Why Nio Stock Accelerated 12% Higher This Week

Key Points

• It plans to roll out an SUV at the start of August.

• The company's positive news was quite a contrast from a large American rival's struggles.

• 10 stocks we like better than Nio ›

Several factors converged this week to make Chinese vehicle manufacturer Nio (NYSE: NIO) a popular stock in the somewhat battered electric vehicle (EV) sector. Almost unarguably the major one was the announcement of a new vehicle, although Tesla's (NASDAQ: TSLA) latest stumbles also played a role.

It was an eventful few days for Nio, and since these developments were positive the stock rose. It ended the week more than 12% higher in price, according to data compiled by S&P Global Market Intelligence.

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Now rolling out of the factory...

That new model is the ONVO L90, the rollout of which Nio incorporated into a press release touting the production of its 800,000th vehicle. The company described the ONVO L90 as a product that "redefines the family oriented three-row electric SUV."

Image source: Getty Images.

It is to be made available for delivery starting Aug. 1 in Nio's native China, and it will retail for the equivalent of $27,000 for a battery-as-a-service version and $39,000 for a complete model.

The introduction of a new vehicle by a carmaker is always attention-grabbing, and often happy news for investors.

Timing mattered with this announcement, as it contrasted with Tesla's fairly grim second-quarter results. The American company, still the global flag-bearer for EVs, reported double-digit falls in revenue, deliveries, and profitability for the period.

A serious up-and-comer

Nio is doing a fine job leveraging its advantages, such as the Chinese government's zeal for next-generation transport solutions, and its growing presence in an economy that is still on the rise (albeit not as powerfully as it was several years ago). Investors, I believe, were right to be cheered by the company's upcoming rollout.

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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tesla. The Motley Fool has a disclosure policy.