NIO and EVs Movement

NIO? An EV company that disappointed its investors after continuous disappointing earnings result. As we know, Nio is set to report its third quarter results on Tuesday before the open of U.S. markets. Are we going to have some surprise or the bad news continues?

What is happening?

Earlier in August, Nio posted a slightly larger loss than a year ago, with lower average selling prices impacted results negatively. Along with guidance, investors will focus on Chinese electric vehicle makers cost structure during the quarter. Without doubt, the price war initiated by industry leader Tesla has weighed on other automakers with intense competition, leaving with options like looking into new avenues to cut costs and increase profitability.

Positive countermeasures

As announced, Nio also reduced 10% of its staff positions. The company and state-owned Changan Automobile have also announced a new partnership to build electric vehicles with battery swapping technology. NIO’s decision to discontinue the free battery swap program and implement cost-cutting measures has helped the company get back on track.

Stimulus

According to the Chinese ministry's website, NIO has recently been included in a database by the Chinese industry that allows companies to manufacture vehicles within the country.

Issuing a production license to Nio signifies a notable change in the approach of Chinese authorities, who have previously exercised caution in approving new production due to concerns about overcapacity and an intensifying price competition involving more than 40 brands.

In a nutshell

With the significant share price pullback over these few months, I believe NIO is undervalued. I hope for a surprise in today earnings result which may send the stock back to moon. However, the risk of continue to perform badly is highly possible too. With the stimulus mentioned above, I am bullish for Nio and its rivals in the same sector. $NIO Inc.(NIO)$  $Li Auto(LI)$  $XPeng Inc.(XPEV)$  $Tesla Motors(TSLA)$  $XIAOMI-W(01810)$  

How do you think?

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