It has been a busy weekend for Nio. Partnership with Qualcomm and Nvidia has been announced while unveiling their new sedan. Investors took the news positively and the price is up almost 10%. Adding to all of that J.P. Morgan analyst updated Nio price target from 50$ to 75$.
Chinese EV startup Nio unveiled an electric sedan called the ET7 this weekend that it promises will have autonomous capabilities and, eventually, a solid-state battery option. In many ways, the new sedan is an emblem of NIO’s accomplishments. It’s laden with the best technology that Nio has developed or sourced during its short history. It’s a project that was pulled back off the shelf only because the startup can once again burn through resources without causing an existential crisis. It’s a nod to the company’s future, too, with Nio promising that a solid-state battery option is on the way. And it helps round out Nio’s lineup in an increasingly competitive market, one that’s not only full of well-funded startups but now features major tech conglomerates like Alibaba and Baidu.
At the same time, Nio announced a partnership with Qualcomm and Nvidia. As per the deal with Qualcomm, the company will incorporate its avant-garde autonomous driving technologies in NIO’s first flagship sedan. NIO will capitalize on Qualcomm’s much-acclaimed Snapdragon Automotive 5G Platform and 3rd Generation Snapdragon Automotive Cockpit Platform with heterogeneous computing capabilities. This will bolster future-proof automotive innovation technologies while delivering immersive interactive experiences to its users. The vehicle also includes a suite of autonomous driving sensors and four onboard computer chips developed by Nvidia, which will offer advanced automated driving features.
The company has been a prime beneficiary of the current trend for both EV makers and growth stocks. Following the recent annual Nio Day event, J.P. Morgan analyst Nick Lai counts “four strategic milestones,” why he believes Nio will “continue to trade more like a fast-growth technology/EV stock than a carmaker.”
These include the pivot away from the existing products’ Mobileye EQ4 solution to an in-house autonomous driving (AD) solution based on Nvidia architecture. A solid-state battery for the next new model – an ET7 sedan – boasting 150kwh capacity or range of more than 1,000km, and the “commercialization of LiDar to deliver super-sensing capability on ET7.”
Most intriguing of all, however, will be the “beginning of content monetization – e.g. AD as a service.”
Lai believes this opens up a whole new world of monetization possibilities for carmakers and suggests “future cars will be like smartphones with wheels.” Accordingly, Lai reiterates an Overweight (Buy) rating on NIO shares and bumped the price target up from $50 to a Street high of $75. Investors could be pocketing gains of 18%, should Lai’s thesis play out over the coming months.
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