NIO Inc. (NYSE: NIO) will resume trading on Tuesday after the Memorial Day holiday, with its American Depositary Receipts (ADRs) closing at $5.20 on Friday, a decline of 7.1%. The drop came despite broader market gains, setting the stage for a critical week as the company prepares to launch its new ES9 flagship electric SUV in China on Wednesday.
The ES9, which began pre-sales in April at a price of 528,000 yuan (approximately $77,800) including the battery pack, represents NIO's latest effort to boost sales volumes in the second quarter. The company has guided for deliveries of 110,000 to 115,000 units in Q2, a year-over-year increase of 52.7% to 59.6%. This follows first-quarter deliveries of 83,465 vehicles, nearly double the prior year but down from the fourth quarter.
NIO's first-quarter financial results showed significant improvement. Revenue reached RMB25.53 billion, up 112.2% year-over-year, while gross margin expanded to 19.0% from 7.6% in the same period last year. The company posted a non-GAAP operating profit of RMB66.8 million, reversing a substantial adjusted operating loss a year ago. CFO Stanley Yu Qu highlighted the vehicle margin of 18.8% and growing cash reserves as positive indicators.
Analyst sentiment remains divided. Morgan Stanley's Tim Hsiao maintains a Buy rating on NIO's Hong Kong shares with a target of HK$58, citing a focus on profitability and strength in the ES8 and ES9 models. In contrast, Jefferies' Xiaoyi Lei holds a Hold rating, reflecting caution amid competitive pressures.
NIO's discount brand, Onvo, is also drawing attention. The L80 model, priced at 242,800 yuan with battery or 156,800 yuan under the battery-as-a-service (BaaS) plan, has seen over 90% of initial buyers opting for BaaS. Deutsche Bank analysts led by Bin Wang project L80 sales could ramp up to around 10,000 units per month initially before settling closer to 4,000 as competition intensifies.
International expansion remains a challenge. NIO shipped only 44 vehicles abroad last month, compared to 6,006 from Xpeng and 14,225 from Leapmotor, according to reports. The company is scaling back overseas plans to refocus on its home market, where it faces pricing pressure from rivals in China's EV price war.
Despite the margin improvements, NIO reported a first-quarter net loss of RMB332.1 million. Management cautioned that guidance depends on market conditions, and margin gains could be at risk if ES9 orders fail to convert or if the Onvo brand's initial interest wanes. The stock's recent hesitation reflects these uncertainties, with investors weighing strong product momentum against competitive headwinds.
