Nio Stock Gains as Morgan Stanley Ups Price Target Amid Strong Onvo L90 Demand

Morgan Stanley has adjusted its view on Nio, the Chinese electric vehicle maker, with updates to its long-term sales projections, operating expenses, and net loss forecasts in light of the company’s restructuring plans. Analyst Tim Hsiao announced a revised price target of $6.50, up from $5.90, reflecting the optimism surrounding Nio’s strategic efforts and the promising early demand for its new Onvo L90 SUV. Morgan Stanley continues to rate Nio shares as Overweight, suggesting confidence in the stock despite anticipated challenges.

The company recently reported significant pre-order numbers for the Onvo L90, garnering between 30,000 to 35,000 orders shortly after its pre-launch event. Hsiao cut the 2025 sales estimate by 9% to 330,000 units due to weaker-than-expected performance in the first half of the year. However, forecasts for 2026 and 2027 remain unchanged at 470,000 and 586,000 units, respectively, indicating expectations for a recovery driven by sustained demand for the new model. Morgan Stanley estimates a 42% year-on-year increase in vehicle sales from 2025 to 2026, followed by nearly 25% growth from 2026 to 2027.

The gross margins for 2025 were left unchanged, while the expected margins for 2026 and 2027 saw a modest increase of 0.2 percentage points due to shifts in product mix. Nio's restructuring initiatives, including a reduction in workforce, have allowed Morgan Stanley to lower its operating expense forecast for 2025 by 10%, resulting in reduced net loss estimates for the years 2025 through 2027 by 8%, 13%, and 9%, respectively.

Anticipating the company's upcoming second-quarter earnings set for September 2, analysts predict continued insights on Nio’s operational restructuring advancements and delivery trends. Founder and CEO William Li alongside CFO Stanley Qu are scheduled to host an earnings call on the same day.

Furthermore, Nio is set to unveil its revamped ES8 SUV at an event in Hangzhou, with units already dispatched to showrooms across China. This launch is part of the firm's broader strategy to enhance its product offerings and market presence. In a strategic move to maintain competitiveness against rivals such as Tesla, Nio has announced price reductions across its long-range vehicles. The cuts encompass various models, including the ET5, ET7, EC6, and the newly introduced ES8 SUV, aiming to fortify its position in the domestic market.

These actions coincide with Tesla's launch of its new Model Y L SUV, which is positioned in direct competition with Nio’s offering. Nio has made adjustments, such as lowering the cost for upgrading from a 75-kWh battery to a 100-kWh one, alongside offering financial incentives to recent buyers, making its product lineup more accessible to price-sensitive customers.

Despite the price target increase and restructuring optimism, market sentiment around Nio remains mixed. Analysts continue to project varying price targets, reflecting a cautious outlook amid strong competitive pressures and potential volatility. The upcoming earnings release and product launches are expected to provide further clarity on Nio's strategic direction and financial health.