After losing about 70% of its value in 2022, shares of the Chinese EV (electric vehicle) maker Nio (NYSE:NIO) continue to underperform the broader markets so far this year. While analysts’ average price target suggests significant upside potential, increased competition and pressure on margins indicate that the downtrend in the stock could be sustained, at least in the near term.
It’s important to highlight that Tesla’s (NASDAQ:TSLA) aggressive pricing strategy is affecting the profit margins of its competitors, such as Nio. Despite Nio’s higher car sales in September and the third quarter, its margins could remain under pressure. Investors should be aware that Tesla’s ongoing price reductions have compelled competitors like Nio to provide promotional discounts in order to increase sales volume.
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