Why did Nio's shares surge again today?

What a madness with Nio! The stocks have skyrocketed again and here I am without having invested a single cent. Their American ADRs rose more than 12% this morning and maintained a 7.6% increase by noon. It seems that their new model could be exactly what they needed to convince investors that their technology really works.

Highlights:

• Its affordable SUV has investors wondering if it's the key to mass sales
• Its Battery as a Service (BaaS) generates recurring revenue and offers lower initial costs.
• Their battery swap stations are located along all the roads in China and are now expanding in Europe.

Has Nio cracked the code for electric vehicles?

The price of Nio's shares has risen by more than 33% in the last month. Most of it since they announced their new SUV ES8. And it wasn't the vehicle itself that caught attention - it was the price. Now many believe that the company has a unique way of capturing more and more market in China and even Europe.

The latest ES8 model is offered for the equivalent of about 43,000 dollars. This wouldn't make sense for a luxury SUV that typically costs nearly 60,000 dollars. The trick is that the lower price includes a subscription to the Battery as a Service plan (BaaS).

Nio has a rapidly expanding network of battery swap stations, with approximately 3,400 stations in China and about 59 in Europe as of last month. They offer what the company says is a three-minute swap for a fully charged battery while you remain in the car.

Nio's sales are growing, with new catalysts

The data shows that Nio has been steadily increasing its sales volumes in recent years, although it has not yet reached mass market volumes.

Nio launched two sub-brands aimed at the mainstream and entry-level markets. But it may also hold the key to boosting sales with its higher-priced luxury line.

The Firefly and Onvo brands should increase sales on their own, but Nio's battery swapping technology could be what boosts volumes in their luxury brands as well. Investors are starting to believe that higher sales levels are coming, and that is driving stocks up again today.

And what about me? I wonder if we are overestimating a technology that requires massive infrastructure when fast charging continues to improve. Is battery swapping really the future or just a temporary solution? The Chinese may be excited, but the Europeans are quite demanding about these things. For now, I keep watching from the sidelines, but I confess that every day I am more curious about these actions.

Howard Smith has positions in Nio. The author of this article has no position in any of the mentioned stocks.

Disclaimer: For informational purposes only. Past performance does not indicate future results.

The current exchange rate from USD to NIO is approximately 36.82 Nicaraguan córdobas per US dollar.