Nio leads the Chinese electric vehicle sector higher as investors look again at the long-term growth story

Diego Thomazini

Nio (NYSE:NIO) rallied 14% on Thursday morning after investors looked past the Q3 EPS miss to give the Chinese electric vehicle maker credit for its strong growth in a challenging market environment.

Despite sales growth of 33%, Nio (NIO) said its margins declined due to lower sales of regulatory credits and elevated costs compared to a year ago.

Nio (NIO) guided for Q4 deliveries of 43K to 48K vs. 55.6K consensus.

During the earnings call, Nio (NIO) noted that it has seen strong interest in the new ET5 sedan model and started ET5 deliveries in China. CEO William Bin Li noted that early-stage user satisfaction rate has exceeded expectations. Execs also confirmed NIO has built 1,210 battery swapping stations and 11,842 charging piles. More than 1,300 swap stations will be built globally by the end of 2022 and Nio (NIO) plans to install 20 Power Swap stations in Europe by the year-end.

Nio (NIO) also noted that it has established an R&D and testing center in Berlin for artificial intelligence and autonomous driving, which will further speed up the local development and release of the digital cockpit and Assisted and Intelligent Driving to further improve users' autonomous driving and digital experience in Europe. The European expansion continues as Nio (NIO) plans to open Nio Houses and Nio Spaces in 10 major European cities, such as Berlin, Frankfurt, Rotterdam, Copenhagen, and Stockholm to build the brand. The EV upstart has rolled out ET7 test drives in Germany, the Netherlands, Denmark and Sweden.

Nio's (NIO) positive update and a big stock market rally in general has other Chinese EV stocks on the move. Li Auto (LI) jumped 11.9% and XPeng (XPEV) gained 9.3%. Of course, all three stocks have a long way to go to make up their 2022 losses.