Goldman Sachs Upgrades NIO Stock Rating Amid Cost-Cutting Measures

Goldman Sachs analyst Tina Hou has upgraded Chinese automaker NIO from Sell to Neutral, raising its 12-month price target to $3.80 (HK$29.50) from $3.70 (HK$29.00). The revision reflects a modest 9% upside potential, despite NIO's 21% year-to-date decline and ongoing profitability challenges.

Key to the upgrade is NIO's aggressive cost-reduction strategy, including project cancellations, workforce reductions, and operational streamlining. These measures aim to slash operating expenses by 20-25%, with Hou projecting a 4-10% profitability improvement over three years.

The upgrade comes as NIO faces intense competition from Tesla and BYD in China's EV market. While revenue growth continues, persistent losses underscore the company's need to demonstrate a clear path to sustainable margins.