By Callum Keown

NIO stock has been stuck in reverse gear the past few months and the selling could continue into 2025, Goldman Sachs analysts said Monday.

The Chinese electric-vehicle maker's American depositary receipts (ADRs) are down 28% since the beginning of October and 47% in 2024. Increased competition and lower prices have hurt the Chinese EV sector -- rivals Li Auto and XPeng have fallen 40% and 18%, respectively, this year. In contrast, Tesla stock is up 42% in 2024, through Friday.

Goldman's analysts don't see the picture getting any better for NIO next year. They downgraded the stock to Sell from Neutral in a note Monday. Their new $3.90 12-month price target suggests that the ADRs could fall 19% from Friday's closing price.

They have a laundry list of issues behind the downgrade, including NIO's "limited" new model launch -- it's only planning one new vehicle. "We are Sell-rated and expect lukewarm order momentum, slow production ramp-up and delivery volume, and intensifying price competition to be downside stock price catalysts," equity analyst Tina Hou said.

However, stronger government policy support is one reason Goldman analysts could turn more positive on the stock. Hou currently expects NIO to sell 337,000 units in 2025, compared to the company's guidance of 443,000 to 449,000 units.

"We could turn more positive on the company's 2025 sales volume if overall market demand improves with NEV [New Energy Vehicle] penetration driven higher by the favorable policy support, which would lead to higher margin and operating profit for the company, all else equal," she added.

Write to Callum Keown at callum.keown@dowjones.com

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November 25, 2024 09:12 ET (14:12 GMT)

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