Barclays (LON:BARC) has maintained its Underweight rating on NIO Inc (NYSE: NIO) with a consistent price target of $4.00. The firm recognized NIO's stable car deliveries, noting that the company has been delivering slightly over 20,000 units monthly for the past four months. This delivery rate marks a return to peak levels last observed in September 2023.
The company's second-quarter results aligned with expectations, and the third quarter delivery guidance indicates a continued solid performance, delivering approximately 20,000 NIO-branded cars per month. Despite the competitive landscape in the Chinese New Energy Vehicle (NEV) market, NIO's recovery has been noteworthy.
NIO is diversifying its brand portfolio with the introduction of the L60, the first car under its mass-market brand Onvo, expected to start deliveries later this month. Furthermore, plans for a low-end brand, Firefly, are set for 2025. The company has also announced that these sub-brands will feature their individual stores.
The expansion into new brands is anticipated to bring economies of scale by offering a full product line to consumers at varying price points. However, Barclays also highlights the risks associated with managing multiple brands, which could lead to a significant increase in resource needs.
In other recent news, NIO Incorporated has reported strong Q2 2024 results, with total revenue reaching RMB 17.4 billion, a 98.9% increase year-over-year. The company's vehicle sales revenue climbed by 118.2% year-over-year to RMB 15.7 billion, driven by a record 57,373 units delivered during the quarter. NIO also launched the ONVO L60 model, which has seen significant pre-order numbers.
In terms of future developments, NIO plans to expand production capacity and build a third factory by Q3 next year. The company is also working towards a long-term operational target of a monthly volume of 40,000 NIO branded vehicles and a 25% vehicle margin. For ONVO branded vehicles, a monthly delivery target of 20,000 units next year is set.
Despite an increase in SG&A expenses due to higher sales volume and marketing campaigns, NIO's focus on cost control and efficient R&D investment is expected to contribute to its long-term profitability.
The company is also planning to launch its flagship sedan, ET9, in Q1 of the next year, and continue its international expansion with a focus on existing European markets and entry into the UAE market.
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