Why Nio Stock Skyrocketed Again Today

Key Points

• Nio's affordable SUV has investors wondering if it holds to the key to mass EV sales.

• Its Battery-as-a-Service (BaaS) subscription brings in recurring revenue while offering lower up-front costs to customers.

• Nio's battery swap stations are available across Chinese highways and cities, and are now expanding in Europe.

• 10 stocks we like better than Nio ›

Nio (NYSE: NIO) stock is surging again today. Its American depositary shares soared more than 12% Tuesday morning, and remained higher by 7.6% as of 11:40 a.m. ET. A new model release from the Chinese electric vehicle (EV) maker may be what Nio needed for investors to believe in its unique technology.

Image source: Nio.

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Has Nio cracked the EV code?

Nio's share price has gained more than 33% in the last month. Most of that has come since it announced the release of its new ES8 flagship SUV. It wasn't the vehicle itself that caught investor attention -- it was the price. Now it seems many are beginning to believe that the company has a unique way to capture more and more of the EV markets in China and even Europe.

The rollout of the latest ES8 model is being offered for the equivalent of about $43,000. That might not have made sense for the luxurious SUV that has been listed for nearly $60,000. The key is that the lower price includes a subscription to Nio's Battery-as-a-Service (BaaS) plan.

NIO has a rapidly expanding battery swap station network, with about 3,400 stations in China, and approximately 59 stations in Europe as of last month. They provide what the company says is a three-minute swap for a fully charged battery while remaining in the car.

Nio sales are growing, with new catalysts emerging

The chart shows that Nio has already been steadily increasing sales volumes in recent years.

Data source: Nio. Chart by author.

It has yet to achieve mass-market volumes, however. Nio launched two sub-brands that target the mainstream and entry-level markets. But it may also have the key to gaining sales with its higher-priced luxury lineup.

The Firefly and Onvo brands should grow sales themselves, but the Nio battery swap technology could be what drives volumes in its luxury brands, too. Investors are beginning to believe higher sales levels are coming, driving shares higher again today.

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Howard Smith has positions in Nio. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.