"Let the good times roll" is likely what Nio(NYSE: NIO) investors are saying to themselves right now after the stock soared 65% over the past month. The Chinese electric vehicle (EV) maker has a lot going for it: It just began deliveries of its Onvo L60; it received a cash infusion from strategic investors; and now, it just announced strong September deliveries and a quarterly record.
Strong deliveries
Nio has quietly tallied five-consecutive months with deliveries topping 20,000. Nio delivered 21,181 vehicles in September, which was good for a 35% increase over the prior-year's deliveries. It also included the very first deliveries of the company's more affordable sub-brand, Onvo. Nio's newly launched brand totaled 832 deliveries during September. For the third quarter of 2024, Nio delivered 61,855 vehicles, which was an 11.6% increase year over year and good for a new quarterly company record.
Data source: Nio delivery press releases. Graphic source: Author.
When looking at the graphic above, you can see a trend of higher deliveries, but it's also fair to say that Nio has turned a corner with these past five months of 20,000+ deliveries. It's also true that Nio is likely to kick sales into a higher gear as production of the Onvo L60 ramps up. Not only will the Onvo L60 boost delivery figures going forward, but the company isn't stopping with just one more affordable sub-brand. There's another brand on the way, expected to be unveiled late in 2024 and codenamed internally as "Firefly."
While China's EV market is highly competitive, there's also a bigger piece of pie to take a slice out of. Consider that in July, China's EV market share of new passenger-car sales was over 50% for the first time. That's massive when you consider EV market share of U.S. new-vehicle sales is roughly 8%. Nio's premium vehicles have caught on with Chinese consumers, but there's plenty of market share it can attack at the low ends of the market with its more affordable Onvo and Firefly brands, and it should kick Nio's deliveries and share price into a higher gear.
Cash infusion
Nio's strong deliveries weren't the only recent positive development. Nio recently announced a cash injection from a strategic group of investors. More specifically, Nio China will receive 13.3 billion yuan, or roughly $1.9 billion, from its parent Nio and the group of investors that include Hefei Jianheng New Energy Automobile Investment Fund Partnership, Anhui Provincial Emerging Industry Investment, and CS Capital. More specifically, the collection of strategic investors will invest an aggregate of 3.3 billion yuan, or roughly $471 million, in Nio China, while Nio has agreed to funnel 10 billion yuan, or roughly $1.43 billion, in cash to subscribe to the newly issued Nio China shares.
What it all means
Let the good times roll. Nio is receiving a cash infusion at just the right time as it begins to really push its Onvo brand into the mainstream-consumer market and prepares to unveil its next sub-brand -- Firefly. Nio clearly has momentum on its side with five-consecutive months of 20,000+ deliveries and a record-quarterly result. Nio shares might be up 65% over the past month, but its momentum should keep going as new brands boost sales to new records.
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Daniel Miller has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
