TipRanks
6 min read
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Chinese EV-maker NIO (NIO) continues to test the patience of its shareholders. In Q1, as reported on June 6, the company missed both top and bottom-line estimates by a wide margin, and once again disappointed when it came to losses. On the bright side, deliveries and sales have been growing at a solid pace, with its affordable Onvo-branded models showing promising momentum. However, high expenses continue to weigh heavily, reflecting an ongoing and significant cash burn. Earnings per share fell short of expectations, with NIO reporting a loss of $0.42 per share.
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That said, with the ADR still trading at depressed levels, some investors might feel like it can’t get much cheaper. While I partly agree with that sentiment, I think going long on NIO only makes sense once we see clear signs that the losses are stabilizing and that a path to a sustainable bottom line is in sight. Until then, I believe NIO is a Hold.
While NIO has made some solid progress in terms of vehicle deliveries and volume, the Chinese EV makers’ financial performance tells a different story. In Q1 2025, NIO delivered 42,100 vehicles—a 40% increase compared to the same period last year. The issue is that this jump in deliveries didn’t translate into a similar increase in revenue, not even half. Vehicle sales revenue grew by just 18.6%, mainly due to the growing contribution of its more affordable models (its Onvo brand), which aligns with NIO’s strategy to capture broader market segments.
However, the primary concern remains that the company still falls short in terms of overall profitability. Operating losses increased to $884 million, up from $740 million, a year earlier—even though total revenue rose to $1.66 billion. Looking at vehicle margins, there was a year-over-year increase to 10.2%, but a drop from 13.1% in the previous quarter, which reflects growing pricing pressure in China’s EV market.
All of this continues to intensify pressure on NIO’s liquidity, making the need to raise fresh capital more urgent, likely through further shareholder dilution. In fact, back in March, NIO raised around HKD 4.03 billion (~US$510 million) through a share issuance in Hong Kong.
To clarify, since NIO is a foreign company listed on the NYSE via American Depositary Receipts (ADRs), it follows International Financial Reporting Standards (IFRS) accounting standards. That means it doesn’t publish full quarterly cash flow statements—only annual ones.
