Why did Nio’s stock drop today?
Investors in electric vehicle (EV) companies are looking for technology that can differentiate a company from its competitors. Chinese electric vehicle manufacturer Nio ( NI -4.72% ) offers unique battery swap technology, and it got some publicity today. You’d think that would drive Nio’s stock up, but that’s not the case, at least this morning. Shares in Nio’s U.S. depository were down 3.3% at 10:15 a.m. ET.
Today’s decline may reflect profit taking after Nio shares soared more than 60% from a recent low in mid-March. But reports that the company is in talks with other automakers to license its battery-swap technology could make today’s drop a buying opportunity.
Nio’s battery swap offer allows customers to pay a lower upfront cost for the vehicle and use existing swap stations through a subscription service to install new batteries in as little as three minutes, depending on the company. It says the technology is enabled by more than 1,400 patented technologies. Today the FinancialTimes reported that Nio was also discussing licensing the technology to competing electric vehicle makers.
The report quotes Hui Zhang, who heads Nio’s Europe division, as saying the company is discussing licensing deals with Chinese and international automakers to use its battery swapping stations. Nio expects its number of stations to grow from 800 to 5,000 worldwide over the next few years.
Nio built its first exchange stations outside of China when it established a commercial presence in Norway last year. The report states that Nio has placed its exchange stations next to it You’re here superchargers to help show how quick and easy the process is for existing EV owners.
The technology provides Nio with a subscription revenue stream from customers who opt into it. Licensing the technology to competitors will add to these revenues and help promote the adoption of electric vehicles. Today’s stock decline does not appear to reflect this fresh news.
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