Morgan Stanley analyst Tim Hsiao reiterated the firm’s rating and price target on Nio after meeting the EV maker’s founder and CEO William Li, implying 52% upside from Monday’s close.
Hsiao met with William Li to discuss delivery growth targets, the upcoming ES9 flagship SUV, margin improvements, and the company’s autonomous driving roadmap.
Nio shares have recently touched a five-month low as investors await the company’s fourth-quarter financial report — in which Nio will disclose if it met its main target of reaching non-GAAP profit in the final three months of 2025.
The stock closed 0.6% lower on Monday at $4.61 and is down 9.60% year to date.
Li said earlier this month that profitability “is achievable, as our current product gross margins are solid” despite noting that financial figures from the final quarter of 2025 were still being audited.
The CEO said the company achieved its vehicle gross margin target of 17% to 18% in the fourth quarter, a goal he had outlined during the third-quarter earnings call.
Delivery Growth Target
The Nio Group — which includes Nio, Onvo and Firefly brands — will launch three new models this year, all of them being large SUVs.
Li reaffirmed that deliveries can achieve a 40-50% compound annual growth rate over the next two years, Hsiao wrote in a research note published Tuesday.
“Nio‘s founder reiterated that deliveries can achieve a 40-50% CAGR over the next two years, implying 456-489k units in 2026, underpinned by new models, including ES9, ES7, and Onvo L80,” the analyst said.
Nio Group delivered 326,028 vehicles across its three brands in 2025, up 46.9% year over year.
The total included 178,806 units under the premium Nio brand, 107,808 units under the mass-market Onvo sub-brand, and 39,414 Firefly vehicles.
A 40% increase from 2025 would bring deliveries to approximately 456,500 units in 2026, while a 50% jump would represent 489,000 vehicles — an average of 40,750 units per month.
The company had initially targeted more than 440,000 deliveries in 2025, aiming to double the prior year’s figure of 221,970 units.
ES9 Pricing Signal
Hsiao said the company expects the average selling price (ASP) of the upcoming ES9 SUV to be above 500,000 yuan, equivalent to $71,900.
“Management said the ES9 would be key to higher margins, potentially exceeding Rmb100k profit per unit, given its high ASP above Rmb500k, which would enable it to compete against models like BMW X5, Mercedes GLE, and Aito M9,” the analyst said.
The comments mark the first pricing indication for the upcoming model, which will become Nio‘s largest and most expensive SUV.
The company plans to launch the flagship ES9 on April 10, co-founder and President Lihong Qin stated during a Q&A session earlier this month.
ES8 Margin Benchmark
Qin reaffirmed during a media briefing over the weekend that the third-generation ES8 SUV has a gross margin of 20%.
“The ES8’s gross margin is 20%,” Qin said. “The average selling price on the showroom floor is over 400,000 yuan ($57,520).”
Based on those figures, Nio generates approximately 80,000 yuan ($11,500) in gross profit per ES8 sold.
The figures suggest Nio made approximately 3.17 billion yuan ($455.9 million) in gross profit from the ES8 alone in the past three months.
Autonomy
Nio remains committed to regaining pole position in the Chinese autonomous driving space, where it will continue to leverage its in-house developed World Model, reinforcement learning model, and Shenji chips, Hsiao wrote.
“Mr Li said he is optimistic that Nio can monetize its AD software in the long run,” the analyst said. “Nio is also exploring the opportunity to sell its AD chips externally.”
As reported by EV, Nio registered two chip subsidiaries in Hangzhou last week as it accelerates efforts to commercialize its semiconductor technology and reduce the financial burden of years of in-house development.
Earlier this Tuesday, Nio‘s Associate Vice President of Brand and Communications Ma Lin wrote on Weibo that the company will begin rolling out its 3.3.0 software update on Wednesday.
“Banyan 3.3.0 is scheduled to begin its full rollout on January 28 — tomorrow,” Ma wrote.
“Users will experience an all-new intelligent driving assistance system developed using the ‘World Model + Closed-Loop Reinforcement Learning’ paradigm — the first of its kind to be deployed,” the Associate VP added.
