Chinese electric-vehicle maker Nio Inc. (NYSE: NIO) reported a net loss for the first quarter, reversing a profit in the prior quarter, but investors focused on stronger margins and an upbeat second-quarter outlook that surpassed market expectations. The company's U.S.-listed shares rose about 3.5% in pre-market trading on Thursday following the release.
Revenue and Deliveries
Nio's first-quarter revenue surged 112.2% year-over-year to RMB25.53 billion ($3.70 billion), driven by a near-doubling in vehicle deliveries. The company delivered 83,465 vehicles in the quarter, up 98.3% from a year earlier, though down 33.1% from the fourth quarter. Deliveries included 58,543 Nio-brand vehicles, 13,339 from its ONVO sub-brand, and 11,583 from Firefly, its smaller-car line.
Profitability and Margins
The company posted a net loss of RMB332.1 million, compared with a net profit of RMB282.7 million in the fourth quarter and a net loss of RMB6.75 billion a year earlier. On an adjusted basis, which excludes share-based compensation and other items, Nio reported a net profit of RMB43.5 million. Vehicle margin, a key metric, rose to 18.8% from 10.2% a year earlier and 18.1% in the prior quarter. Gross margin improved to 19.0%.
"Vehicle margin has improved quarter over quarter for four consecutive quarters, and our cash reserves continue to rise," said Chief Financial Officer Stanley Yu Qu. The margin improvement comes amid a challenging environment for China's auto sector, where overall industry profit fell 18% in the first quarter and sales margins dropped to 3.2%, according to data from the China Passenger Car Association.
Outlook and New Products
Nio forecast second-quarter deliveries of 110,000 to 115,000 vehicles, representing growth of approximately 53% to 60% year-over-year. The company expects revenue in the range of RMB32.78 billion to RMB34.44 billion, above the FactSet consensus estimate of RMB31.45 billion. Founder and CEO William Bin Li said the company has entered an "intensive new product launch and delivery cycle" starting in the second quarter.
The company's flagship ES9 SUV is scheduled to launch and begin deliveries on May 27. ONVO also started deliveries of the L80 after its May 15 launch. These new models are positioned in the premium segments where Nio faces intensified competition from BYD's refreshed Denza flagship SUV and Xpeng's recently launched high-end GX SUV.
Market Context and Risks
While the margin improvement and guidance are positive signals, analysts caution that the rebound remains on a narrow foundation. Deliveries dropped sharply from the fourth quarter, and the company remained loss-making under U.S. accounting rules. Nio noted that its outlook is only a preliminary view of market conditions. If competitors continue discounting or raw-material costs rise, sustaining the margin gains could prove challenging.
Nevertheless, investors are interpreting the quarter as evidence that Nio can sell more cars with better unit economics, even if it hasn't yet delivered consistent profitability. In China's crowded EV market, that may be enough to sustain momentum for now.
