Update: Replace Avatar with its official English name Avatr.

Changan Nio, a joint venture between Chinese electric carmaker Nio and legacy carmaker Chongqing Changan Automobile, announced Thursday that it is changing its name to one without the word "Nio" in what analyst sees as a smart move.

After Changan Nio changed its name to Avatr Technology, Changan has two new energy companies under its umbrella, with Avatr likely to be used for cooperation with Huawei and CATL, said Yin Xinchi, chief analyst of the auto and parts industry at CITIC Securities, in a morning briefing released Friday.

Changan's other new energy vehicle company, Changan New Energy, will also launch new models for general consumers and seek to go public on its own, the analyst noted.

The analyst gives Changan's conventional fuel vehicle business a 20x PE, corresponding to a market cap of RMB 100 billion ($15.5 billion).

He gives Changan's new energy segment, which includes Avatr and Changan New Energy, a combined market cap of RMB 50 billion.

On that basis, the analyst sees a target market cap of RMB 150 billion for Changan, with a price target of RMB 27.60. This compares to the analyst's target price of RMB 19 for Changan on May 10.

The analyst upgraded his rating on Changan to "Buy" from "Overweight".

Changan, which trades in Shenzhen, closed down 6.3 percent to 23.05 yuan on Thursday. The stock is up more than 40 percent so far this month.

Changan said Thursday that Avatr will join hands with Changan, Huawei, and CATL to create the world's leading smart electric networked vehicle platform, build a rich smart car product line and build a smart life and smart energy ecology.

Notably, yicai.com reported on Wednesday that Changan, Huawei, and CATL will join forces to create a high-end new energy brand that will include a smart electric connected car platform, a range of smart car products and a smart life and smart energy ecology, to be launched as soon as this month.

Changan didn't specify in Thursday's announcement, but the information above suggests that Avatr could be the new premium brand it is building with Huawei and CATL.

Changan Nio and GAC Nio are joint ventures that Nio formed three years ago with Changan and GAC respectively, which was considered at the time to have set a precedent for joint ventures between emerging and traditional car companies in China.

Changan Nio was established in October 2018, and at its inception, Changan and Nio each held 45% of the shares, with the other 10% held by the executive team.

But with Nio in deep financial trouble in late 2019 and early 2020, the two joint ventures have progressed more slowly.

Changan Nio has been in the pipeline for three years and has not launched a product to date.

In addition to the slow progress of products, a more critical signal is that Nio's stake in Changan Nio has been sharply reduced from 50% to 4.62% at the end of last year, while Changan's shareholding has increased to 95.38%. This is interpreted as Nio's plan to exit Changan Nio.

Changan NIO changes name to new one without 'NIO'