Price cuts on electric vehicles have been a point of contention for some time now. For electric vehicle stock Nio (NIO), though, it seems to have been a help. Nio shares are up over 6% in Thursday afternoon’s trading following the announcement of price cuts on its Onvo line.
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Nio’s Onvo line, which is something of a budget alternative, just announced the L60 SUV, for delivery starting September 28. When it launches, it will cost 149,900 yuan—about $21,208 USD—when a “battery service” is bought as well. For the car and the battery together, meanwhile, it runs 206,900 yuan.
That “battery service,” noted a CNBC report, sets the user back about $1,000 a year to basically rent a battery to go along with the Onvo. By way of comparison, a Tesla (TSLA) Model 3 will set drivers back about 231,900 yuan, and that was following the price cuts from April.
Making its Mark
Meanwhile, for those who do not believe that Nio has a future, it is making a move that might suggest otherwise. It is currently considering purchasing the old Volkswagen (VWAPY) Audi plant in Brussels to produce its cars there as the European market starts to shift away from gas-powered cars and toward electric.
Volkswagen itself is running into a bit of a supply glut as more and more inexpensive Chinese electric vehicles are hitting the market. That is leaving Volkswagen struggling to keep up, and the company may in turn decide to sell its plant to one of the firms that is effectively driving it out of the market. However, with signs that the European government is increasingly eyeing tariff measures that will remove the Chinese cost advantage, this may be a storm that Volkswagen could weather until the end. Or, conversely, it also may make Nio a more motivated buyer, as owning property in Europe might get it around the tariffs.
Is Nio a Buy or Sell?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on NIO stock based on six Buys, four Holds and one Sell assigned in the past three months, as indicated by the graphic below. After a 39.46% loss in its share price over the past year, the average NIO price target of $5.97 per share implies 11.9% upside potential.
