Daiwa Securities reiterated its Buy rating on Nio in a recent report with a $100 price target, implying a 73% upside from the company's Wednesday closing price of $57.71.

Daiwa Securities believes Nio will be able to further capture the luxury car market in the future with its leading NAD (Nio Autonomous Driving) technology, building a user community, and innovative business concepts and models (BaaS, ADaaS).

The analysts believe that the BaaS model lowers the purchase threshold for consumers and is favored by users.

In August, Nio launched Battery as a Service (BaaS), a battery rental service. As of recent weeks, the number of customers who have purchased vehicles using the BaaS model is close to 50% of new orders, Nio co-founder and president Qin Lihong said in a recent speech.

According to Daiwa Securities, Nio management is optimistic about its future autonomous driving service (ADaaS) and believes that Nio will launch the service by the first quarter of 2022.

This view was shared by Haitong Securities, who said last week that the subscription model for NAD is expected to provide Nio with a steady stream of cash flow as the smart driving algorithms take hold, the analysts said.

"NAD is similar to the Tesla FSD in that the car is being transformed into a vehicle for computing power and software," Haitong said.

Daiwa Securities said Nio is oriented toward building a user community, which is different from other traditional car manufacturers. The analysts believe this will help increase user loyalty and further build brand reputation, which will serve to stimulate new car sales.