Nio shares have gone down since July, but Goldman analysts think the worst times are now behind the Chinese electric car manufacturer that wants to challenge Tesla in the upcoming years.

Nio shares traded much higher on Thursday after the Chinese Tesla competitor was upgraded to a ‘buy’ at the financial giant Goldman Sachs.

Goldman Sachs analyst Fei Fang increased his rating on the carmaker to from a ‘neutral’ to a ‘buy’ while leaving his target for the company unchanged at $56, stressing that the China group had shed $28 billion from their market cap since hitting a peak in July.

“We think Nio’s promotion of the ET7 is strategic. The design, like the wheelbase, is in line with other full-size premium sedan vehicles including the BMW 7 series and the Mercedes S-class,” Fang said.

Nio’s United States listed shares were measured 7% higher in morning trading to exchange hands at $36.02 each.

Although a much-smaller competitor to Tesla, Nio is growing its sales at a quicker rate: its Sept. quarter number of 24,439 cars delivered was dwarfed by Tesla’s number of 241,300, but its growth of 100.2% was 30 percentage points beyond Tesla’s.

Goldman’s review shows that electric vehicle penetration is going forward, market shares are consolidating towards the largest manufacturers and the anticipated demand could be catalyzed by new models.

Nio introduced their ET7 as its fourth passenger-focused model and sedan back in January. And now Goldman thinks the price point, which is in line with the BMW 5 series and Mercedes E-class, as being a good selling point for the Chinese company.

Nio is also moving globally, by announcing its “Norway Strategy” back in May. The company recently started Nio House in Oslo and debuted its ES8 car in that nation. The company wants to launch the ET7 in the country next year.

The company also plans to add 120 Nio Space and 20 Nio House retail establishments this year, bringing its overall store count to 366 by December.

While the EV sector is growing, it is still a volatile one with stiff competition.

Author: Steven Sinclaire

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