Critical Nio Stakeholders
Each company and industry has several stakeholders, however, for the focus of this blog, we decided to only focus our energy on 6 categories of stakeholders. We first looked at the suppliers of materials and components, as you can not start production without supplies. Furthermore, we look at the energy generating and storage companies as they are needed for the production of vehicles and needed after the purchase of the vehicles. Then we look at the producers/resellers of the vehicles and the consumers that consume the products made. After that, we look at the investors that had a role before the company was even able to order supplies from the suppliers, but also investors are looking to make a profit after seeing the products being produced and want a part of the company.
Because Nio uses over 190 suppliers who are not all identified, we are going to be looking at the suppliers that are identified and what impact having this amount of suppliers has on a company that is trying to be sustainable. Nio has 7 key suppliers; Mobileye B.V, CATL, Continental, Bosch, ADAS, Brembo and Novelis. These companies contribute to Nio’s AI systems, air suspensions systems, brakes, sensors/radars, aluminium for body panels. Utilizing the ESG (Environmental, Social, and Corporate Governance) rating tool on msci.com, we were able to rate as many companies as possible mentioned above. Results state that their ESG rating is average ranging from a BB score to A. (MSCI Inc, 2020)
The ESG tool is to a certain extent reliable to rate an industry or a companies specific industry as it is a tool used by many investors and this tool was also mentioned and explained in the Sustainable Energy Professional class making it that more credible.
Nio does, however, state in their annual report that their criteria for suppliers are mainly quality, cost and timing, just like the rest of the car industry, they don’t mention anything about sustainably sourcing materials or components, neither ethically. However this is understandable for a growing company that is trying to grow profit, they do however state they strive to be fully sustainable in the future.
One of their suppliers CATL, which provides battery cells, is on the higher side of the ESG rating scale with a score of A even though nickel and cobalt, which are key components of current battery cells, are known to pollute oceans and have questionable ethical work environments. CATL is known to have high job satisfaction from their co-workers. They utilize battery recycling and energy storage from renewable sources to generate their energy. They are one of the more known battery suppliers in the world that pays a lot of attention to sustainability which is one of the reasons they also have a contract with Tesla. (Contemporary Amperex Technology Co., 2020)
The supplier they use for aluminium, Novelis, is also the world’s largest aluminium recycler, utilizing a closed-loop recycling method and circular economy system and using a lot less water than their competitors. Aluminium production is not the most sustainable activity in the world, however, this company is trying its best by being the best in being the world leader of sustainable aluminium. (Novelis Aluminum, 2020)
CATL website front page showing their sustainability. An important stakeholder for Nio.
ENERGY GENERATING COMPANIES
Nio is connected with different energy generating companies due to its partners and suppliers, however, for simplicity, we will only be looking at energy generating companies to which Nio is directly connected with or has plans to connect with.
Nio has a joint-manufacturing with JAC, which means that Nio currently has no factory that is 100% by the company, so they are currently manufacturing their electric vehicles with JAC factories, while Nio has full control of what happens in their product line and how it gets created. Nio tries to produce as sustainable as possible and JAC, as a huge auto manufacturing brand in China, has governmental obligations to continuously be more sustainable, which is why they the Nio-JAC factories are supplemented with Photovoltaic panels on the roofs.
Aside from Jac stating that they are committed to keeping up sustainable system innovations, safe, energy-saving and eco-friendly technology, along with improving their ESG and partaking in sustainable United Nations projects. To have a look at their whole 2015 society responsibility report where they explain in detail how they manufacture and plan to manufacture in an eco-friendly manner. (JAC Motors, 2020)
Aside from having photovoltaic panels on their factory roofs, they state that one of the biggest ways they contribute to the energy generation movement is producing several electric vehicle units. Creating an electric vehicle is a way to contribute to energy generation as you need the energy to create the vehicles and energy to charge the cars. This new electric vehicle trend encourages the government and companies to generate their energy is a sustainable and ethical manner, creating innovations and investments for hydro, solar, thermal and wind energy generating systems.
ENERGY STORAGE COMPANIES
Just like the energy generating companies, we will mainly be looking at the JAC-Nio factories, which is known that they are connected with energy storage and is storing their energy from the photovoltaic panels. CATL is also a stakeholder in this category as they provide Nio with battery cells, which is a form of energy storage. Nio Power, Nio Service and other power/charging stations which are a part of the Nio business are also stakeholders for this company.
Nio power stores its energy for the battery swap and charging stations, which can be seen as a single company on its own. Nio Service, transport portable energy stored within its vehicles to help electric vehicles with a quick boost of energy within 10 of charging.
The Chinese government is also a huge stakeholder in the energy storage category, as they have contributed almost 1 billion charging stations/poles in China, which has a direct effect on Nio as a company.
