NIO INC.

Global Chip Shortage Situation

The global chip shortage has been bad for the car-industry, Nio had to recently suspend production for five days at its Nio-JAC factory. Nio has reduced its 1Q21 deliveries to 19,000 units from 20,000 to 20,500 forecast.

Will the global issue affect Nio’s estimates?

With the current availability of chips, Nio management’s production guidance for 2Q21 stands at roughly 7,500 units per month. This amounts to the company delivering 22,500 units in the quarter vs. the ~21,100 deliveries estimate.

J.P. Morgan analyst Nick Lai says:

“We believe our current forecast remains achievable and potentially conservative,” Lai said. “Into 2H21, most Chinese OEMs (e.g. Geely, Xpeng, Dongfeng Motor, SAIC, Guangzhou Auto) have indicated chip shortage or tightness should gradually ease, and production should resume to normal levels towards year end, although most management teams also indicate visibility is low at ~2-3 months at the moment.”

Nio Stock has suffered heavy losses in recent weeks, so I believe it is very undervalued and I remain super bullish. The demand in the NEV (new energy vehicle) is here to stay and with new models the competition will intensify.

Analysts say (JP Morgan) Nio’s sales will roughly double from 44,000 last year to sales of 90,000 units in 2021.

Average Price Target: $63.64 ~63.68% upside