Nio Eyes Return To Glory. Its EV Sales Are Set To Accelerate.


Nio (NIO), the former darling of China EV startups, turned into a laggard amid slumping sales. But Nio stock rose Wednesday morning to extend its hot streak in July as anticipation builds for a stronger second half of 2023 on the back of new and more affordable electric vehicles.




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Analysts at Morgan Stanley wrote Tuesday that they now see 15,000 Nio deliveries in July, following recent back-to-back launches of the new ES6 and ES8 SUVs, as well as the ET5 Touring sedan.

That 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, which was down a bit from 6,658 in April. Nio also joined the China price war in June, slashing prices of all EV models.

After a strong July, Nio should see “a steady uptrend toward September” when the startup is targeting 20,000 EV deliveries, Morgan Stanley analyst Tim Hsiao said in his note to clients.

The all-new, next-gen ES6 debuted in late May and made up more than 40% of June deliveries in its first full month of sales, CnEVPost.com calculates. Nio itself no longer breaks down EV sales by model. The ES6 is traditionally its top-seller.

In fact, Nio’s entire lineup of six EVs is either new or totally overhauled, after the shift to a second-generation, highly advanced EV platform, which it calls Nio Technology 2.0 (NT2.0).

In a July 6 note to clients, Mizuho Securities analysts said they expect that platform switch to start paying off after it curbed deliveries earlier in the year.

“Nio is still in the early stages of vehicle ramps on its NT2.0 platform and could accelerate into the second half of 2023,” Mizuho analyst Vijay Rakesh wrote. He reiterated a buy rating on Nio shares and price target of $20.

Still, Rakesh cautioned that “costs and demand remain headwinds” for Nio. And Morgan Stanley’s Hsiao says Nio, once called the Tesla (TSLA) of China, has still to show stronger execution. Previously, analysts tied a slow production ramp of new electric vehicles, like the ET5 and ET7, to delayed deliveries to customers, leading, in turn, to order cancellations.

Nio aims to double EV sales in 2023. Thus far, the overall China EV market shows healthy demand trends but also faces overcapacity issues, analysts say.

Nio Stock

In stock market trading Wednesday, Nio stock rose 2.7% to 11.10, rallying for a fourth straight day. It closed above the 200-day moving average Monday for the first time since November 2021.

Nio stock surged nearly 11% in June and is up more than 13% in July so far amid the ES6 launch.

XPeng stock climbed 1.4% on Wednesday to above 15. XPEV stock is also up over 13% in July amid the launch of its new G6, an electric SUV that undercuts the Model Y in price.

On Tuesday, Goldman Sachs analyst Tina Hou initiated coverage of XPeng with a buy rating and a price target of $18.10. Hou cited the G6 launch and declining battery prices.

Li Auto remains the clear sales leader amid China EV startups this year. Li stock gained 1.5% Wednesday, on track for its best close in nearly a year. Shares are up 7% in July, taking the year-to-date rally to 84%.

Both the Nio ES6 and Xpeng G6 target the high-end, mid-size crossover market in China.

That market is increasingly competitive. It’s dominated by Tesla (TSLA) Model Y and now includes the new N7 from Denza, a BYD (BYDDF) brand in which the Mercedes-Benz Group has a 10% stake.

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