As electric vehicles (EV) chomp up more market share in the auto industry, two companies lead the charge. Tesla, Inc. (TSLA) and Nio (NIO) are both exclusively EV producers, so they can focus solely on their technology and business models. Both are vertically integrated, which minimizes dependency on global supply chains. Finally, sales at both companies have swelled well over 100% year-over-year. (See Tesla stock chart and Nio stock chart on TipRanks)
Reporting on the companies' successes and future outlooks is Vijay Rakesh of Mizuho Securities, who explained that year-over-year, Tesla and Nio have increased their sales 121% and 112%, respectively. He expects Nio’s sales momentum to continue through the year’s end, and said that globally, “Tesla’s lead remains unchallenged.”
Rakesh maintained Buy rating for both of the stocks, and declared a price target of $820 for Tesla, and $65 for Nio. For Tesla, this would reflect a possible 24.32% 12-month upside, and for Nio, a possible 29.25% upside, from Tuesday's closing prices.
The five-star analyst spoke of a bright second half of 2021 for the two auto manufacturers. He stated that Nio could exceed the expected amount of battery swap stations by the year’s end, and that Tesla is planning to begin production at its two new Gigafactories in Austin and Berlin.
Aside from Nio’s domestic competition from Li Auto (LI) and XPeng (XPEV), large traditional auto manufacturers are fumbling to get their responses out into the market. Rakesh wrote that Ford (F), Mercedes (DDAIF), and Volkswagen (VWAGY) are said to be finding it difficult to manage both conventional and electric engines in their product lines.
There is, of course, a slight downside. Rakesh elaborated that Tesla could be facing a possible slowdown of sales in China, and its concentrated product line leaves it largely dependent on two particular models. Additionally, it is within the realm of possibility that both companies may be subject to production delays caused by the semiconductor chip shortages currently affecting global supply chains.
However, the analyst remained staunchly bullish. He added that Nio will eventually begin its penetration into international markets, which could amount for 25-30% of its overall sales. He enthusiastically wrote that Nio “remains on track to be the first major Chinese EV OEM to realize commercial success overseas.”
On TipRanks, TSLA and NIO have analyst rating consensi of Hold and Strong Buy, respectively. The average Tesla price target is $653.95, reflecting a possible 12-month downside of –0.85%. The average Nio price target is $63.63, reflecting a possible 12-month upside of 26.53%.
Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.