Published on 27 May 2024 on Zacks via Yahoo Finance

NIO Continues to Expand in Europe Despite Tariff Challenges

NIO Inc. NIO continues to expand its presence in Europe despite regulatory and higher tariff threats from the European Union (EU).Per William Li, the founder, chairman and CEO of NIO, in case the EU substantially raises the tariff, the carmaker will make a reasonable business decision. It would delay or cancel the launch of its new mid-range and future entry-level models in Europe.The company recently opened its new showroom called NIO House Amsterdam, which is the carmaker's largest NIO House in Europe. As of May 23, 2024, the EV maker’s ES8, ET7, EL7, ET5, ET5T and EL6 models have entered into the European market. The China-based carmaker has built 43 battery swap stations and 46 charging stations and connected more than 500,000 third-party chargers in Europe.It has also built seven NIO Houses, eight NIO Spaces and 55 NIO Service Centers in Europe. For local users, NIO Houses have hosted around 1,450 community events over the past three years.On Apr 8, 2024, the company inaugurated its smart driving technology center in Germany. It is NIO’s first technology center outside of China.This month, the carmaker launched a mid-range Onvo line, which was cheaper than Tesla’s Model Y. NIO plans to introduce a more affordable entry-level Firefly brand in 2025.Per Li, the company plans to set up a European factory with a local partner if the annual sales in Europe reach around 100,000 units. Despite the headwinds in the international market, NIO will continue to serve its global customers. However, the carmaker will change its approach toward overseas expansion. It will now try to work with more local partners.Per BOVAG, in the Netherlands, the sales of EVs rose from 43,000 in 2019 to 128,000 in 2023, which contributed 30% of all new car sales.On Oct 4, 2023, the European Commission initiated an anti-subsidy investigation into China-made EVs, increasing the threat of higher tariffs.NIO incurred a net loss of $2.9 billion in 2023 and remained a loss-making company despite an increase in year-over-year deliveries amid fierce price competition among local and global players in China.

Zacks Rank & Other Key Picks

NIO currently carries a Zacks Rank #2 (Buy).Some other top-ranked stocks in the auto space are Geely Automobile Holdings Limited GELYY, Blue Bird Corporation BLBD and Oshkosh Corporation OSK, each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.The Zacks Consensus Estimate for GELYY’s 2024 sales suggests year-over-year growth of 36.6%. The earnings per share (EPS) estimates for 2024 and 2025 have moved up 34 cents and 54 cents, respectively, in the past 60 days.The consensus estimate for BLBD’s 2024 sales and earnings suggests year-over-year growth of 17.29% and 155.14%, respectively. The EPS estimates for 2024 and 2025 have improved 63 cents and 69 cents, respectively, in the past 30 days.The Zacks Consensus Estimate for OSK’s 2024 sales and earnings suggests year-over-year growth of 9.86% and 10.72%, respectively. The EPS estimates for 2024 and 2025 have improved 72 cents and 67 cents, respectively, in the past 30 days.