Bank of America cut its rating on Chinese electric vehicle (EV) maker Nio (NYSE:NIO) to “neutral,” sending NIO stock down on Jan. 9.
The bank said Nio won’t be offering many new models in the first half of the year and will have to raise its marketing budget. But Mizuho Securities told investors to “buy the dip,” and shares halted the slide overnight.
Nio opened this morning at $7.55 per share, a market capitalization of $16.3 billion.
A Crowded Market
The EV market is getting crowded as Chinese makers look overseas for buyers. Nio is among the most aggressive.
It is taking its battery swap technology to Europe, promising to maintain a customer’s driving range in as little as 3 minutes. The company is looking to build a dealer network in Europe in advance of launching two new product lines over the next year. Nio launched a new ultra-luxury vehicle called the ET9 last month.
Slower sales led to layoffs at Nio’s Shanghai headquarters, but it has $2.2 billion in new investment from Abu Dhabi to fund the export push. The company is still debating whether to enter the U.S. market in 2025.
The focus at Nio has been on its two new lines, called Alps and Firefly, with prices starting at $25,000. To make that price point and cut its losses, Nio is trying to gain control of its supply chain.
Nio has also bought back its manufacturing from state-backed JAC Motors. This reverses moves made in 2020, when the company tied itself to JAC manufacturing, needing government help to stay in business.
The moves have made NIO a “battlefield stock,” with Tipranks listing 2024 price targets as low as $8/share and as high as $18.
NIO Stock: What Happens Next
The best Chinese EV stock isn’t directly listed on U.S. markets. That’s BYD (OTCMKTS:BYDDF), which now sells more cars than Tesla (NASDAQ:TSLA).
As of this writing, Dana Blankenhorn did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
