in line with expectations, and in November they even exceeded them significantly. Although Tesla may dominate the global market, there is not much of its supremacy to be seen in China, Reeves is certain. Although the group can also record significant growth in China, according to the electric carmaker’s strong equity valuation, this is still less impressive.
NIO can score in the home market
The -situation is different with competitor NIO: “ So far, NIO has only delivered a total of 36,700 vehicles in 2020. But that is over 110 percent more than in 2019 – and the company is aggressively investing to ramp up production further,” explains Reeves. In addition, the Chinese manufacturer can benefit from its home advantage, while Tesla has a harder time as an international company in the People’s Republic. It starts with the fact that NIO has contacts with state authorities and has concluded a cooperation with the energy network operator State Grid Electric Vehicle Service, which belongs to the state supply company of the People’s Republic. Although the partnership includes the construction of only 100 charging and service stations in the coming year, this shows the need for friendly relationships between Chinese companies and the government, as this is the only way for company growth and a strong market position. “ Meanwhile, the Tesla factory is 100 percent American-owned,” says Reeves. “ And even if Chinese banks provided the $ 1.4 billion loan for the facility, that is very different from a business relationship with partners in Beijing.”
Although the electric car manufacturer NIO had to take a lot of criticism from investors for increasing its liquidity in December by means of a secondary placement, according to Reeves this was exactly “the right step at the right time”.
The -columnist defends the purchase price of 39 US dollars per share, as it was seven percent below the market price. He also points out that Tesla has already taken similar measures several times in the past and that this is not something that can only be accused of NOK.
Finally, for investors who still can’t decide between the two electronic giants, Reeves has one more piece of advice: “ If you enjoy this kind of meta-investing by trying to think about what other people think of what Musk thinks, then focus on Tesla, but for many investors who want to get through the noise and simply see the growth potential of China’s electric vehicles, NIO is an option that is a lot […] the hysteria around Tesla that is common these days. ”
Finanzen.net editorial team