NIO
NIO Inc
Price:  
3.46 
USD
Volume:  
63,546,096.00
China | Automobiles
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NIO WACC - Weighted Average Cost of Capital

The WACC of NIO Inc (NIO) is 7.9%.

The Cost of Equity of NIO Inc (NIO) is 8.85%.
The Cost of Debt of NIO Inc (NIO) is 5.50%.

Range Selected
Cost of equity 7.80% - 9.90% 8.85%
Tax rate 0.30% - 0.70% 0.50%
Cost of debt 4.00% - 7.00% 5.50%
WACC 6.7% - 9.1% 7.9%
WACC

NIO WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.86 0.9
Additional risk adjustments 0.0% 0.5%
Cost of equity 7.80% 9.90%
Tax rate 0.30% 0.70%
Debt/Equity ratio 0.4 0.4
Cost of debt 4.00% 7.00%
After-tax WACC 6.7% 9.1%
Selected WACC 7.9%

NIO's CAPM model and how its cost of Equity is calculated

The Cost of Equity reflects the return a company needs to deliver to shareholders to justify the risk of investing in its shares. It’s computed using the Capital Asset Pricing Model (CAPM), which blends the risk-free rate, the stock’s beta, and the market risk premium.

This method evaluates the stock’s risk compared to a safe investment and the market’s overall volatility.

Here’s how we figure out the cost of equity for NIO:

cost_of_equity (8.85%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.86) + risk_adjustments (0.25%)

We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.