The ADR shares of Chinese electric car company soared to an all-time high on Tuesday as more and more skeptics turned into its believers.

Nio received an endorsement before the US stock market opened Tuesday from investment bank UBS, which not only raised its rating on Nio from "sell" to "neutral," but also raised its price target on the stock by 1530% to $16.30 from $1.

Nio shares rose more than 19% to $17.84, a record high, on the news. Nio's market capitalization has surpassed 20 billion dollars, up more than 740 percent since the low of $2.11 recorded in March.

UBS said that Nio's improved fundamentals have eased concerns about its balance sheet, thanks to successful financing in June.

However, UBS also warned that the company may need to raise more money from investors to finance its rapid growth in the electric vehicle sector.

UBS added that Nio is benefiting from a recovery in sales through 2020 as global consumer demand for electric vehicles continues to be strong.

"With the refresh of the ES8 and warming of EV purchases, demand seems strong by its own scale," UBS said.

However, despite the improved outlook for Nio's share price, UBS still believes that its valuation will further fair.

It's worth noting that after UBS's $16.30 target price, Nio stock closed about $1.50 above its latest target price.

Second-quarter results far exceed expectations

Another major reason UBS raised its price target on Nio shares so sharply as the company's much better-than-expected operational improvements and cost-cutting.

According to Nio's second-quarter 2020 results released on Aug. 11, its second-quarter revenue rose 146.5% year-on-year to RMB 3.719 billion, topping analysts' expectations of RMB 3.493 billion and exceeding the upper end of the company's previous guidance (RMB 3.368 billion to RMB 3.543 billion).

Its net loss narrowed 64.2% year-over-year to RMB 1.177 billion, compared to RMB 3.286 billion a year earlier.

In addition, Nio's gross margin turned negative to positive at 8.4% in the second quarter, far exceeding market expectations.

In terms of vehicle deliveries, Nio also set a record high in the second quarter. Nio delivered a total of 10,331 vehicles in the second quarter, up 190.8% year-over-year.

Looking ahead to the third quarter, Nio founder and chairman William Li Bin said deliveries are expected to be in the range of 11,000 to 11,500 vehicles, an increase of 6.5 to 11.3 percent from the previous quarter, and continuing to surpass record quarterly delivery values.

Nio also expects the company's total revenue for the third quarter of this year to be in the range of RMB4,047.5 million (572.9 million dollars) to RMB4,212.3 million (596.2 million dollars), up about 120.4 percent to 129.3 percent year-on-year and 8.8 percent to 13.3 percent sequentially.

Eyeing the European market

Recently, Nio has been getting a lot of good news.

There is news that the Nio is moving forward with plans to expand into Europe and other parts of the world.

Li Bin recently said, "We hope to try to enter some countries that are more welcoming to electric cars in the second half of next year." According to him, the first stop for Nio to go abroad is the European market, but he did not reveal the specific countries.

For now, Europe's new energy vehicle market has surpassed China's size.

According to survey data published by Matthias Schmidt, an independent automotive analyst in Berlin, from January to July 2020, Europe has registered a total of 500,000 new energy vehicles.

And according to data released by the China Association of Automobile Manufacturers, from January to July 2020, China has sold a total of 486,000 new energy vehicles, down 32.8 percent year-on-year.

In addition, Nio plans to enter major global markets by 2023 or 2024 and has already begun preparatory work.

Nio also announced that it will be offering battery swap technology, hoping that battery swap will once again become an alternative to long term charging.

Nio currently has 143 battery swap stations in China to provide battery swap services, and Nio also plans to add 300 more battery swap stations in China next year.

On August 20, Nio also officially launched its BaaS (Battery as a Service) battery rental service. Consumers do not need to buy battery packs when purchasing a car, but rather choose to rent battery packs of different capacities according to their needs and pay a monthly service fee.

For those who choose the BaaS model to purchase an Nio, the price of the vehicle will be directly reduced by RMB 70,000.