The underdog is finally poised to have its moment in the spotlight. After smashing delivery expectations for the month of July 2023, NIO is currently receiving accolades left, right, and center, relegating Tesla to the side benches, at least temporarily.
To wit, NIO reported today that it delivered a whopping 20,462 EVs in July 2023, constituting an increase of 103.6 percent relative to the corresponding month of the previous year and 91.11 percent on a sequential basis. Moreover, the company managed to deliver 10,000 units of the all-new ES6 SUV. Year to date, the company has delivered 75,023 vehicles, constituting an increase of over 23 percent on an annual basis.
In cognizance of NIO’s growing delivery momentum, Morgan Stanley just named the stock a “research tactical idea.” Additionally, CCB International has now increased its target price for NIO shares to $21.10.
As NIO appears to be shining brighter than ever, Tesla has seemingly backpedaled. While Tesla did earn a record revenue of nearly $25 billion in Q2 2023, the achievement was marred by the EV giant’s shrinking margins as well as additional delays in materially ramping up the production of the Cybertruck. To wit, Tesla’s automotive gross margin (ex-regulatory credits) fell to 18.10 percent in Q2 2023 from 19.0 percent in Q1 2023 and 26.20 percent in Q2 2022. Moreover, the company has revealed that it is only producing “release candidate” builds of the Cybertruck currently, with formal production slated to commence only later this year at Giga Texas. Volume production is not expected until 2024.
To make matters worse, Tesla continues to face a spate of investigations. As we noted in a previous post, the EV giant is currently being investigated by California’s DMV and the office of the attorney general. It is also under the scrutiny of the SEC and the Department of Justice. To make matters worse, the US Office of Defects Investigation (ODI) has now opened a preliminary evaluation of Tesla’s 2023 Model 3 and Model Y, citing 12 reports of inability to steer the vehicle and loss of power steering.
Against this backdrop, it is hardly a surprise that NIO is up 55 percent over the past month, while Tesla is down 4 percent during the same timeframe. Bear in mind that NIO’s production capacity is expected to hit 600,000 units soon. This means that the Chinese EV player is about to enter its hyper-growth phase, necessitating a heftier growth premium for its shares.
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