But in recent years, Chinese automaker NIO has been making waves with its own line of high-performance electric vehicles. As NIO continues to gain momentum, many are wondering whether Tesla's reign as the number one EV maker is in jeopardy.
So fasten your seatbelt folks, we're taking a deep dive into this one.
The EV industry ⚡️
Before picking Tesla and NIO apart, it's important to understand the current state of the EV industry.
In recent years, there has been a significant shift towards electric vehicles as more consumers are prioritising sustainability and eco-friendliness. As a result, the EV market has grown; and grown fast.
Today, the industry is worth around $384 billion, with some estimating it’ll reach a staggering $800 billion by 2027.
Tesla's dominance 🏎
Tesla dominates the electric car market, with a massive 65% market share in the US. And it's easy to see why - cars that dance, doors shaped like falcon wings, and of course, whoopee cushion sound effects when your passengers sit down.
Gimmicks aside, Tesla vehicles do offer some serious benefits:
High performance - some models are capable of reaching 0-60 mph in 2 seconds. Whoever said EVs were boring?
Low operating costs - electricity is generally cheaper than petrol and diesel
Advanced technology - self-driving capabilities, over-the-air software updates, and a large touchscreen display
Long range - some models are capable of driving over 400 miles on a single charge, and strides are constantly being made in this area to reduce people's 'range anxiety'
But with great demand, comes great supply issues. In Q4 2022, Tesla missed its predicted deliveries by 25,000.
But, it still managed to deliver 405,000 vehicles. I guess if you're going to have a problem, being in high demand is a better one to have!
The rise of NIO 📈
Dubbed the "Tesla of China", NIO was founded in 2014 and has been causing disruption in the space ever since. Its stock has increased a mind-blowing 320% in the last 3 years alone.
This company is backed by the Chinese Government and some of the biggest investors in the game, like Vanguard and BlackRock.
NIO has proven not just to be 'another EV brand' through its own battery swapping technology. Instead of having to wait for the car charge for half an hour, NIO stations will swap out your battery for a fully charged one in under 3 minutes. Yep, it's like you're an F1 driver stopping for a quick pit stop.
Another unique benefit NIO has is its focus on providing a complete user experience. The company's ‘NIO House’ concept features amenities such as coffee bars, kids' areas, and social spaces for events and gatherings. The concept is part of NIO's efforts to provide a complete user experience beyond just selling electric cars.
NIO's House concept
NIO's aim is to combine sales, service, and social activities in a single location, providing customers with a more personalised experience.
The company is growing in popularity day by day, finishing Q4 of 2022 with 40,000 vehicles delivered, a personal best. This brought their total annual deliveries to 122,000, so it’s clear they’re starting to take some market share from Tesla.
Many investors feel like they missed the boat on Tesla stock. A $1,000 investment when Tesla went public would be worth $166,000 today, so it's unsurprising people are looking towards the next big thing. With an impressive business model and growing market share, people are undoubtedly turning their attention to NIO.
Can NIO stock reach $1,000?
Currently, NIO's stock price is just under $8 (as of June 2023) meaning it would need to more than 10x.
Whether that will happen one day is debated among investors, and will completely depend on the company's success over the coming years.
So, could Tesla lose its crown? 👑
The market may be going crazy for NIO, but let's not get carried away.
Tesla has a significant head start over NIO. The company has been in the EV industry for over a decade and has established itself as a leader in innovation and design. Tesla also has a global presence, with production facilities spanning 3 continents.
While NIO has been making impressive strides, the company still has a long way to go before it can compete with Tesla in terms of production volume and global reach. Tesla has the advantage of economies of scale, which allows the company to produce vehicles at a lower cost and with greater efficiency.
When we bring numbers into it, NIO may have set an all-time high of 40,000 vehicles delivered in the final quarter of 2022, but this is 10 times less than what Tesla delivered.
So, is NIO set to steal the crown? Not yet it seems. But it's natural for investors to wonder whether Tesla could one day lose its top spot.
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As with all investing, your capital is at risk.
This content is for educational purposes only. Shares does not provide investment advice. If you are unsure about anything, please seek advice from an authorised financial advisor. Shares is a trading name of Shares App Ltd. Shares App Ltd is an appointed representative of RiskSave Technologies Ltd, which is authorised and regulated by the Financial Conduct Authority.
