Fri Jul 18 10:50:00 UTC 2025: ## NIO’s ONVO Brand Faces Challenges Despite Promising Start in EV Market

**Shanghai, China – July 17, 2025** – Chinese electric vehicle (EV) manufacturer NIO Inc.’s (NIO) sub-brand, ONVO, launched in May 2024, is making waves in the competitive EV market, but not without facing significant headwinds. The brand’s first model, the L60, which entered the market in September 2024, has resonated with family customers due to its safety, spaciousness, energy efficiency, and user-friendly charging.

The L60 quickly gained traction, becoming one of the top three best-selling battery EVs in the RMB 200,000-300,000 price range within its first four months. ONVO delivered 17,081 units in the second quarter of 2025, a jump from the 14,781 vehicles delivered in the first quarter. The brand is expanding its lineup with the L90, a large family SUV, scheduled for release on August 1, 2025, followed by a third SUV model in the fourth quarter.

Despite the initial success and positive product reception, ONVO’s overall sales have fallen short of NIO’s expectations. The company is facing challenges in managing ONVO’s operations and vehicle margins, attributing this to amortization and financial pressures. NIO projects ONVO’s 2025 vehicle margin to be approximately 15%, lower than the 20% margin expected from the NIO brand.

The ONVO L60 is positioned as a budget-friendly alternative to Tesla’s (TSLA) Model Y, undercutting its price by $14,000. However, it faces stiff competition from rivals like XPeng’s (XPEV) G6, which boasts competitive pricing, with the XPeng G6 580 Long Range Plus available for under 180,000 RMB.

While NIO’s stock has outperformed the Zacks Automotive-Domestic industry year-to-date, losing 2.5% compared to the industry’s 6.5% decline, the company appears overvalued from a valuation perspective. Furthermore, the Zacks Consensus Estimate for 2025 and 2026 EPS has seen mixed revisions in the past 30 days.

The EV market is experiencing heightened competition amid slower-than-anticipated adoption rates and the emergence of more affordable models. NIO’s ONVO faces the challenge of navigating this landscape while striving to achieve its ambitious growth targets.

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