TipRanks
6 min read
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Nio Inc. (NIO) has been a disappointing stock this year, underperforming the broader market and particularly its Chinese peers, despite a moderate rebound following the tariff war shock that hit the EV sector. While the company has made progress on deliveries and shown some improvement in margins, the bold target set by management to stabilize losses in Fiscal 2025 still feels out of reach, even with three quarters left.
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The upcoming launch of several new models with better margins, along with ongoing cost-cutting strategies, is the main hope for doubling margins by year-end.
With Q1 results set to drop on June 3rd, I think investors will be watching closely for any shifts in margin trends or cost structure. That said, I remain skeptical that Nio can consistently maintain steady losses, move toward profitability, and generate healthy cash flow in such a short timeframe. For now, I’d rate the stock as a Hold.
Investors are closely monitoring Nio’s investment thesis, which hinges on the company achieving financial breakeven by 2025 and potentially turning profitable by 2026.
According to Nio’s CEO and founder, William Li, the company is expected to hit breakeven in the fourth quarter of this fiscal year based on three key factors: (1) the launch of nine new models to fully diversify the product portfolio; (2) the rollout of new vehicle technologies aimed at gradually boosting gross margins; and (3) perhaps the most challenging, the aggressive expansion of its battery swapping network, with plans to install stations in every county across China’s 27 provinces—an initiative that’s expected to drive sales.
In Q1, Nio reported a solid 42,094 vehicle deliveries, marking a 40% year-over-year increase. The company is also seeing early momentum with its new Onvo and Firefly brands. Between March 19 and 27, out of 6,530 vehicles delivered, 2,690 came from these two brands, even though Nio had not officially started ramping up production of these new models yet. These brands are expected to play a significant role in helping Nio reach its ambitious profitability goals. Management has also reaffirmed its target to double deliveries in 2025 compared to the 2024 goal of 222,000 units.
Still, Q1 financials raise some serious questions about how realistic the breakeven by year-end really is. Nio reported a net loss of $977 million, a 24% increase year-over-year, pushing its total projected loss for fiscal 2024 to between $3.1 billion and $3.2 billion—about 4% more than in 2023. Gross margins came in at 11.7%.
