There’s always something going on with Nio (NYSE:NIO) stock it seems.
The China-based electric vehicle manufacturer likes to test the waters with new and unusual revenue-generating ideas. Yet, more isn’t necessarily better for unproven business ventures.
Ultimately, NIO stock only earns a “D” grade as Nio refuses to stay in its lane and stick to its core competency.
Not that Nio is perfect when it comes to selling EVs. As you may recall, Nio’s June 2023 vehicle deliveries were down by around 17% year over year. Also on a year-over-year basis, Nio’s vehicle deliveries for the three months ended June 30 declined 6%.
But overall, Nio sells EVs better than it does anything else. Nevertheless, the company aspires to be and do many things, and that’s not necessarily a good thing for Nio and its shareholders.
Nio’s History of Unusual Business Concepts
As we mentioned earlier, Nio is fine (albeit not fantastic) at selling EVs. That’s why NIO stock earns a “D” grade and not an “F.” However, careful investors might be concerned about Nio’s track record of trying out various unproven business concepts.
Do you remember the so-called Nio Phone? That ill-conceived attempt at commercializing a smartphone is practically a punchline now. Also, Nio started up but then closed down an insurance brokerage subsidiary company because of regulatory issues.
Then, Nio tried its hand at “developing fusion technologies,” according to a Reuters report. Don’t expect any near-term income generation from this venture, however.
Apparently, Nio poured 995 million yuan into Nio Fusion, which “will research and develop technologies that aim to bring controlled fusion for commercial uses globally in two decades.”
Confusion and Disappointment Ahead
Oddly enough, Nio didn’t bother to announce the advent of Nio Fusion on its press releases page. Another business venture not listed on that page is Nio’s foray into solid-state battery rentals.
It’s difficult to know whether this venture will be a viable one, since Nio President Qin Lihong reportedly declined to provide details about the cost to rent the batteries, or even a launch date for this initiative.
Adding to the confusion (along with a feeling of disappointment), Nio declined to unveil its new 150-kWh semi-solid-state battery pack at the company’s recent Power Day event.
As Eddie Pan pointed out, Nio CEO William Li announced in May that the company’s battery pack would be available in July.
The July 20 Power Day event would have been the perfect time to showcase this battery pack. Yet, this didn’t happen and undoubtedly, some Nio shareholders are feeling frustrated. It’s just another sign that Nio should probably just stick to making and selling EVs.
NIO Stock: Don’t Get Your Hopes Up
Nio needs to demonstrate consistent improvement in its vehicle deliveries. If that happens, then at least Nio’s investors can feel like the automaker is on the right track.
In the meantime, Nio is trying out battery packs, battery rentals, controlled fusion technologies and other pursuits. It feels like the company is confusing more activity with more productive activity.
Therefore, NIO stock only gets a “D” rating and has “trouble” written all over it in 2023’s second half.
On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.
