NIO Stock Alert: Nio is reportedly closing a battery deal with BYD

After the company announced in December that it would spin off its battery division, Nio (NYSE:NOK) has secured a new contract for batteries for its new brand of affordable vehicles, according to sources Reuters. The electric vehicle (EV) company had previously expressed its intention to outsource battery manufacturing. Despite this deal, NIO stock is down about 2.5% today.

Nio has reportedly signed a battery deal with the Chinese electric vehicle leader BYD (OTCMKTS:BYDDY) for its upcoming brand Onvo, or Ledao in Chinese. Onvo’s first vehicle, the L60, is expected to compete with it Teslas (NASDAQ:TSLA) Model Y. The car is expected to be unveiled this month and launch later this year.

“One of the most important issues that has fundamentally neither been solved nor received much attention is battery life,” Nio CEO William Li previously explained. “This is not just a problem that Nio needs to solve, but one that the entire industry needs to work together to solve.”

BYD, together with CATL And CALB, will provide the batteries for different versions of the electric vehicle. It is worth mentioning that when contacted by, Nio noted that the news about the BYD deal was “inaccurate.” Reuters.

NIO Stock: Nio is reportedly closing a battery deal with BYD

BYD has historically used most of the batteries it produces, but it appears the company is opening its doors to outside customers. Last year, only 5% of battery production was sold to external customers such as Tesla. According to a Reuters According to a source, BYD is already in the process of making changes to its battery production lines in preparation for Onvo.

Battery outsourcing should help Nio achieve its big goal of becoming profitable. However, it will probably still be a few years before that happens.

In the fourth quarter, the company reported an adjusted net income loss of $688 million, resulting in an annual loss of $2.56 billion. GAAP EPS was a loss of $1.73. For 2024, analysts forecast an adjusted net income loss of $2.22 billion and a GAAP EPS loss of $1.16.

If we look to 2027, Nio could experience its first year of profitability. Analysts expect GAAP EPS of 23 cents, which is expected to rise to 32 cents the following year.

At the time of publication, Eddie Pan did not hold, directly or indirectly, any positions in the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to those of InvestorPlace.com Publishing Guidelines.