Goldman downgrades Nio on weak outlook, competitive pressures

Investing.com -- Goldman Sachs downgraded Chinese electric vehicle maker NIO Inc (HK:9866 ) to “sell” from "neutral" on a limited pipeline of new models and sluggish production ramp-up on its vehicles.

Brokerage warned of intensifying competition, compounding the challenges for the automaker.

Goldman Sachs lowered price target on Nio’s U.S.-listed shares to $3.90 from $4.80, implying a 19% downside from current levels. While, its Hong Kong-listed shares now carry a target of HK$30, down from HK$38.

The competitive landscape for EV makers is expected to intensify as established players and newer entrants roll out competitive models. Goldman believes Nio’s limited new product pipeline puts it at a disadvantage during this period.

Goldman highlighted rising operating losses as Nio (NYSE:NIO ) continues to expand the sales network for Onvo, which targets more price-conscious consumers. The expansion, involving the addition of 300 to 500 stores by mid-2025, will require significant spending on sales and marketing (S&M) as well as research and development (R&D), which are expected to erode profitability over the next three years.

Goldman also flagged downside risks to Nio’s fourth-quarter volume and revenue guidance. Weekly sales volume in November is trending at 4,800 units, falling short of the company’s implied run rate of 5,900 units needed to meet its targets for the remaining weeks of 2024.

“We expect lukewarm order momentum, slow production ramp-up and delivery volume, and intensifying price competition to be downside stock price catalysts,” the note said.

Source: Investing.com