Morgan Stanley moved its price targets on two Chinese carmakers in opposite directions on Tuesday, raising Nio and cutting XPeng, while keeping an Overweight rating on both, according to a new research note first obtained by PriceTarget.
Analyst Tim Hsiao lifted his target on Nio’s Hong Kong shares to HK$68.50 from HK$58.00, an increase of 18%.
Hsiao cut XPeng’s to HK$70.00 from HK$96.00, a reduction of 27.1%.Hong Kong closed lower in both.
Nio ended Tuesday at HK$28.68, down 2.25% from Monday’s HK$29.34, leaving the new target at about 2.4 times the market price.
XPeng closed at HK$40.40, down 3.86% from HK$42.02, near its 52-week low of HK$40.20.
In New York, Nio was flat in pre-market trading at $3.67 and XPeng was down 3.0% at $10.38.
The two targets are now almost level, at HK$68.50 and HK$70.00, a gap of 2.2%. Before Tuesday they stood at HK$58.00 on Nio, set on September 1, and HK$96.00 on XPeng, set on August 31, with XPeng 65.5% higher.
Both Under Pressure
The raise and the cut share a backdrop. Neither company is on course for the volume it set out this year.
Nio has guided to delivery growth of 40% to 50% on the 326,028 vehicles it sold in 2025, which implies 456,000 to 489,000 for the year.
It delivered 262,893 in the first eight months, leaving 193,000 to 226,000 for September to December, or 48,000 to 57,000 a month. Its best month this year was June, at 40,597.
Third-quarter guidance of 108,000 to 111,000 implies September deliveries of 36,000 to 39,000, below that pace before the final quarter begins.
Management has said it is targeting more than 40,000 a month in the fourth quarter, which would still leave the annual range out of reach.
XPeng is going backwards.
It delivered 243,111 vehicles in the first eight months, down 10.5% year on year, against 429,445 for the whole of 2025.
Matching last year would require 186,000 over the remaining four months, or about 46,600 a month, and its best month this year was June at 40,126.
Its own third-quarter guidance of 115,000 to 121,000 implies 37,900 to 43,900 in September, after 38,027 in July and 39,107 in August.
Both are counting on new models. Nio began deliveries of a five-seat version of its ES9 flagship in July, and XPeng begins delivering the G9L this month besides the recently launched L03 and GX models.
Morgan Stanley’s Reversal
The convergence inverts the view Hsiao set out nine months ago.
In a note published at the end of December, he named XPeng, Geely and SAIC Motor as Morgan Stanley’s preferred Chinese carmakers for the first half of 2026, citing “their resilient domestic and growing overseas sales” alongside “re-rating opportunities from a non-auto ‘second act’.”
Nio was not on the list, though the bank held an Overweight rating and a $9.00 target on it at the time.
The XPeng target had been the stable one. Hsiao held $34 on the American depositary shares in notes from late December through early March, and the HK$96.00 figure was still live on July 2.
Nio’s had not. On the American shares it ran from $5.90 in May 2025 to $6.50 in August, then $9.00 in November and back to $7.00 in January.
The January figure came after a meeting with founder William Li and was widely reported as a raise from $6.50, though it sat 22% below the November target.
Nio’s Hong Kong shares are well below the HK$61.75 they reached over the past year.
XPeng Under Pressure
The cut follows a difficult month for XPeng.
Its Hong Kong shares fell about 8% to 9% on August 25, the session after a soft third-quarter delivery forecast overshadowed a fundraising that valued its robotics unit above $6.3 billion.
UBS initiated coverage of the Hong Kong line at Neutral with a HK$47.00 target in early September, and cut its target on the American shares to $12 from $18 in the same week.
Hsiao had been among the most enthusiastic voices on the company. In a note on March 2 he called XPeng’s VLA 2.0 system “a bold leap forward to capture the X factor,” arguing that progress in vision-language-action models and physical artificial intelligence would convince investors XPeng is more than a carmaker, and that the technology would position it at the front of the Level 3 and Level 4 autonomous driving rollout.
The cut brings Morgan Stanley into line with the rest of the market rather than ahead of it.
Goldman Sachs cut to HK$69.00 from HK$77.00 after the second-quarter results and Macquarie to HK$70.00 from HK$73.00, so Hsiao’s new figure sits between them rather than above them.
Against the Grain on Nio
The raise comes after a quarter that split the analyst community.
Nio reported second-quarter results on September 1 showing deliveries of 107,658, up 49.4% year on year but below its own guidance of 110,000 to 115,000. Vehicle margin reached 18.5% against 10.3% a year earlier.
Adjusted operating profit was 206.9 million yuan, and adjusted net profit of 26.1 million marked a third consecutive profitable quarter on that basis. Cash stood at 56.7 billion yuan.
Third-quarter guidance of 108,000 to 111,000 vehicles implied little sequential growth.
JPMorgan’s Nick Lai downgraded Nio to Neutral from Overweight the following day, cutting his target to $4.50 from $7.00. The American shares fell 4.9% to $3.86 and the Hong Kong line fell 3.3%.
He cited sluggish Chinese passenger-vehicle demand, intensifying price competition and limited overseas exposure, and cut 2026 and 2027 revenue estimates by 5% and 9%.
Citi’s Jeff Chung kept a Buy rating but lowered his target to $7.10 from $8.20.
Nio management said higher battery, memory chip and other material costs would add 2,000 to 3,000 yuan a vehicle in the second half.
The raise leaves Morgan Stanley far above the rest of the market. UBS initiated coverage of Nio on September 10 with a Buy rating and a HK$43.00 target, against a HK$28.38 close. Hsiao’s new figure is 59% above that.
