Nio Inc. shares traded at their highest ever Wednesday after analysts at JPMorgan upgraded them to buy and said that the Shanghai-based electric-vehicle maker is set to be the “long-term winner” in China’s luxury electric-vehicle market.
Nio’s American depositary receipts
rose nearly 20%, on target for a closing record, according to FactSet. The jump was also Nio’s largest one-day percentage increase since late August.
See also: Nio jumps more than 5% after Deutsche Bank praises company’s technology
The JPMorgan analysts, led by Nick Lai, upgraded Nio’s ADRs to their equivalent of buy with a price target of $40, nearly tripled from $14. The analysts are the most bullish on Nio out of the 15 analysts surveyed by FactSet, and their new price target represents a 85% upside from Tuesday’s closing price for Nio.
Nio’s ADRs have gained more than 500% this year, compared with gains around 9% for the S&P 500 index.
“In China’s smart EV market, we expect Nio to be a long term winner in the premium space among Chinese brands vs. (Xpeng Inc.)
leading the mass market, while (BYD Co.)
should likely see strong EV demand with rising external battery sales from 2022,” the JPMorgan analysts said in a note.
Related: XPeng shares jump after JPMorgan starts coverage at ‘buy’ rating
Electric-vehicle penetration in China is set to quadruple by 2025 to 20% from less than 5% in 2019, the analysts said.
A production-cost parity with internal combustion engine vehicles is seen by 2022 or 2023 as battery costs drop further, they said.
For Tesla Inc.
that scenario is “a rising tide lifts all boats” rather than a “winner takes all,” a pattern similar to the one in the smartphone market where Chinese brands were able to seize market opportunity through product offering or pricing, they said.
Nio is expected to dominate about 30% of the premium passenger EV market, JPMorgan said.