FILE PHOTO: NIO ES8 electric SUVs are seen displayed at the second media day for the Shanghai auto show in Shanghai, China April 17, 2019.  REUTERS/Aly Song
NIO ES8 electric SUVs are seen displayed at the second media day for the Shanghai auto show in Shanghai
  • The 2020 rally in Chinese electric vehicle manufacturer Nio continued on Friday and now stands at a year-to-date gain of more than 1,100%.
  • Nio, like other electric vehicle startups, have seen outsized enthusiasm from investors in 2020 as the trend away from internal combustion engines towards electric vehicles accelerates.
  • Whether Nio and its peers can hold onto and expand the gains they’ve made in 2020 into 2021 will likely be determined by execution.
  • Visit Business Insider’s homepage for more stories.

2020 has been a strong year for electric vehicle start-ups. From high-profile SPAC debuts to soaring stock prices, investors have pegged an outsized premium to EV stocks as they try to replicate the success of Tesla

One EV company that has seen an outsized gain this year as it ramps up the production of its vehicle lineup is China-based Nio. The company, which has its eyes set on the premium electric vehicle space in China, has seen its stock rally by more than 1,100% year-to-date as of Thursday’s close.

That rally is set continue on Friday, when the rally could hit 1,200%, with Nio’s surging more than 5% in Friday morning trades.

Earlier this month, Nio saw its market value soar past General Motors after it revealed record monthly deliveries in October of more than 5,000. The company said it has cumulatively sold more than 60,000 cars since it debuted its current model lineup in 2018.

Now, with a market capitalization of nearly $70 billion, Nio is behind just a few automakers who are bigger in market value, including Volkswagen, Toyota, and Tesla. But whether Nio can hold onto and extend its gains set in 2020 will most likely hinge on execution as it attempts to grow into its valuation. 

This is true for many high profile electric vehicle companies, and was true for Tesla, which faced years of skepticism from investors as it frantically worked to ramp up production to meet soaring demand for its ever expanding EV model lineup.

On the flipside, EV startup Nikola Corp. is a reminder to investors that fortunes could quickly dwindle with any hiccups that materialize in the growth narrative of the company. The company faced waves of controversy following a short report from Hindenburg Research in September that alleged the company and its founder Trevor Milton misled and deceived investors.

Nikola, though it denied a bulk of the claims made by Hindenburg, has yet to fully recover from the short-report, which has put its own business opportunities at risk, such as a potential partnership deal with General Motors. Talks surrounding that deal are ongoing, according to both Nikola and General Motors, with a deadline to make a deal set for December 3. 

One relatively under the radar China-based EV maker investors may shift attention to is Xpeng, which soared 33% on Thursday after it reported strong growth in its third quarter results. 

Other high-profile electric vehicle startups that investors will likely keep an eye on going forward include Fisker, Lordstown Motors, and Rivian, which remains private. 

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