The electric car sector has been hyped for a long time and showed deep signs of braking last year. Pioneer Tesla, for example, lost around two-thirds of its company value, dropping from 6th to 20th place in the world's most valuable companies ranking. Fellow competitors Lucid Motors and NIO also fell at roughly the same rate. However, it would be premature to doom the industry. There have just been positive surprises that have heralded a turnaround in the financial market.
Tesla kicked things off last week with strong quarterly results that saw the stock accelerate by double digits in percentage terms. Two days later, takeover speculation arose at Lucid and catapulted the share price by almost 100%. The NIO share also benefited from the change in sentiment, with a weekly increase of 14%. Thus the Chinese car title listed on the Nasdaq continues its bottom consolidation formation that began in November. The e-car maker, founded in 2014, is getting additional backing from its major shareholder. The Scottish investment firm Baillie Gifford & Co recently increased its position by 24 million shares and thus held just under 8% in the Chinese. While Baillie Gifford & Co added to its stake in the electric startup, it liquidated its position in Li Auto and continued its five-quarter-long sell-off in Tesla.
Operationally, however, NIO is currently on a bumpy ride. Due to the recurring lockdowns in the Middle Kingdom, the group has recently been unable to increase its sales as expected. Even though the Chinese managed to set a record in December with 15,815 vehicles delivered, the original forecast of more than 26,000 units was missed. Nevertheless, there were unmistakable signs of recovery in the final quarter of 2022. Compared to the previous month, sales continued to increase sequentially, resulting in a 60% year-on-year increase in the three months to December. For 2022, a total of 122,486 vehicles were handed over to their new owners, an increase of just over a third.
To further accelerate its growth trajectory, NIO is focusing on fresh models. These include, for example, the new mid-size coupé SUV "EC7", which is expected to be in showrooms in May. The latest edition of the "ES8" will follow a month later. A total of five new bodies are to be launched by the summer. But NIO also wants to expand its presence further regionally. Last fall, the Chinese celebrated the European market launch with the trio of models "ET7," "EL7" and "ET5." By 2025, the car newcomer intends to be present in 25 countries on the old continent. The premium brand from Shanghai is already on the road here. To this end, NIO Switzerland GmbH was founded in Zurich in October.
NIO is not only targeting customers with its intelligent and powerful chassis but also with its unique battery management system. Unlike the growing competition, co-founder Lihong Qin is not focusing on the range of his batteries but on a unique swap strategy. In the power swap stations, or PSS for short, the empty batteries are replaced within just around five minutes. To make its system palatable to Europeans, the premium e-vehicle manufacturer is currently expanding its infrastructure. For example, in Germany, seven more PSSs are planned for the first quarter. For the current year, NIO has once again set ambitious targets and aims to double its sales figures. On the earnings side, however, NIO is still in the red. And that will not change anytime soon: Analysts do not expect the company to break even until 2025 at the earliest.
For the new Softcallable Barrier Reverse Convertibles on NIO, the share may continue to work on the bottoming-out process shown at the beginning. Even moderate setbacks do not immediately jeopardize the promised double-digit percentage return. The two products, which are offered in CHF and USD, each have a risk buffer of a comfortable 51%. If the barrier remains intact during the maximum term of one year, the maximum return will be achieved. The coupons amount to an above-average 20.00% p.a. for the CHF variant and even 24.00% p.a. for the USD product. After half a year at the earliest, the issuer has the right to call the Barrier Reverse Convertibles early.
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