Okay folks, so Neo just had their most important day of the year Neo day. And before the market reacts tomorrow, we have to discuss what they announced, how big of a deal it is and my thoughts on pricing. With the small cap bear market and the relentless Chinese fear, what is my thought process moving forward with this And the only thing that I ask before we get into all of this is that you hit that ravishing like button and also don't forget to subscribe either. Okay, so Neo unveiled their Et5 Electric sedan, which is widely seen as their rival to the Tesla Model 3..

for full context, the top 15 best-selling electric vehicles in China according to Cnbc are number one, the Huang Huang Mini, which is a super low tier cheap mini vehicle, totally different, segmented audience, number two, the Tesla Model 3, and number three, the Tesla Model Y. So the Et5 is essentially Neo-strategic attempt to compete in this segment and basically earn its place amongst the big dogs that sell at scale in this market. But really, the main competitor that people are going to be looking at is how this is going to stack up against the Model 3.. So I went ahead and I made a spreadsheet of course comparing the two, we'll start with the total battery range on the highest end batteries for each respective model.

The Et5's total highest battery range is 621 miles, which is great. It's fantastic. and the Tesla Model 3, the highest Tesla Model 3 in terms of battery range, is a little bit more than half of that at 334 miles. So definitely a huge stark difference in terms of this main line item.

here. When you get down to the lower end batteries, if you get the cheapest models for each, you get 341 miles on the Et5 and 267 miles on the Tesla Model 3.. So in terms of battery, the Neo Et5 definitely outperforms the Tesla Model 3.. But you get the most dark difference when you get down to their top-tier new battery that they just introduced.

and this is the one that you're already seeing a lot of people brag in the media about. So expect to see a lot of talk on this battery this week and keep in mind that the battery is a service model that they use, makes it so that it's not super expensive up front as compared to say, a Tesla Model 3 long range where you have to pay a lot more up front just to get the better battery life, and again, the battery life is only like half as much as the Neo Et5. Elon really needs to step up his game in terms of the 0 to 60 time on the lower end 4.3 seconds for the Et5 and then 5.8 seconds for the Model 3.. Now when you upgrade to the top performance model, the Model 3 0 to 60 goes down to 3.1 seconds.

and the Et5 based on what we know right now with what they announced, doesn't offer a faster speed, it just has the one vehicle and you can change the battery based on how much range you want and how much you want to pay for the battery. But the actual motor and the actual performance capacity seems to be the same across models because they just have that one model, whereas with the Tesla you have three different versions. you have the standard most cheap one and then you have the long range and then you have the performance. The long range obviously has the best range and then the performance has the best speed and then the cheapest is just the most affordable option.

Whereas with the Et5, your affordability goes up and down based on the battery range that you want, But because of the battery as a service model, you can lease the battery for very, very cheap prices where it almost doesn't even make that big of an impact. For full self driving, they both offer some features available with the car and then the rest of the currently available features for a certain monthly fee around 105 dollars a month for the Et5 and 10 000 or 200 a month for the model 3.. neither really has full self driving, but they do update you via updates and they give you more features if you pay for the monthly subscription on top of the ones that they already give you included with the car. But when consumers look to buy Evs these days, I'd argue They're looking at three different things: top battery range locks and then upfront cost And that brings us to the last point.

The Et5 finally puts a Neo vehicle right in the price range to compete with the Model 3.. for the lowest option upfront cost model, with a Neo Et5, you're paying around 40 500 if you use the battery as a service model to rent the battery and that adds about 110 a month to give or take. They haven't released final numbers on the subscriptions. These are basically guesstimates based on what they're charging right now and based on extrapolations on how fast they're improving batteries and the overall cost to their bottom line to provide these batteries.

I think for the lowest end battery you're probably looking about 110 a month ish. And then for the model 3, you're paying around 39 940 for the lowest model three. And then you compare that lower end model to the lower end model model three where you're paying 39 940 for the lowest option model and you're saving a little bit of money. and you're not having to pay that subscription fee.

but you are giving up some range and you are giving up some of that performance 0 to 60.. But where the difference in value really starts showing up is when it comes down to comparing the top battery life range vehicles, make no mistake, the competitive feature of the Neo Et5 is this battery range and its looks. Its price is competitive. It's not an insanely cheap car though.

