Reportedly, Nio Inc. NIO is in talks with Mercedes-Benz Group AG MBGAF to seek investment from the German automaker in exchange for its technology.
Earlier this year, William Li, co-founder and CEO of Nio and Ola Kaellenius, CEO of Mercedes, hinted at a potential alliance.
This partnership would offer Nio an opportunity to improve its financial position, whereas it would help Mercedes get access to Nio’s research and development (R&D).
Per sources, the discussion did not cover the type of technology to be exchanged and the amount of funds to be invested.
Per another source, Nio approached Mercedes with the partnership proposal but faced resistance. The source added that the talks were highly unlikely to proceed.
Nio denied the reports of talks with Mercedes on collaboration.
Per Mercedes, there are no current plans for a collaboration; however, Kaellenius is in talks with various industry leaders and peers, including William Li.
Per sources, Mercedes’ R&D and strategy teams resisted the collaboration, citing potential damage to the brand’s image.
The deal could be a conflict of interest between Mercedes and its Chinese shareholders.
Mercedes does not have a favorable sales record in China and is planning to invest in the R&D team to enhance its electric and digital innovation.
Nio is making more investments in self-developed technologies for components like batteries and chips.
Nio’s recent debut in the telecom market with a new smartphone has sparked concerns among investors. Investors believe that the Chinese automaker is risking too much amid widening losses and fierce price competition.
In the second quarter, NIO reported a net loss of $835.1 million, wider than the loss of $411.7 in the corresponding quarter of 2022. This followed Nio’s announcement of a price cut in June.
However, Nio’s upbeat third-quarter forecast sparks optimism. For third-quarter 2023, NIO projects deliveries in the range of 55,000-57,000 vehicles, suggesting a rise of 74-80.3% year over year. Revenues are envisioned in the range of $2,606-$2,692 million, indicating a year-over-year improvement of 45.3-50.1%.
Zacks Rank & Key Picks
MBGAF carries a Zacks Ranks #2 (Buy) and NIO currently carries a Zacks Rank #4 (Sell).
Some top-ranked players in the auto space include Li Auto LI and Oshkosh Corporation OSK, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for LI’s 2023 sales and earnings implies year-over-year growth of 154.7% and 9,200%, respectively. The EPS estimate for 2023 and 2024 have moved north by 31 cents and 65 cents, respectively, in the past 60 days.
The Zacks Consensus Estimate for OSK’s 2023 sales and earnings implies year-over-year growth of 15% and 125.7%, respectively. The EPS estimate 2024 has moved north by 8 cents in the past 30 days.
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Oshkosh Corporation (OSK) : Free Stock Analysis Report
NIO Inc. (NIO) : Free Stock Analysis Report
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Mercedes-Benz Group AG (MBGAF) : Free Stock Analysis Report