Nio (NYSE:NIO) has introduced a new addition to its lineup, officially launching the L60 SUV under its mass-market ONVO brand last week. The vehicle is going for a starting price of Rmb149,900 (with battery leasing option).
To assess the potential demand and customer profile, J.P. Morgan analyst Nick Lai visited three major ONVO stores in Shanghai over the past few days. He spoke with showroom sales staff and prospective buyers, stating, “Our visits enhance our confidence on ONVO’s sales momentum and its successful product positioning.”
Visiting two stores in the downtown area and one on the outskirts of the city, Lai saw a solid amount of foot traffic at all locations. Sales staff mentioned that test-drive slots were fully booked the previous weekend following the official debut of the L60, driven by lots of interest from customers. As for the customer profile, Lai notes that the majority of potential buyers were young couples in their early to mid-thirties or families with young children. “This is to a large degree similar to the buyer profile for Model Y, in our view, but L60’s price and content is arguably more attractive for young buyers,” Lai commented.
So, what are the reasons behind people choosing the L60? The primary factor was its value proposition – the offer of smart technology and a larger vehicle size at a more competitive price. Another major appeal was the L60’s “superior interior space,” with its 4.83-meter length and 2.95-meter wheelbase providing more room compared to the Model Y. Additionally, some buyers felt the L60’s interior had a more luxurious feel than the Model Y.
Looking at the bigger picture, Lai continues to bang the drum for Nio, based on expectations that its cash flow will improve, with positive operating cash flow likely in 4Q24. Additionally, the monthly sales of the L60 are projected to reach around 30-40% of Tesla Model Y’s, or approximately 10-15,000 units in 2025, which, if realized, would significantly strengthen Nio’s financial and operational performance.
“Our positive stance remains unchanged,” Lai summed up, reiterating an Overweight (i.e., Buy) rating on Nio shares along with an $8 price target. This figure conveys his confidence in Nio’s ability to soar ~42% in the next twelve months.
Turning now to the rest of the Street, where 5 other analysts join Lai in the bull camp and with the addition of 4 Holds and 1 Sell, the stock claims a Moderate Buy consensus rating. At $5.97, the average price target suggests the shares could climb ~6% from current levels. (See Nio stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
