Nio Is Down 70% From All-Time Highs. Here Are 2 Reasons Why It's Worth a Second Chance.

The electric vehicle industry is one of the newest, most volatile investment opportunities on the market today. With Tesla (NASDAQ: TSLA) as the only established industry leader, there is still a great opportunity for start-up electric vehicle (EV) makers to ultimately dominate the market. As of now, Nio (NYSE: NIO) and Rivian (NASDAQ: RIVN) are ahead of the competition, but all EV companies have faced supply chain challenges as a result of COVID-19. The bear market has also been less than kind to the EV industry; at Tuesday's prices, Nio's stock has dropped almost 70% from its all-time high in January 2021, and other companies are struggling similarly.

Among these top three manufacturers, only Nio is based in China. That's significant, because China was responsible for almost 60% of global exports of electric vehicles in 2021. The Chinese government is also taking several steps in 2022 to boost EV demand, such as introducing subsidies for new-energy vehicles and reducing charging fees. These circumstances balance China's recent lockdowns, which forced manufacturing plants to halt production for weeks at a time. In two years, Nio managed to increase its quarterly production of EVs from less than 4,000 to more than 25,000. Once supply chain issues are no longer as prevalent, the company should be able to produce more than 500,000 EVs yearly.

Nio's innovation is the primary reason it's taking the EV market by storm. Its battery-as-a-service (BaaS) and autonomous-driving-as-a-service (ADaaS) investments set the company apart from the competition. The company's stock is up roughly 200% since it began trading almost four years ago and gained 24.9% in June alone (the S&P was down more than 6% during that same period), showing that Nio is growing and adapting with plenty of room to grow.

Source Fool.com