Will NIO's Multi-Brand Strategy Come to Fruition With ONVO in 2025?

NIO Inc. NIO introduced its smart electric vehicle sub-brand, ONVO, in May 2024, to kick-start the company’s transition into a multi-brand strategy. Designed to deliver an optimized ownership experience and exceptional value, ONVO’s first model, the L60, officially entered the market on Sept. 28, 2024. Praised for its safety, spaciousness, class-leading energy efficiency and user-friendly charging experience, the L60 has resonated strongly with family customers. In the first four months of 2025, the ONVO L60 ranked among the top three best-selling battery electric vehicles in the RMB 200,000-300,000 price range. In the second quarter of 2025, the ONVO brand delivered 17,081 units, up from 14,781 vehicles delivered in the first quarter of 2025.The brand's second model, the L90, a flagship large family SUV, will debut at the end of July, with deliveries commencing on Aug. 1, 2025, in China. A third ONVO SUV is set to launch in the fourth quarter, completing a more comprehensive SUV portfolio aimed at mass-market consumers.Despite strong product reception, ONVO’s overall sales performance this year has fallen short of the company’s expectations, partly due to amortization and other financial pressures. Managing ONVO’s operations and vehicle margins has proven challenging for the company. The key driver of gross vehicle margin for the ONVO brand is not expected to materialize until the third quarter. The company projects ONVO's 2025 vehicle margin to be approximately 15%, lower than the vehicle margin of 20% expected from the NIO brand. NIO carries a Zacks Rank #3 (Hold) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Amid slower-than-expected EV adoption and the launch of affordable models, competition in the EV market is intensifying. NIO ONVO L60 is currently competing with Tesla's TSLA Model Y and XPeng's XPEV G6. Tesla Model 3/Y has reported a year-over-year decline in second-quarter deliveries due to lower demand amid rising competition. Tesla delivered 373,728 Model 3/Y in the second quarter of 2025, down from 422,405 units in the corresponding quarter of 2024. Priced at $14,000 less, NIO ONVO L60 has emerged as a strong budget-friendly rival of Tesla Model Y. On Feb. 26, XPeng unveiled official images of its refreshed 2025 G6 model. One of the G6’s key competitive strengths over rivals like the ONVO L60 is its pricing. The XPeng G6 580 Long Range Plus is available for under 180,000 RMB. In comparison, the ONVO L60 60kWh rear-wheel-drive variant requires an upfront payment of nearly 150,000 RMB, plus a monthly battery rental fee of 599 RMB.NIO’s Price Performance, Valuation and EstimatesNIO has outperformed the Zacks Automotive-Domestic industry year to date. NIO shares have lost 2.5% compared to the industry’s decline of 6.5%.YTD Price PerformanceImage Source: Zacks Investment ResearchFrom a valuation perspective, NIO appears overvalued. Going by its price/sales ratio, the company is trading at a forward sales multiple of 0.56, higher than its industry’s 0.45.Image Source: Zacks Investment ResearchEPS Estimates RevisionThe Zacks Consensus Estimate for 2025 and 2026 EPS has moved up 2 cents and down 3 cents, respectively, in the past 30 days.Image Source: Zacks Investment ResearchOnly $1 to See All Zacks' Buys and SellsWe're not kidding.Several years ago, we shocked our members by offering them 30-day access to all our picks for the total sum of only $1. No obligation to spend another cent. Thousands have taken advantage of this opportunity.Thousands did not - they thought there must be a catch. Yes, we do have a reason. We want you to get acquainted with our portfolio services like Surprise Trader, Stocks Under $10, Technology Innovators, and more, that closed 256 positions with double- and triple-digit gains in 2024 alone.See Stocks Now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Tesla, Inc. (TSLA): Free Stock Analysis Report NIO Inc. (NIO): Free Stock Analysis Report XPeng Inc. Sponsored ADR (XPEV): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks