Top-rated analyst Vijay Rakesh from Mizuho Securities downgraded EV (electric vehicle) makers Tesla (NASDAQ:TSLA), Rivian (NASDAQ:RIVN), and Nio (NYSE:NIO), to Hold from Buy. The analyst blamed slowing EV demand, rising inventory levels, and pricing pressure for his ratings cuts.
The analyst decreased the price target for TSLA stock to $195 from $270, along with reducing RVIN’s price target to $12 from $24. Additionally, NIO’s price target was trimmed to $5.50 from $15.
Analyst’s Opinion
While Rakesh maintains optimism regarding the long-term potential of EVs, he acknowledges several near-term challenges. Along with dwindling demand and rising inventory levels, the analyst sees reduced consumer affordability and subsidy reductions in the U.S. and Europe as headwinds. Further, the lack of new affordable model launches poses challenges in the short term.
Rakesh sees a deceleration in EV growth rate and has revised his expectations downward for 2024. The analyst expects EV sales to grow by 15% year-over-year in 2024, down from his previous growth forecast of 25%.
Another factor affecting Tesla and Nio is intense competition in China. Notably, rivals like BYD (BYDDY), Li Auto (LI), and Xpeng (XPEV) implemented about 10% to 15% price cuts, putting pricing pressure on Nio and TSLA. While Nio does not plan to lower prices, TSLA continues to lower prices for its models, which is eroding its profit margins.
Which Is the Best EV Stock?
On TipRanks, NIO and Rivian stocks have a Moderate Buy consensus rating, while TSLA stock has a Hold. Regarding future price performance, analysts expect an upside potential of 18.4%, 65.9%, and 42.36% in TSLA, RIVN, and NIO, respectively.
