J.P. Morgan downgraded NIO to Neutral from Overweight and cut its price target to $4.50 from $7.00, citing sluggish demand in China's passenger-vehicle market, intensifying price competition, and limited overseas exposure. The brokerage noted NIO's second-quarter results were moderately ahead of estimates, with vehicle gross margin reaching 18.5% despite about 4 billion yuan ($550 million) of cost inflation per vehicle compared with late 2025. Management forecasts another 2,000-3,000 yuan per vehicle increase in costs in the second half, mainly from batteries and memory chips, which could pressure margins. J.P. Morgan expects NIO's volume growth to moderate, forecasting 430,000 deliveries in 2026 and 480,000 in 2027, representing growth of 32% and 12%, respectively. The brokerage cut its 2026 and 2027 revenue estimates by 5% and 9%, and adjusted earnings forecasts by 13% and 52%, now expecting adjusted net losses of 2.34 billion yuan in 2026 and 975 million yuan in 2027. J.P. Morgan prefers BYD and Geely among Chinese automakers for their stronger earnings resilience and overseas growth potential.
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BYD Co Ltd Class A
