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Analysts’ take on electric carmaker Nio will give Tesla investors déjà vu

Bernstein analysts pointed to the company’s cash burn and high volume target

Nio car
The Shanghai-based electric vehicle maker has been called the “Chinese Tesla”

Electric vehicle company Nio Limited (NYSE:NIO) recently made its public debut on the New York Stock Exchange with investors hailing it as the “Chinese Tesla.”

Wall Street analysts have begun to weigh in and their concerns about Nio may give Tesla Inc (NASDAQ:TSLA) investors déjà vu.

READ: Chinese Tesla rival NIO revs up US$1.3bn IPO on NYSE

Bernstein analyst Robin Zhu, lead analyst on the note, pointed to a number of issues, including the company’s cash burn, its lofty volume targets and reports of declining reservation numbers.

The analysts don’t see Nio reaching profitability in the near future, expecting the company to burn cash through 2025.

While analysts think Nio will overcome manufacturing problems, distribution issues will follow as the demand for electric vehicles struggles to expand outside of China’s major cities.

“Longer term, we question whether the premium EV segment will be big enough to support Nio’s volume ambitions,” said analysts, according to a Market Watch report.

Analysts foresee the company selling 50,000 vehicles by 2020 and 160,000 vehicles by 2025.

Bernstein gave its shares an Underperform rating with a price target of US$4.20

Shares of Nio jumped revved up nearly 12% to US$12.96 in Friday pre-market trading.

Quick facts: NIO Limited

Price: 1.52 USD

Market: NYSE
Market Cap: $1.6 billion

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