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

Core Insights - NIO Inc. launched its smart electric vehicle sub-brand ONVO in May 2024, with the first model L60 entering the market on September 28, 2024, as part of a multi-brand strategy [1][10] Product Performance - The ONVO L60 has been well-received for its safety, spaciousness, energy efficiency, and user-friendly charging experience, ranking among the top three best-selling battery electric vehicles in the RMB 200,000-300,000 price range in the first four months of 2025 [2][10] - In Q2 2025, ONVO delivered 17,081 units, an increase from 14,781 units in Q1 2025 [2] Future Models - The second model, L90, a flagship large family SUV, is set to debut at the end of July 2025, with deliveries starting on August 1, 2025 [3] - A third ONVO SUV is expected to launch in Q4 2025, completing the SUV portfolio aimed at mass-market consumers [3] Financial Performance - Despite strong product reception, ONVO's sales performance has not met expectations due to amortization and financial pressures, with vehicle margins projected at approximately 15% for 2025, lower than the 20% expected from the NIO brand [4][10] - NIO's stock has lost 2.5% year-to-date, outperforming the Zacks Automotive-Domestic industry, which has declined by 6.5% [8] Competitive Landscape - The ONVO L60 competes with Tesla's Model Y and XPeng's G6, with the L60 priced at $14,000 less than the Model Y [5][6] - XPeng's G6 offers a competitive advantage with a lower price point, available for under 180,000 RMB, compared to the ONVO L60's upfront cost of nearly 150,000 RMB plus a monthly battery rental fee [7] Valuation Metrics - NIO appears overvalued with a forward price/sales ratio of 0.56, compared to the industry's 0.45 [12]