Currently, the Nio-JAC factory or Nio is the only producer of the Nio electric vehicle which makes Jac one of its largest stakeholders. The reseller market is however also a major stakeholder, electric vehicles haven’t been around that long to see a huge development in this market.
However, every company that are selling second-hand cars are affected by the growth of an electric vehicle company like Nio. The value of fossil fuel cars is dropping fast while electric vehicle cars in some cases like Tesla are rising. Meaning if you buy a new electric vehicle, you can potentially sell it for a profit due to speed updates and autonomy price raises that have been shown by Tesla at the moment. This can also carry through to Nio cars, especially as they are marketed as premium vehicles.
Reseller or the second-hand car market will start losing money or making money, depending on what they choose. They will have to start changing their business model and stop accepting fossil fuel vehicles as it will be starting to only lose them money soon if no changes are made. Especially that it is expected that almost all cars sold nearing 2050 will be electric, which is reason enough for banks to not grant a loan to aspiring second-hand car resellers. (IEA, 2020)
World car sales are currently declining overall partly due to the COVID-19, while electric vehicles are declining the least and remain to gain market share. (IEA, 2020)
Consumers are also an important stakeholder as they control their demand and has a direct effect on the number of electric vehicles Nio produces. Not only does Nio consumers purchase their vehicle cars, but they also contribute to the servers needed to run the apps, the Nio power services, Nio houses buildings and services that are found within and these houses and also the Nio x Chalayan clothing line.
Nio is very vulnerable to its clients, which is why they focus so much on service, user experience and premium quality. They ensure that the customer is happy at all times with their products and service. Nio has an app where the community can directly share their praise or concerns with the company, making it easier to solve problems and enhance benefits. This connection with the consumers also gives the customers a feeling that the company cares, this direct feedback system also pressures Nio to be as sustainable as possible. The data that Nio gets from their application is priceless.
The Nio community also utilizes the Nio houses which provide Nio owners and their family different amenities like; vehicle displays & testing, living room-like relaxing spaces, forum spaces to share ideas and inspiration, meeting rooms & workspaces, libraries, cafés to eat or drink and kids space so that they can educate themselves while having fun.
As mentioned above, Nio also has a premium clothing line, which also has a direct impact on Nio as a company as it is part of their branding. It is apparent that Nio pays a lot of attention to their branding and image and wants to create a community and a specific lifestyle with Nio. That lifestyle is looking futuristic, minimalistic, educated, sustainability informed and conscious which is good for the Chinese government and the world if they succeed. If a certain lifestyle is perceived as cool and is sustainable if this lifestyle spreads throughout China and then to the world, it is a positive aspect to look forward to,
Investors are a big part of Nio’s existent, the Nio founder is a successful Billionaire entrepreneur that lives a minimalistic lifestyle owning no real estate, and only rents an apartment in China is a magnet for investors. The entrepreneur is passionate, talented and has had other successful endeavours, but remains modest about this, as Chinese people are relatively modest, however, he still stands out coming from a relatively poor background.
Because of his talents and personality, he has attracted huge investors and interests, the biggest being the Chinese government. The Chinese government has had a lot of issues with pollution and has had protests within and outside its country from the world, so investing in sustainable companies like Nio are completely essential. The Chinese government sees these kinds of companies as such an important asset, that they will not let it fail if Nio just keeps doing what it is good at of course. Nio has locations all over the world to help get the best talents to work on designs, engineering, procurement etc. Aside from China, they have locations in London, Munich and San Jose in the United States, where they are also planning to manufacture and sell their cars in the future, which investors are interested in as well.
As Nio is still a relatively new company and still has a lot of room to grow, seeing that electric car companies are valued differently than tradition car companies. As electric companies like Nio are simultaneously a car company, service company, energy, company, a software company, technologies company, insurance company and autonomy company, their future market capitalization value can range from 500 billion US dollars to 2 trillion dollars per company, depending on their innovation, popularity and consumer adoption.
Looking at the current Nio stock price of around 27 US dollars per share (in October 2020) which makes the potential future value of the Nio stock priced at 1,895.73 US dollars per share in one of the positive case scenarios if Nio keeps growing, improving, innovating and manufactures more in-house. In one of the worst-case (potential future) scenarios is where Nio may have short term issues, but still manages to keep producing cars, grow their community around their brand lifestyle and maintain (or keep improving) their impeccable services. The potential future value of the stock (in one of these worst-case scenarios) may be priced between 500 and 900 US dollar per share, this is caused due to community and reputation Nio has already formed and the amount of support (monetary or inner networkings within China or global) Nio receives from private individuals, private companies, organisations and most importantly the government.
* These future values are based on a long-term basis of within approximately 10 years