Nio Inc. (NYSE: NIO), the Chinese electric vehicle (EV) maker, has seen its stock soar by nearly 15% in December 2024, with a notable 12.36% jump in a single trading session.
Currently trading at $5.18, Nio has posted a five-day gain of 17.4% and a six-month gain of nearly 16%. Despite the recent momentum, the stock remains below its initial public offering (IPO) price of $6.26.
Boost from Chinese policies and economic optimism
Nio’s rally coincides with renewed confidence in China’s economic policies. Over the weekend, Chinese officials announced plans for a “moderately loose” monetary policy alongside “more proactive” fiscal measures aimed at bolstering domestic consumption in 2025.
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These announcements have reignited investor interest in Chinese EV stocks, given the government’s clear focus on revitalizing the sector.
Additionally, China’s Ministry of Industry and Information Technology (MIIT) approved Nio’s flagship ET9 luxury sedan to become the first mass-produced vehicle featuring steer-by-wire (SBW) technology.
While the optimism around fiscal policies has lifted Nio and other Chinese stocks, broader Chinese markets have struggled to sustain the momentum. The CSI 300 Index saw early gains of 3.3%, which were pulled back to 0.7% by the end of trading, reflecting lingering investor skepticism.
However, U.S.-listed Chinese shares like Nio surged ahead, buoyed by hopes for further concrete steps from policymakers during the upcoming Central Economic Work Conference.
Growth in deliveries and expansion plans
Nio has showcased consistent operational progress, delivering 20,575 vehicles in November 2024, marking a 28.9% year-over-year increase and its seventh consecutive month of exceeding 20,000 deliveries. Cumulative deliveries now stand at 640,426 vehicles.
This momentum is underpinned by growing demand for its premium and ONVO-brand vehicles, as well as the upcoming launch of the ET9 luxury sedan in the first quarter of 2025.
Looking forward, Nio aims to double deliveries to nearly 450,000 units in 2025, driven by new models and expanded brand offerings.
The company plans to roll out two ONVO-brand vehicles: the Firefly model targeting the mass market and the ET9 sedan.
Despite challenges, Nio’s leadership anticipates narrowing losses, achieving gross margins of 15% for ONVO and 20% for its premium brand by 2025, and hitting breakeven by 2026.
Challenges in a competitive landscape
While Nio’s recent performance has been encouraging, its stock remains far below its early 2021 peak valuation of over $100 billion, with a current market cap of $10 billion. Analysts are divided on the company’s prospects.
Goldman Sachs recently downgraded Nio to “Sell,” citing intensified competition and sluggish production momentum, setting a target price of $3.90.
Similarly, Macquarie lowered its rating to “Neutral” with a $4.80 target, while JPMorgan trimmed its target from $8 to $7.
Nio also faces strategic challenges, particularly in Europe, where tariffs and geopolitical risks could stifle its expansion efforts.
The company’s reliance on battery-swapping technology, a unique selling point, may lose relevance as competitors like Li Auto (NASDAQ: LI) introduce ultra-fast charging capabilities.
Despite the challenges, Nio’s ambitious delivery targets, innovative technology, and global expansion plans position it as a strong player in the EV market.
However, with competition intensifying and geopolitical uncertainties looming, investors remain cautious, keeping a close watch on the company’s next moves.
Featured image via Shutterstock
