Will Onvo And Firefly Brands Help Nio Stock?

Chinese luxury electric vehicle maker Nio stock (NYSE:NIO) reported record deliveries of 31,138 vehicles in December, marking an increase of 73% compared to last year. Deliveries were also up 51% from 20,575 in November. In comparison, Li Auto (NASDAQ:LI), the largest of the emerging EV players in China, delivered 58,513 vehicles for December 2024, an increase of 16.2% year-over-year while Xpeng (NYSE:XPEV) sold 36,695 vehicles, up a solid 82% year-over-year.

Nio has been expanding its brand portfolio to help it address larger segments of the market and cater to more niche needs. The company’s value-priced Onvo brand, launched in late September, sold 10,528 vehicles up from 5,082 units in November. The brand’s first vehicle, the Onvo L60 is priced between RMB 200,000 ($28,000) and RMB 300,000 ($42,000). Sales are expected to scale up further as production ramps up and also as the product lineup widens. Onvo intends to launch two SUVs in 2025, including a seven-seater and a five-seater that will go head-to-head with Li Auto’s Li L8 and Li L7 vehicles. Last month, Nio also introduced another brand Firefly, which will compete in the high-end compact car market, taking on the likes of BMW’s Mini and the Mercedes Smart series of vehicles in China. The company said that pre-sales for the new Firefly vehicle were open, with prices starting at 148,800 yuan (roughly $20,500).  While luxury compact EVs remain a niche in China, there is a big market for small EVs, especially in cities and more congested areas. This could allow Nio to expand as the market matures. Moreover, Firefly could also help Nio better compete in Europe, where compact cars dominate the automotive market.

While NIO stock has seen lackluster growth over recent years, the Trefis High Quality Portfolio, with a collection of 30 stocks, has provided better returns with less risk versus the benchmark S&P 500 index over the last four year period; less of a roller-coaster ride as evident in HQ Portfolio performance metrics. Given the current uncertain macroeconomic environment around rate cuts and multiple wars, could NIO face a similar situation as it did the last few years and underperform the S&P over the next 12 months – or will it see a recovery?

Nio’s valuation is very attractive. The stock trades at about $4.50 per share, or roughly 1x consensus 2024 revenues, which is low considering that revenues are projected to grow by over 20% for 2024 and by over 40% in 2025 per consensus estimates. In comparison, Tesla trades at about 13x revenues, even though revenues are likely to remain almost flat in 2024.  See our analysis of Nio, Xpeng & Li Auto: How Do Chinese EV Stocks Compare? for a detailed look at how Nio stock compares with its rivals Li and Xpeng.

[1] Returns as of 1/3/2025
[2] Cumulative total returns since the end of 2016

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