Mizuho Securities analyst Vijay Rakesh on Wednesday initiated coverage on Chinese electric vehicle (EV) maker Nio (NYSE: NIO) with a Buy rating and a price target of $60.00.

Nio rose 17.44 percent to $41.35 on Tuesday, meaning Rakesh sees a 45 percent upside for Nio. The stock closed down 0.07 percent at $41.32 on Wednesday.

The analyst said Nio "is a leader and innovator in the premium automotive EV segment; it is domiciled in China, the largest and most prolific EV market globally."

Mizuho sees Nio's Battery-as-a-Service ("BaaS") battery rental model as a key differentiation from peers, saying it has a premium EV offering with a lower cost of ownership through its novel BaaS battery swap module.

With a small 0.1% share of overall global light vehicle production (LVP), Nio has significant upside as it expands in China, into Europe in the second half of 2021, and potentially into other markets, the analyst said.

Nio has seen the battery swap model as its key strength. In addition to the consideration of replenishment speed, more importantly, the company hopes that car owners can enjoy the benefits of battery technology progresses.

According to Nio's senior director of communications Ma Lin, the starting point of Nio's energy replenishment system is to provide users with all scenarios of energy replenishment through a "rechargeable, battery swappable and upgradeable" energy replenishment system to protect the interests of users throughout their life cycle.

Nio's new 100 kWh battery is already available at the battery swap station in Beijing, and Nio has announced that it will launch a 150-degree solid-state battery in the fourth quarter of next year.

Even the first Nio ES8 delivered in 2018 can get a range increase of more than 40 percent by upgrading to a 100-degree pack, according to Ma.

Thanks to battery swap technology and battery swap stations, Nio customers can buy or rent the latest technology at a fraction of the cost and enjoy the dividends of technological advances.