Morgan Stanley published a report stating that NIO's (NIO.US) performance in the third quarter was mixed. Although the gross margin for automobiles was slightly above expectations, increased operating expenses and marketing costs put pressure on profitability.

Morgan Stanley noted that management sounded optimistic during the earnings conference call, predicting that sales would grow by more than 100% next year, mainly relying on the launch of new models. Benefiting from economies of scale and a reduction in incentive measures, gross margin or profitability is expected to improve accordingly. Therefore, the shareholding rating for NIO is maintained with a target price reduced from $8 to $7.

Morgan Stanley indicated that the most favored OEM manufacturers in order are BYD (01211.HK), XPeng Motors (09868.HK), Geely (00175.HK), and NIO.