Nio Analyst Sees Tougher Path To Profitability, Downgrades EV Maker To Sell: What You Need To Know

Nio Inc NIO shares are trading lower. Goldman Sachs on Monday downgraded the EV maker to Sell and cut the price target. Here’s a look at what you need to know.

What To Know: Goldman Sachs analyst Tina Hou downgraded Nio from Neutral to Sell and lowered the price target from $4.80 to $3.90 citing competitive pressures and a difficult path to profitability ahead.

The Goldman analyst believes Nio is unfavorably positioned heading into 2025 given the slow production ramp of Onvo and the company’s limited new model pipeline. Nio is expected to launch one new model in 2025. Hou expects Nio to be in a “relatively passive position” to try to keep up with launches from competitors.

Nio’s compact Firefly SUV is expected to be launched in the first quarter, but Goldman anticipates limited volume of around 9,000 units in 2025. Moreover, the analyst expects the EV maker to have a tough time meeting margin targets as competition and scale act as headwinds.

The analyst expects Nio to become operating cash flow positive in 2025 and free cash flow positive in 2029, versus prior estimates of 2026 and 2027, respectively.

Hou cut profit estimates by 2% to 13% on lower sales volumes and and lowered the discounted free cash flow target by around 20%, arriving at a new price target of $3.90, suggesting approximately 18% downside potential.

“We believe consensus hasn't sufficiently factored in the continued competition into the next few years, and the higher operating expenses associated with sales network expansion, which may not effectively translate into improving sales volume and efficiency, in our view,” the Goldman analyst said.

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NIO Price Action: Nio shares were down 3% at $4.69 at the time of publication Monday, according to Benzinga Pro.

Photo: courtesy of Nio.