Nio launches Onvo L60, stock to ‘rise in absolute terms over the next 15 days,’ analysts say By Investing.com

Nio (NYSE:) on Thursday unveiled its new electric SUV, the Onvo L60, priced lower than what the market expected.

Shares in Nio jumped more than 7% Thursday.

“NIO’s share price should react positively to the superior price-performance of L60. However, with demand seemingly less of a doubt now, timely demand fulfillment would in turn become the key concern – likely a good problem to have,” Morgan Stanley analysts commented.

Following a more than 20% surge in NIO’s stock month-to-date, compared to a 1% gain for the Nasdaq, expectations for order intake have increased significantly.

According to Morgan Stanley analysts, for NIO to see further substantial re-rating, it will require strong execution in scaling up production and maintaining a positive customer experience amidst the influx of orders, which they highlight as “crucial to prove NIO is structurally on the rise.”

Nio’s aggressive pricing strategy should support the Onvo delivery target of 20,000 units in the fourth quarter, analysts added, with the likely upbeat demand expected to put pressure on the company’s ramp-up pace.

In a separate note, Morgan Stanley analysts said they believe Nio’s share price “will rise in absolute terms over the next 15 days.”

NIO launched the ONVO L60 at a lower-than-expected MSRP of RMB 206,900, which includes a 60kWh battery and is RMB 13,000 lower than the pre-sale price. The BaaS model, excluding the battery pack, is RMB 57,000 cheaper, priced at RMB 149,000.

Morgan Stanley analysts believe that this competitive pricing, along with additional incentives such as an early bird discount of up to RMB 4,000 and a local government trade-in subsidy of RMB 10,000, is expected to drive higher order conversions and boost sales.

The analysts estimate a 70% to 80% probability of this positive scenario playing out.