Nio (NIO), the former darling of Chinese EV startups, has become a laggard amid falling sales. But Nio stock emerged on Wednesday to extend its July hot streak as anticipation braces for a stronger second half of 2023 thanks to new, more affordable electric vehicles.
Morgan Stanley analysts wrote on Wednesday that they expect 15,000 Nio deliveries in July. They cited a ramp-up in production of new models, including the ES6 SUV and ET5 sedan.
It would mark the second month-over-month sales acceleration for Nio, whose startup rivals include Li-Auto (LI) and XPeng (XPEV).
Nio delivered 10,707 vehicles in June, up sharply from 6,155 in May, down slightly from 6,658 in April. Nio also joined China’s price war in June, slashing prices for all EV models.
After a strong July, Nio should see “a steady upward trend toward September” as the startup targets 20,000 electric vehicle shipments, Morgan Stanley analyst Tim Hsiao said in his note to clients.
The all-new, next-gen ES6 debuted in late May and accounted for more than 40% of June shipments in its first full month of sales, CnEVPost.com calculates. Nio itself no longer breaks down electric vehicle sales by model. The ES6 is traditionally its bestseller.
In fact, most of Nio’s eight EV lineup is either new or totally overhauled, after switching to a highly advanced second-generation EV platform, which it calls Nio Technology 2.0 (NT2. 0).
The company is banking on this platform switch to start paying off, after curbing production and deliveries of some models earlier this year.
“Nio is still in the early stages of vehicle ramps on its NT2.0 platform and could ramp up to the second half of 2023,” Mizuho analyst Vijay Rakesh wrote in a July 6 note. to customers. He reiterated a buy rating on Nio shares and a price target of $20.
Still, Rakesh warned that “cost and demand remain headwinds” for Nio. And Morgan Stanley’s Hsiao said Nio, formerly called the You’re here (TSLA) of China, has yet to demonstrate stronger execution. Previously, analysts had linked a slow ramp-up of new Nio electric vehicles, like the ET5 and ET7, to delayed deliveries to customers, in turn leading to order cancellations.
Nio aims to double electric vehicle sales in 2023. So far, China’s overall electric vehicle market is showing healthy demand trends, but is also facing overcapacity issues, analysts said.
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In trading on Wednesday, Nio stock was up 3.2% at 11:15 a.m., rallying for a fourth straight day. It closed above the 200-day moving average on Monday for the first time since November 2021.
Nio stock jumped nearly 11% in June and more than 15% in July until SS6 ramped up.
XPeng shares climbed 1.3% as of 3:16 p.m. Wednesday. XPEV stock also rose nearly 13% in July as part of the launch of its new G6, an electric SUV priced below the Model Y.
On Tuesday, Goldman Sachs analyst Tina Hou launched XPeng coverage with a buy rating and price target of $18.10. Hou cited the launch of the G6 and falling battery prices.
Li Auto remains the undisputed sales leader among Chinese EV startups this year. Li shares climbed 1.5% to 38.17 on Wednesday, marking its best close in nearly a year. Shares rose 9% in July, taking the year-to-date rally to 87%.
Both the Nio ES6 and Xpeng G6 target the high-end and mid-size crossover market in China.
This market is increasingly competitive. It is dominated by You’re here (TSLA) Model Y and now includes Denza’s new N7, a BYD (BYDDF) in which the Mercedes-Benz group holds a 10% stake.
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