It's not something that's really underpriced in the Model 3. It's something that's pricing maybe slightly above Model 3 net, but is providing better range and for some, a new refined look that they like better. Model 3 doesn't have that new honeymoon effect in the market. A lot of people have seen them.

It's at this stage where that battery as a service model really starts showing into the data for the Et5. With the top tier battery that gets 621 miles, you're still paying that base 40 500 and that top tier battery bolsters your payment up some. but still, you're paying 5k less up front than the Model 3 and your battery range is almost double as much so over the lifetime of ownership. Hey, the Neo is still going to be more expensive, but you are looking a lot more competitive.

I mean, you've never seen Neo this competitive and this neck and neck with the Tesla Model 3 before. But even outside of that, the big story is really this battery in the battery technology and how it could apply to a lot of the other vehicles in Neo's lineup. Ev companies trade on their ability to one-up their competitors in terms of the tech in their vehicles and the biggest number one tech that people want to see is batteries that actually have range. That beats out the competitors.

It's what made Lucid Stock take off when they confirm that their battery range hit about 500 plus miles. If this battery and future innovations on this battery find its way into the entire lineup, that's going to substantially bolster the entire competitiveness of this company. Now, keep in mind that the Et5 Neo is planning to start delivering in September 2022, so this is a big catalyst for the company in terms of bolstering results at the end of next year and through 2023 especially, but it's going to take some time. This isn't a tomorrow sort of big impact to the bottom line of this company.

They also caused quite a stir by saying they partnered with a custom augmented reality glasses company to reduce the need for in-car screens. Neo's investing branch, Neocapitals actually invested in this company and they also worked with the company to develop this. But I gotta say I think that Ar glasses for use in vehicles is very, very gimmicky at this point. Aside from that, they also said on Neo day that their higher priced, higher tier Et7 sedan deliveries are going to start in March 2022..

they also said next year they'll be opening in Germany, the Netherlands, Sweden, and Denmark. They also said by 2025, the company aims to reach users in more than 25 countries and regions. Of course, they've already opened up in Norway, so they do have one foot in Europe already. now.

in terms of what you want to hear whether or not the stock will go up in relation to this news, you had some small evidence of speculative capital being present, rallying it up right to close in anticipation of that happening post Neo Day, which indicates that there are some catalyst momentum traders still playing Neo. Despite the risk-off environment, they certainly could be present tomorrow to play the game once more. But at the same time we've generally grown very, very accustomed to seeing Neo rally up in the weeks and especially the last couple of days prior to a big analyst heavy event like a Neo Day, a new battery reveal, so on, and so forth. But this year you had the massive massive risk off environment and you had the Big Chinese fear acceleration which have made it very, very difficult for Neo to trade positively.

But honestly, I think for Neo to really make a sustainable reversal, you'll need to see a broader growth sector market reversal as a whole. If you remember back from October 5th to November 11th, Neo went from 33 to 44 and that was in the context of the overall risk on period that the growth sector enjoyed. To me, it almost seems like Neo could report whatever they want and it would still go down. And the reason is because again, you just have this risk-off environment that doesn't want to buy stocks that aren't well risk off.

But if you're looking into 2022 and 2023, we have a lot of big catalysts on our horizon. We're gonna have supply chain issues, Really, start easing into Q1 and Q2, which is going to bolster deliveries across the board. You're going to have new battery rollouts, You're going to have that Et7 arriving in Q1 of 2022. They're building out production capacity.

They're building out more battery swapping stations. So I think that you're looking at 2022 and 2023 and you're seeing a lot of fundamental bolsters to Neo and Neo the company. I think it's just a matter of when the market gives us the right condition to recognize that. But until it does, recognizing what Neo is doing and strategically deciding whether it is a good value for your own risk management style and also making sure that you're not overexposed to more risk on markets like, say, China, you start really diving into those questions and then you can start looking at the price and say hey, Well, this seems like a pretty good deal.

Or hey, you know what? Maybe I don't want the risk with this for me. As somebody who's been talking about Neo since three Dollars, it's always been a very, very risky play, but it's something that's been developing and showing and building conviction for years. But anyways, folks that gaps off the video, let me know what you think down below. If you'd like to join us on ziptraderu, we do have coupon code holiday25 which will get you a discount.

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Deposit any amount. Anyways, have a good one and I'll see you in the next video.