Hong Kong Stocks: Nio’s Budget-Friendly Car Takes Aim at Tesla’s Model Y

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In key news on Hong Kong stocks, Nio Inc. (HK:9866) has unveiled its first car under its budget-friendly brand, Onvo, which aims to directly challenge its U.S. rival Tesla’s (NASDAQ:TSLA) Model Y. The company also announced its plans to introduce one new model annually under the Onvo brand to expand its portfolio in a highly competitive market.

NIO is a prominent Chinese automotive firm known for its premium smart EVs (electric vehicles).

Nio Sets Sights on Mass Market Growth

For the last 10 years, Nio has focused on the premium car segment, with prices typically exceeding 300,000 yuan (US$41,500). While the company has expanded into Europe, its monthly deliveries in China have often lagged behind those of its competitors. Consequently, the company has entered the mass-market segment to enhance its market presence and tap new customers.

The first car under the Onvo brand, the L60 SUV, is priced at ¥219,900, which is over 10% cheaper than Tesla’s Model Y with a price tag of ¥249,900. The Model Y stands as one of the top-selling models in China, boasting monthly sales that surpass those of numerous traditional gasoline cars. In 2023, the Model Y achieved sales of 456,394 units in China, accounting for 75.6% of Tesla’s total sales of 603,664 units in the country.

Recently, the Chinese smartphone maker Xiaomi Corporation (HK:1810) also ventured into the EV space, placing its first model, the SU7 Sedan, in direct competition with the Model Y. Xiaomi’s SU7 is priced at approximately $4,000 lower than Tesla’s base Model 3 in China.

Nio’s pre-sales for the L60 SUV will commence following yesterday’s launch event, with the first deliveries expected to start in September of this year. Additionally, the company anticipates that the newly launched brand will have a positive impact on overall profitability once monthly sales reach 20,000 units.

Is NIO a Buy, Hold, or Sell?

As per the consensus among analysts on TipRanks, 9866 stock has been assigned a Hold rating based on one Buy and four Hold recommendations. The NIO share price target is HK$52.80, which implies an upside of 25% from the current price level.

Year-to-date, Nio stock has traded down by 39%.