Bernstein Out Bearish On EV Startup NIO

NIO Inc (NYSE: NIO) notched a 10-percent pop in value shortly after its Wednesday debut on the U.S. markets. It continued to rise 2 percent ahead of the next trading session.

In just a few hours, the Chinese electric vehicle company raised $1 billion, but the Baidu Inc (ADR) (NASDAQ: BIDU) and Tencent-backed automaker wasn’t able to win all bulls.

“We’re skeptical NIO can achieve its volume targets,” Bernstein analyst Robin Zhu said Thursday in a note initiating coverage with an Underperform rating.

“There appears to be evidence (both from NIO’s F-1 and anecdotally via industry contacts) pointing to a reservations number that’s fallen over time. Longer-term, we question whether the premium EV segment will be big enough to support NIO’s volume ambitions.”

NIO targets 100,000 unit sales by 2020 and 300,000 by 2025, which suggests a double-digit share of a premium EV market already resting on bullish adoption forecasts.

As the firm only began delivering orders in June, Axiom said NIO makes Tesla Inc. (NASDAQ: TSLA) and “Elon Musk’s manufacturing output look prodigious.” Bernstein projects 50,000 unit sales by 2020 and 160,000 by 2025.

“NIO is the first of China’s EV start-ups to go public and will immediately become the most interesting company we cover,” Zhu said. “Many things intrigue us about NIO — from its impressive branding, to the ES8, to its massive volume ambitions, to its prodigious cash burn. But we’re unconvinced NIO’s shares represent a sound investment.”

Related Links:

Tesla Delays, GM Ramps Up: What’s The New Timeline For Autonomy?

The 35-Year Forecast For Electric Vehicles

Photo by Jengtingchen/Wikimedia.