Chinese luxury electric vehicle maker Nio has seen its stock decline by about 41% year-to-date, compared to rival Xpeng, which is down by 29%. However, Nio recently reported strong delivery numbers for May, shipping 20,544 vehicles for the month, up almost 234% from the same month last year. Despite this growth, Nio’s stock has experienced a sharp decline of 90% since January 2021, underperforming the S&P 500 in each of the last 3 years.
The Trefis High Quality Portfolio, consisting of 30 stocks, has consistently outperformed the S&P 500 over the same period, providing better returns with less risk. With the uncertain macroeconomic environment, including high oil prices and elevated interest rates, the question arises whether Nio will continue to underperform or see a recovery in the next 12 months.
Nio recently unveiled its first vehicle under the lower-priced Onvo brand, taking on Tesla’s Model Y crossover. The new vehicle will have a starting price below Tesla’s Model Y in China and is expected to go on sale in September. The Chinese government’s incentives for consumers to trade their older gasoline cars for electric and low-emission vehicles could benefit mass-market EVs, potentially helping Nio’s Onvo brand.
Nio is looking to keep costs low with its new models, purchasing batteries from BYD and investing in EV charging infrastructure. This could give the company an advantage over rivals. Nio stock currently trades at around $5.40 per share, approximately 1x consensus 2024 revenues, showcasing potential for growth in the future.
Overall, Nio’s performance in the EV market will depend on its ability to compete in a crowded industry with over 100 brands and navigate challenges such as price wars and production scaling. Investors will be watching closely to see if Nio can capitalize on its recent delivery growth and new brand offerings to drive stock performance in the coming months.
