Tesla, Rivian, Nio Hit With Downgrades As EV Demand Slows

Mizuho was cautious on the electric vehicle space heading into the year. Continued slowing EV demand trends have shifted the analyst firm to neutral.

Mizuho analyst Vijay Rakesh downgraded Tesla Inc TSLA, Rivian Automotive Inc RIVN and NIO Inc – ADR NIO on Monday, citing weak demand and rising inventories.

Tesla: The Mizuho analyst downgraded Tesla from Buy to Neutral and lowered the price target from $270 to $195 after slashing its revenue and earnings estimates through 2026.

“We see TSLA maintaining strong market share in the global EV space, but we see moderating growth and limited margin leverage at current interest rate levels as headwinds,” Rakesh said in a new note to clients.

Rivian: Mizuho downgraded Rivian from Buy to Neutral and set a price target of $12 as the firm anticipates 2025 deliveries of just 74,500 versus consensus expectations of 83,000.

“We still see RIVN well positioned in the strong SUV/Pickup markets and a push towards profitability, but headwinds remain from slowing EV demand, challenging execution, and elevated cash burn,” the analyst said.

Although Rakesh applauded Rivian for making a push towards offering more affordable EVs, the analyst noted the EV maker faced multiple headwinds in 2024 and 2025 including a planned factory shutdown. Rakesh believes lower EV demand in the U.S. and profitability headwinds will limit optimism ahead of R2 production.

Nio: Mizuho downgraded Nio from Buy to Neutral and lowered its price target from $15 to $5.50 as the firm grows more cautious on Nio’s short-term outlook.

Rakesh noted Nio recently lowered its deliveries guidance for the March quarter. The analyst believed Nio was anticipating lower deliveries as it increases focus on its “Le Dao” mass-market brand, which is set to be revealed in May.

As Nio offered incentives to help move current inventory ahead of its 2024 model-year launches, gross margins are likely to see some near-term pressure, the Mizuho analyst said.

“We see a challenging year for EVs paired with increasing competition, as Nio focuses on the high-end market and has no plans to reduce prices,” Rakesh said.

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Mizuho On The Broader EV Space: Auto prices are at 10-year highs and higher insurance costs were contributing to limited affordability. Mizuho believed higher insurance premiums remained a headwind to EV adoption as it’s about 25% more expensive to insure EVs versus internal combustion engine vehicles.

Mizuho also warned of slowing growth trends across the EV space as low affordability and limited charging infrastructure continued to act as headwinds to electrification. EV inventories were up 92% year-over-year in 2023 and are accelerating, according to Mizuho.

“We see major EV OEMs signaling signs of weaker demand with TSLA noting 2024E delivery growth to be ‘noticeably lower’ than 2023 as it raised prices in US/EU/China, we believe to offset costs,” Mizuho said.

“RIVN also guided 2023E production flat y/y at 57k units due to planned shutdowns in 2Q24E, while NIO saw deliveries of 50k in 4Q23, down 10% q/q, as competition in China continues to increase.”

Major EV markets in the U.S., Germany and France have also cut subsidies in 2024, which added to the demand problem for EVs. As a result, expectations for EV makers in 2024 are likely too high, Mizuho said.

TSLA, RIVN, NIO Price Action: At publication time Monday, Tesla shares were up 0.92% at $172.40, Rivian shares were down 1.11% at $10.69 and Nio shares were up 2.04% at $4.99, per Benzinga Pro.

Photo: Courtesy of Tesla.