Written by Cláudio Afonso | LinkedIn | X
JPMorgan analyst Nick Lai published a new research note on Friday commenting on the launch of Onvo L60, the inaugural model under Nio’s first sub-brand Onvo.
The analyst noted that the family-oriented SUV is priced ‘significantly lower than the Tesla Model Y’ when bought with the Battery Subscription program, which Onvo considers the main competitor to its first model.
Tesla’s SUV starts at 249,900 yuan in China following a price cut in April. According to the China Passenger Car Association (CPCA), Tesla delivered 86,697 China-made units in August.
From January to August, Tesla sold 292,489 units of the Model Y in the country.
“Nio officially launched its first model (L60 SUV) under its new mass market brand Onvo last night with a largely anticipated starting price of Rmb206.9k (slightly lower than the initial indicative price of Rmb219.9k),” Lai noted.
“What’s interesting is the price with BaaS (battery as a service) is as low as Rmb149.9k, meaningfully below the Tesla Model Y (Rmb249.9k) that L60 aims to compete with, although the buyer would have to pay a monthly rent under the BaaS scheme,” he added.
After Nio reported its earnings results from the second quarter, JPMorgan upgraded the stock’s rating to Overweight due to cash flow improvement and strong sales expectations for the Onvo model.
“We recently upgraded Nio to OW [Overweight] after its 2Q24 results on expectations that 1) Nio’s cash flow condition will continue to improve with 4Q24 Operating cash flow likely turning positive,” Lai wrote before comparing the SUV sales ofTesla and Onvo.
Additionally, the analyst also expects the “monthly sales run rate of L60 will reach around 30-40 per cent of Model Y’s, or ~10-15k units in 2025, which if it materializes, would be a strong fundamental driver for Nio’s financial and operation performance.”
Nio management said after the event that expects to deliver 5,000 units in October with a continuous production ramp-up. Nio Group founder and CEO said the goal for March 2025 is to deliver 20,000 L60 units.
The analyst forecasts a “near- to medium-term upside” for both Nio and XPeng shares while BYD remains the firm’s “top pick”.
“Our positive stance remains unchanged. Among OEMs, our top pick is BYD-H&A [ Hong Kong-listed and Shenzhen-listed shares of BYD] and we anticipate near- to medium-term upside from Nio as well as XPeng, due to low expectations and sequentially improving fundamentals.”
JP Morgan reiterated an Overweight rating and $8.00 price target on Nio US-listed shares indicating an upside potential of 52 per cent based on Friday’s closing price.
Earlier this week, also Morgan Stanley analyst Tim Hsiao published a new note stating the price “surprised the market on the upside” while reiterating an Overweight rating and a $6.10 price target on the shares.
Written by Cláudio Afonso | LinkedIn | X
