Today, Nio (NYSE:NIO) stock is once again making headlines. Indeed, Nio has announced the ET5, its first “touring” car. Touring cars are designed for families like the station wagons of generations past.
The move is important because Nio’s other cars were aimed at young go-getters, either in business or in government. The ET5 features more rear-seat headroom, more cargo capacity and underfloor storage. It is expected to retail at $52,000.
Nio stock opened June 16 at $10.13 per share, its first trip over $10 since late March. The shares are now up 5.3% for the year, although their 2023 high of $12.71 remains intact. Its market cap is nearly $17 billion after 2022 sales of about $7 billion.
NIO Stock On Watch
China’s birth rate has been declining for decades. The trend did not reverse with the end of the country’s one-child policy in 2015. China’s leaders now face a demographic cliff, with 400 million of its 1.4 billion people expected to be over 60 by 2035. India now has a larger population.
While the Nio touring car is designed for families, it’s not your grandmother’s station wagon or your mother’s SUV. It’s more like a Porsche (OTCMKTS:DRPRY) or BMW (OTCMKTS:BMWYY), and designed for the European market in which Nio is already active. It will also compete with the Volkswagen (OTCMKTS:VWAGY) ID.7, an electric sedan with a 435-mile range.
All Chinese electrics must compete with the Tesla (NASDAQ:TSLA) line, which still has the largest market share in the upper-end of the market. BYD (OTCMKTS:BYDDF) leads in the mid-market, with cars costing around $25,000. The market Nio is aiming for also includes Li Auto (NASDAQ:LI), which makes a range of hybrids with ample storage and long range.
What Happens Next?
Nio lost money in the first quarter of 2023, its production reduced by the switch to a new design platform. Cars like the ET5 are key to its future survival in a crowded, competitive Chinese EV market.
As of this writing, Dana Blankenhorn did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
