Nio joins Tesla in the ranks of electric-vehicle makers worth more than General Motors as Wall Street sees major upside

• Nio has surpassed General Motors in market value, as investors continue to bet on the long term outlook of electric vehicle manufacturers.
• Nio’s market cap of more than $56 billion on Thursday was more than General Motor’s $53 billion. 
• Shares of Nio have surged this week after the Chinese electric vehicle maker said it delivered a record 5,000 cars in the month of October.
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Nio is now worth more than General Motors.

The Chinese-based electric vehicle company had a market capitalization of more than $56 billion on Thursday, compared to General Motor’s market capitalization of $53 billion. 

While the two companies now sport a similar valuation, the size of their underlying businesses are far apart.

Nio has cumulatively delivered just 63,343 of its current model line up of 3 electric vehicles, with the first vehicle going on sale in 2018. General Motors sold 2.9 million cars and trucks in 2019 alone.

The widening gap between valuations and underlying car deliveries at the two companies illustrates just how much of a premium investors are willing to pay for a company that’s focused solely on electric vehicles. This trend was first set by Tesla, who has seen a meteoric rise in value in 2020 as it successfully ramped up the production of its electric vehicle model line up to nearly half a million cars per year despite the COVID-19 pandemic. 

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General Motors has taken note. The company recently unveiled its electric powered Hummer, and is in ongoing discussions to potentially partner with Nikola and manufacture its Badger pickup truck. 

Wall Street analysts are buying into the growth potential of Nio. The firm received a price target hike from Citi to $46.40 on Thursday, representing potential upside of 23% from Thursday’s close.

And last month, JPMorgan said it expects Nio “to be a long term winner in the premium space among Chinese brands” as Tesla’s success in China represents a “rising tide lifts all boats” phenomenon. 

Whether Nio is able to sustainably hold its market value edge over General Motors will be determined over time. In June, Nikola Motor Corp. briefly surpassed Ford in market capitalization for no longer than a couple of days. 

Shares of Nio surged as much as 11% to record highs in Thursday trades.