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EV race heats up: Overtake or be out
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doctorpot1 joined discussion · Dec 15, 2022 09:13

Turned a 44% loss into a 6% loss on Nio. I'm still betting on Nio as it benefits from the growing EV industry, and the upcoming China bull run.

As the world leaders continue to push for renewable and sustainable energy, they are pumping more subsidies to encourage development in this area. This will be beneficial for the EV market as they are a substitute to their non-renewalable energy counterpart the ICE vehicle. Government had also been pushing out subsidies for consumer to purchase EV, and over time EV would probably be the norm.
Because EV is a "hot" sector many investors had be buying them and drive up the price, buying up at any price. Thus, I think there will be more opportunities in the Chinese EV market because the China crash would have force the exuberance down. On top of that, we also will be able to benefit from China rebound when all the negative overhangs like covid zero, delisting fear is resolved.
Among the list of amazing Chinese EV companies like $BYD Company ADR(BYDDY.US)$, $Li Auto(LI.US)$, $XPeng(XPEV.US)$ and $GEELY AUTO(00175.HK)$. I'm more optimistics in the Chinese EV company called $NIO Inc(NIO.US)$, because on top of selling EV, they are also in the business of selling technology, battery swap technology. One of the inconvenience in owning an EV is that charging time is so long, as compared to filling up the tanks with petrol. But with this battery swap technology, "filling up" the EV will be a lot faster which I believe will be a competitive advantage over the long term.
Nio is even licensing the technology to their competitors. I can see that in the future, many EVs' battery pack will be using Nio's technology, and consumer will be "filling up up their EV's tank" at Nio's battery swap stations. Nio term this as Battery-as-a-Service (BaaS), and they currently have 1,210 battery swapping station around the world that are swapping 1 battery every 2.8 seconds.
I think this is a great business model as the company can have a stable subscription revenue that is not limited to a company but the entire industry. Plus, users can buy the vehicle at a cheaper price, and pay for the battery monthly. Lowering up front cost for the buyers. Nio is building a platform for all EV to leverage on, and they earn money from every single EV in the platform. This is also a great breakthrough as many companies find that battery swap technology isn't feasible. Even the innovative $Tesla(TSLA.US)$abandoned it. About 50 other Chinese EV firms are pursuing it, but some how only $NIO Inc(NIO.US)$ made great progress towards commercialising it. So if Nio did build up the entire ecosystem around this BaaS, more EV manufacturers might be enticed to license from Nio as now their own customers will get access to all the benefits for a really cheap price.
So as Nio crashes from its peak of $66.99, just like many companies had in 2022, I had been picking up the stocks slowly. Slowly because it is still a Chinese company which have tons of negative headwinds against them. Furthermore, this is a bear market so price tends to fall, so low can go lower. So I have been applying the strategies to be used in a bear market as laid out in the post below:
doctorpot1: Strategies for a bear market which last on average 9.6 months, but this one may last more than 2 years
It is thanks to such strategies that my position in Nio isn't that bad. The strategy of buying in slowly, and using options to hedge and buy in. Without using such strategies, I would had suffered a 44% loss. However by hedging my position with Covered CALL options strategy, and buying in using a double down Cash Secure PUT options strategy, I'm only down 6.16%. Full trading record below.
Turned a 44% loss into a 6% loss on Nio. I'm still betting on Nio as it benefits from the growing EV industry, and the upcoming China bull run.
Without using options my cost per share in Nio would have been $21.53, and that will be a loss of 44%, losing $1,894. To breakeven, Nio will need to rally by 78.52%. However thanks to selling both Cover CALL options on my existing position, as well as selling Cash Secured PUT options to try and get new shares. My cost per share is greatly reduced from the premium collected. The cost dropped from $21.53 to just $12.852. I had collected 40% of my initial investment back in options premium, turning this 44% loss into a 6.16% loss. So now in order to break even, Nio just need to rally by 6.57% which is easy if there are more good news from CCP
Of course, I will still be selling more options over time to recoup back all my investment. Given that the Chinese market might be on a bull run, I'm considering to add more position quickly to ride the wave up before it is too late
Turned a 44% loss into a 6% loss on Nio. I'm still betting on Nio as it benefits from the growing EV industry, and the upcoming China bull run.
Turned a 44% loss into a 6% loss on Nio. I'm still betting on Nio as it benefits from the growing EV industry, and the upcoming China bull run.
All options order on NIO
Turned a 44% loss into a 6% loss on Nio. I'm still betting on Nio as it benefits from the growing EV industry, and the upcoming China bull run.
Turned a 44% loss into a 6% loss on Nio. I'm still betting on Nio as it benefits from the growing EV industry, and the upcoming China bull run.
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doctorpot1
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crawled out of poverty, working towards FIRE!! (financial independence, retired early)
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