NIO Inc., a leading electric vehicle (EV) manufacturer in China, witnessed a 5.1% plunge in its stock price during the pre-market trading session on Wednesday. This downward movement comes amid growing concerns about the demand and pricing trends for EVs in China, as highlighted by analysts at HSBC Global Research.

According to the research note, the demand for EVs in China, which experienced a strong surge during the fourth quarter of the previous year, may trend lower in the first quarter of 2025 due to seasonal factors. Additionally, there were indications of softer pricing towards the end of 2024, potentially impacting the profitability of EV makers like NIO.

In light of these concerns, HSBC Global Research has downgraded its rating on NIO from "buy" to "hold," suggesting a more cautious outlook for the company's near-term performance. Despite this, the brokerage firm forecasts that EV penetration in China may reach 60% this year, potentially leading to industry consolidation and further advancements in autonomous driving technology.