What happened
Shares of Chinese electric vehicle (EV) maker Nio (NIO 6.18%) were hammered after the company released its quarterly earnings and business update earlier this week. But the stock is rebounding in a big way today, and the stock might even end the week higher than where it began. As of 11:35 a.m. ET Friday, Nio's American depositary shares are higher by 5.1% for the day.
So what
Though investors were disappointed with Nio's near-term outlook this week, today's rebound may be coming from a reminder of its long-term plans after the company released an update on its brand ecosystem yesterday.
Nio reported a higher loss on lower sales than expected in the fourth quarter. Perhaps more significant was its projection for 2023 first-quarter deliveries. The company expects to ship up to 33,000 EVs in the first quarter, but that would be a meaningful sequential drop versus fourth-quarter 2022 deliveries of over 40,000. But yesterday's update reminded investors that Nio is still expanding its global infrastructure as it adds power swap stations, charging locations, customer-gathering Nio Houses, and service centers in Europe.
Image source: Nio.
Now what
Nio has built its customer base partly by offering its Chinese customers more than just smart electric cars. Its SUV and sedan models are sold with an option to use a subscription for swapping drained batteries for fresh ones in just minutes. That lowers the initial cost to customers and differentiates Nio from its competitors. It also has aimed to build a loyal following with Nio Houses and other gathering spaces many Chinese consumers have embraced.
Now it is building out that model in Europe. The company now has more than three dozen service centers in the EU along with several Nio Houses, battery swap stations, and other charging infrastructure.
That network has expanded beyond Norway to include Sweden, the Netherlands, and Germany. That growth is what buyers of Nio stock are counting on. After the earnings-related sell-off earlier this week, some investors are looking at the potential benefits from this growth and adding shares today.
