One of today’s more impressive movers in the electric vehicle (EV) world is Chinese EV maker Nio (NYSE:NIO). Currently, shares of NIO stock are up more than 10% on a big announcement.
Via both a Twitter post and a press release, the company announced today that its energy subsidiary has entered into a strategic partnership with China National Offshore Oil Corporaton (CNOOC). For investors who aren’t aware, CNOOC is China’s third-largest oil company, making this partnership big news for NIO stock.
This strategic partnership will center on the buildout of charging and swapping infrastructure. The leaders of both parties attended a signing ceremony today at which Nio’s power exchange station was modeled and both management teams spoke of the agreement.
Overall, the commentary from both parties appears to be positive. Accordingly, investors are buying NIO stock on anticipation of accelerated growth on the horizon.
Let’s dive deeper into what this may mean for investors.
NIO Stock Surges on Key Strategic Partnership
Nio’s unique value as a pure-play EV maker is tied closely to its charging infrastructure and swapping stations. These swapping stations can change out a car’s battery in a matter of minutes, allowing for a complete charge in a fraction of the time it takes to charge said battery. Such technology was looked at by other major players, but Nio is a leader in this regard.
Accordingly, bringing on a massive company like CNOOC could accelerate Nio’s rollout, giving the company a greater head start on its competition in China. China is the world’s largest EV market — and perhaps the most sought-after, given the demographic shift underway in the country (i.e. China’s expanding middle class). As millions of EVs hit the road in the years to come, the hope is that Nio will be able to command significant market share. As Nio’s infrastructure rollout accelerates, the hope is also that its revenue growth will be able to offset some of the capital layout required for its infrastructure build.
Having a partner will also allow Nio to put more capital to work in boosting production, leading to significant potential shareholder value. Today, that appears to be what investors are most excited about.
On the date of publication, Chris MacDonald 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.
