Morgan Stanley analyst Tim Hsiao has raised the price target for Chinese electric vehicle maker NIO Inc. (NYSE: NIO) to $6.50 from $5.90, maintaining an Overweight rating on the stock. This upgrade comes as NIO trades at $5.65, representing potential upside of approximately 15% from current levels.
Key Investment Thesis (NIO Stock)
The upgraded price target reflects Morgan Stanley’s confidence in NIO’s strategic positioning, particularly around the company’s restructuring efforts and the momentum building behind its ONVO sub-brand. Despite lowering 2025 volume estimates by 9% to 330,000 units due to a weaker-than-expected first half performance, the firm maintains its 2026-2027 volume projections based on strong order intake for the ONVO L90 model.
The analyst specifically highlighted that “solid order intake of Onvo L90 should underpin more meaningful volume recovery in 2026,” indicating confidence in the brand’s long-term trajectory despite near-term challenges.
ONVO Brand Momentum Drives Optimism
NIO’s ONVO brand represents a crucial strategic pivot toward the mainstream family market. Launched in May 2024, ONVO targets Tesla’s Model Y with competitive pricing and family-centric features. The brand’s flagship L60 model, priced at 219,900 yuan ($30,476), began deliveries in September 2024 and has already established itself among the top three best-selling battery electric vehicles in the RMB 200,000-300,000 price range.
ONVO recorded sales of 17,081 units in Q2 2025, up from 14,781 units in Q1, demonstrating growing market acceptance. The recently launched L90, a premium large family SUV, started deliveries in August 2025 and is expected to contribute significantly to volume growth.
The brand’s strategic importance extends beyond current sales figures. NIO projects that ONVO will achieve monthly deliveries of 20,000 units to reach profitability, with the company estimating a 15% vehicle margin for ONVO in 2025.
Financial Performance and Market Position
NIO’s stock has shown resilience in 2025, gaining 17% year-to-date and approximately 32% over the past 12 months. Recent trading data shows the stock closed at $5.65 on August 21, 2025, with significant volume of over 100 million shares traded.
The company’s Q2 2025 delivery projections estimate between 72,000 and 75,000 vehicles, representing growth of 25.5% to 30.7% compared to Q2 2024. Revenue forecasts range from RMB 19.5 billion to RMB 20.1 billion, indicating an 11.8% to 15.0% increase year-over-year.
Despite operational challenges, NIO’s vehicle margin improved to 10.2% in Q1 2025 from 9.2% in the previous year, even amid industry-wide price wars. The company achieved 22% revenue growth and 89% gross profit increase year-over-year.
Analyst Sentiment and Price Targets
Wall Street maintains a cautiously optimistic outlook on NIO, with 12 of 26 analysts rating it “Buy” or higher, while 13 rate it “Hold” and one assigns a “Strong Sell” rating. The average analyst price target stands at $4.92, though individual targets range significantly, with the highest reaching $8.11.
Morgan Stanley’s upgrade positions the firm among the more bullish voices on NIO’s prospects, particularly as the company navigates the competitive Chinese EV landscape while expanding internationally.
Strategic Outlook and Investment Considerations
NIO’s multi-brand strategy positions the company to capture different market segments while leveraging its established infrastructure. The company operates over 1,300 battery swap stations in China and continues investing in this differentiating technology.
International expansion remains a key growth driver, with planned deliveries in the United Arab Emirates in Q4 2025, though European expansion faces headwinds from increased tariffs on Chinese-made EVs.
The Morgan Stanley upgrade reflects confidence in NIO’s ability to execute its strategic vision despite near-term operational challenges. As the ONVO brand gains traction and production scales, the company appears well-positioned to benefit from China’s evolving EV market dynamics while building a sustainable path to profitability.
This analysis is based on publicly available information and analyst reports. Investors should conduct their own research and consider their risk tolerance before making investment decisions.
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