Electric Vehicle Stocks Like NIO Poised to Take Off

Just look at Nio (NIO), an electric vehicle stock, which just reported strong deliveries.

In fact, for May 2022, the company delivered 7,024 vehicles, of which 5,317 were premium smart electric SUVs, including 746 ES8s, 2,936 ES6s and 1,635 EC6s. Nio also sold 1,707 ET7s, its flagship premium smart electric sedan. Nio’s cumulative deliveries as of May 31 have reached 204,936 vehicles. Better, vehicle production had been gradually recovering from the impact of the coronavirus pandemic.

The Fly reports Bank of America analyst Ming Hsun Lee’s upgraded Nio toa “buy,” from its earlier “neutral” rating. Lee’s price target is $26, up from $25. The upgrade is based on improving sales and better margins expected in the second half as well as an attractive valuation given the view, Lee told investors, that one-year return of down 60% has “likely priced in all negatives.”

According to Digitimes, Nio has been recruiting in the U.S., which could lead to potential production and sales in America. In more good news for the company, China is implementing a new tax cut for new car purchases, which should benefit the entire EV sector. And Citigroup analyst Jeff Chung also recently said the Shanghai government would implement plans to boost the local economy, a potential boon for Nio.

Mizuho analyst Vijay Rakesh now has a buy rating on the stock, with a price target of $60 per share. The analyst believes the company’s production and supply chain issues are just starting to show signs of improvement, and that Nio could be back to pre-shutdown levels by this month. This could indicate a substantial boost for Chinese EV companies.

Technically, after finding strong support around $12, the oversold stock just broke above prior resistance around $17.76. From here, we’d like to see the stock test April 2022 resistance around $24 per share, near-term.

Electric Vehicle Demand Still Strong

We also have to consider that EV demand is still strong.

Global leaders want millions of EVs on the roads, and here in the U.S.. President Joe Biden wants at least 50% of all new vehicles to be electric by 2030. As a result, automakers are shifting production toward electric fleets.

And people are buying. According to Car and Driver: “American car shoppers seem to have discovered the electric car. After a decade of slow but steady sales growth, electric vehicle registrations in the U.S. shot up 60 percent in the first quarter of 2022 even as overall new car registrations dropped 18 percent. It’s the latest indication that domestic EV acceptance may have turned some important but invisible corner recently.”

All of this is positive news for EV companies like Nio.