Chinese electric carmaker Nio’s stock price has slumped 40% since 2024 due to intense competition and trade barriers. The company, despite being a loss-making entity, is generating decent revenues and is predicted to break even by 2026, considering factors driving demand and Wall Street analysts’ Nio stock price target.
NIO Stock Analysis
The Nio stock long-term forecast examines the company’s performance and main drivers. As of September 18, 2024, the stock price was $5.02, 19% below its 2018 flotation price and 92% below the all-time high of $62.84 in February 2021, according to MacroTrends.
Nio’s stock has dropped 51% in the last year, from $10.31 to $5.02. In contrast, it has dropped 40% so far this year from its peak of $8.42 at the beginning of January 2024.
Second Quarter Results
- The company’s second-quarter results, which were released in early September 2024, were the subject of the most current Nio news.
- In the second quarter, vehicle sales totaled RMB 15,679.6 million (US$2,157.6 million), a 118.2% increase over the same time in 2023.
- In contrast, total revenues were RMB 17,446.0 million (US$ 2,400.6 million), rising 76.1% from the first quarter of 2024 and 98.9% from the second quarter of 2023.
- The second quarter of 2024 had a net loss of RMB 5,046.0 million (US$694.4 million), which was 2.7% less than the first quarter of this year and 16.7% less than the same period last year.
Record-Breaking Achievement
The company reported a 143.9% increase in the delivery of 57,373 vehicles in Q2 2024, including 32,562 premium smart electric SUVs and 24,811 premium smart electric sedans.
Nio, founded by William Bin Li, has secured over 40% of the market share in the battery electric vehicle segment in China, thanks to its core competitive advantages in technology, product, service, and community.
Outlook For The Third Quarter
Nio reported 20,498 and 20,176 vehicles delivered in July and August 2024, with cumulative deliveries reaching 577,694. The company expects vehicle deliveries in Q3 2024 to be between 61,000 and 63,000, with total revenues expected to be between RMB19,109 million and RMB19,669 million.
How Did Analysts Respond?
Vincent Sun, senior equity analyst at Morningstar, reports that Nio’s second quarter revenue exceeded its guidance, and its vehicle margin reached a low-teens level, gaining six percentage points year-over-year to 12% due to larger delivery and lower battery cost.
Nio’s second-quarter revenue nearly doubled year-over-year, largely due to a 1.4 times increase in vehicle delivery and an 11% decrease in average selling price. The company expects to break even in 2025 with a net profit of CNY 1 billion.
Conflict With The EU About Tariffs
The European Commission has rejected Chinese electric vehicle manufacturers’ requests to adjust prices to avoid higher tariffs, citing the need to protect European manufacturers from low-cost, China-made rivals, following the Commission’s July 2024 announcement on BEV import duties.
The ONVO Brand Debuts
Nio unveiled ONVO, a family-focused brand, and the L60, its first product, an electric mid-sized SUV, with deliveries expected in September 2024.
Is China’s Demand for EVs Strong?
The International Energy Agency predicts that by 2030, nearly one in three cars in China and one in five in the US and EU will be electric. The Global EV Outlook predicts sales to reach 17 million by 2024, with a 25% increase in Q1 compared to 2023.
China’s electric car sales are expected to reach 10 million in 2024, accounting for 45% of all car sales in the country. Chinese automakers’ growing exports, which accounted for over half of all sales in 2023, could help lower prices. The composition of the main EV-producing economies is diverging significantly from the traditional auto industry.
2026 Will Be the Tipping Point for EVs
S&P Global Mobility predicts that 2026 will be a pivotal year for EV adoption, with over one in four new passenger cars expected to be electric by 2030, as manufacturers ramp up their transition to zero-emission vehicles.
Top automakers are predicted to contribute over 70% of global EV production by 2030, compared to just 10% in 2022. However, the industry must address range anxiety, especially for those without garages or long-distance travelers, to ensure success.
Forecasts for NIO Stock: Where Will It Go Next?
Nio stock is rated as a ‘hold’ by 11 Wall Street analysts, with a consensus forecast of a 17.96% price rise to $5.93 over the next 12 months, with the highest forecast of $8 and the most pessimistic forecast of $4.
Nio is rated a moderate buy’ by 11 analysts, with a consensus forecast of $5.97 for future stock price next year. Wallet Investor classifies it as a ‘bad long-term investment,’ with a flatline price of $0 in 2025.
Long-term Nio stock predictions are often viewed as unrealistic due to analysts’ reluctance to look too far into the future. Coincodex’s Nio stock price prediction for 2030 suggests a price rise to $1,472.36 by January 2030.
In conclusion, is it wise for me to invest in NIO?
Nio’s stock price has slumped by 40% since 2024, down 51% from a year ago. Factors contributing to the decline include losses, intense competition, and trade barriers. However, analysts suggest cautious optimism for Nio stock investment.
Electric vehicle demand is expected to surge significantly over the next five years, bolstering existing manufacturers. Nio’s continued improvement in delivery and revenue could lead to a break-even point in 2026.
