We recently published a list of the 11 Most Promising EV Battery Stocks According to Analysts. In this article, we are going to take a look at where NIO Inc. (NYSE:NIO) stands against the other promising EV battery stocks.
Despite the electric vehicle industry growing at a fast pace, some challenges remain. The major ones are range anxiety among consumers, slow battery charging time, and the availability of charging infrastructure. However, even with these challenges, the industry remains healthy and a lot of energy and resources are being contributed toward it.
The infrastructure market is expected to grow at a phenomenal pace as PwC expects the EV supply equipment (EVSE) market to grow from $7 billion to $100 billion by 2040, at a 15% compound annual growth rate.
For electric vehicle components, governments around the world are incentivizing EV production. For example, the U.S. Department of Energy (DOE) recently announced $1.7 billion in funding to transition 11 vulnerable auto manufacturing plants across eight states to EV production and related components. For more details, you can read 8 Best EV Stocks to Buy According to Short Sellers.
Advancements in EV Battery Technology
Due to the environmental impacts of internal combustion engines, scientists have also been working tirelessly to solve the current problems faced by EV batteries. Researchers, led by the University of Colorado Boulder, have uncovered the cause of battery degradation, a common issue that leads to reduced capacity over time. Their study, published in Science.org, may pave the way for improved lithium-ion batteries, which are crucial for EVs and energy storage.
Using advanced X-ray technology, they discovered that hydrogen molecules from the battery’s electrolyte bind to the cathode, taking spots meant for lithium ions, which weaken the battery’s performance. This new understanding could help engineers develop longer-lasting, cobalt-free batteries for EVs, which would increase driving range, reduce costs, and address environmental and ethical concerns related to cobalt mining.
Additionally, according to a research report published in Frontiers in Quantum Science and Technology, Yuji Hatano and his team explored the impact of transverse magnetic fields on diamond quantum sensors for EV battery monitoring. Their research aimed to improve measurement accuracy for temperature and magnetic fields, which are crucial for determining the state of charge (SOC).
The study showed that diamond sensors enhance SOC estimation, which could potentially increase the EV cruising range by 10%. A prototype demonstrated high precision with currents up to 1,000 amperes, and misalignment detection was highly accurate. The findings suggest diamond quantum sensors could significantly improve battery monitoring in EVs and other industries.
Moreover, solid-state batteries could also reduce the charging time in batteries which could drastically improve the consumer sentiment and increase the demand for EVs. It was suggested by Mark Fields, former Ford CEO and President on CNBC’s ‘Squawk Box’ and we discussed it in our article on the best EV stocks for the long term. Here is an excerpt from the article:
“Fields suggested that automakers need to offer more affordable EVs and expand hybrid offerings while working towards breakthroughs in battery technology, especially solid-state batteries. These batteries could eventually reduce charging times to match the convenience of filling up at a gas station…
…He emphasized that while automakers are working on delivering low-cost EVs, the real game-changer will be the development of solid-state batteries, which could significantly improve charging times and consumer convenience.”
Our Methodology
For this article, we identified over 20 EV battery stocks through screeners and ETFs. We narrowed our list to 11 stocks with the highest average analyst price target upside, as of September 12. We also added the hedge fund sentiment around each stock which was taken from Insider Monkey’s database of over 900 hedge funds as of the second quarter of 2024.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A fleet of eco-friendly electric cars, a symbol of the company’s commitment to sustainability.
NIO Inc. (NYSE:NIO)
Average Analyst Price Target Upside as of September 12: 19.52%
Number of Hedge Fund Holders: 20
NIO Inc. (NYSE:NIO), a leading Chinese EV manufacturer, is making waves in the EV market with its innovative battery technologies and unique approaches to energy storage. The company’s latest advancement is its 150 kWh semi-solid-state battery, introduced in July 2023.
The new battery pack significantly extends the driving range of NIO’s vehicles, reaching around 930 kilometers (578 miles) on a single charge. The range surpasses many traditional lithium-ion batteries, which shows that the company is pushing the boundaries of EV performance.
The semi-solid-state battery technology represents a significant leap forward for the company. By integrating the benefits of solid-state technology with the practicality of current lithium-ion batteries, it has created a product that offers both high energy density and practicality. The advancement not only improves the range of NIO’s vehicles but also allows current NIO owners to upgrade to the new battery packs, a move that adds value and longevity to their existing EVs.
The company is also working on other cutting-edge battery technologies, such as 4680 battery cells and lithium manganese iron phosphate (LMFP) batteries. The developments aim to further improve energy density and vehicle performance, which improve the company’s position as an innovator in the EV space.
NIO (NYSE:NIO) has a consensus Buy rating as per the coverage of 37 analysts. As of September 12, the average price target of $6.31 implies an upside of 19.52% from the present levels. It is among our most promising EV battery stocks according to analysts.
In Q2, NIO (NYSE:NIO) showcased remarkable growth, with revenue increasing by 99% year-over-year to 17.45 billion yuan ($2.4 billion). The company set a new record by delivering 57,373 EVs during the quarter and projects deliveries of between 61,000 and 63,000 vehicles for the third quarter. The impressive performance highlights its strong market presence and growing customer base.
On September 5, JPMorgan upgraded the stock to Overweight from Neutral with a price target of $8, up from $5.30. The upgrade is based on improved visibility into the company’s plans and the company’s significant progress in strengthening its cash position. JPMorgan anticipates that the company’s operating cash flow will turn positive in the second half of 2024, which will reduce concerns about future fundraising or equity dilution.
In the second quarter, 20 hedge funds had stakes in NIO (NYSE:NIO), with total positions worth $82.117 million. As of June 30, Point72 Asset Management is the most significant shareholder in the company with a stake worth $26.89 million.
Overall NIO ranks 11th on our list of the most promising EV battery stocks. While we acknowledge the potential of NIO as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than NIO, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.