Chinese EV Stocks: Li Auto vs NIO Ahead of Q2 Earnings

Li Auto and NIO are two of China's biggest EV makers. Li Auto's hybrid approach and strong demand for its L-series have captured a large market share. NIO, on the other hand, has focused on pure EVs with a range of sedans and SUVs. NIO's deliveries surged 25.6% YoY in Q2, while Li Auto's deliveries only grew 2.3%. NIO's vehicle margin improved to 10.2% in Q1, while Li Auto's margin stood at 19.8%. Li Auto holds a cash balance of $15.3 billion, giving it a significant advantage in financial strength.

In the rapidly evolving landscape of electric vehicles (EVs), two Chinese companies, Nio and Li Auto, have emerged as significant players. Both companies have unique strategies and financial positions that set them apart in the competitive EV market.

Nio: Innovative Premium EVs

Nio, a luxury EV maker, has seen a surge in its stock price, driven by several key factors. The company introduced the third-generation ES8 SUV, priced at approximately RMB 308,800 (around $43,000) under a battery subscription model, which reduces the initial cost for consumers [1]. This model addresses consumer concerns regarding high upfront expenses and battery dependability. Nio's delivery figures have been inconsistent, with a decrease in July 2025 compared to June's year-high, but the company is expanding into new price points and markets with its Onvo and Firefly brands [1].

Li Auto: Hybrid and Strong Financials

Li Auto, on the other hand, focuses on hybrid electric vehicles (HEVs) and has captured a significant market share with its L-series vehicles. The company is set to announce its Q2 2025 earnings on August 28th, with analysts expecting earnings of $0.2401 per share and revenue of $4.4757 billion [2]. Li Auto's strong financial position, with a cash balance of $15.3 billion, provides it with a significant advantage in financial strength compared to Nio [1].

Comparative Performance

Nio's deliveries surged 25.6% year-over-year (YoY) in Q2, while Li Auto's deliveries only grew 2.3% [1]. Nio's vehicle margin improved to 10.2% in Q1, while Li Auto's margin stood at 19.8% [1]. Despite the differences in growth rates and margins, both companies have shown resilience in the competitive Chinese EV market.

Valuation and Future Outlook

Nio's stock is trading at just about 1x estimated 2025 revenue, significantly lower than that of its competitors [1]. This indicates that the market has reservations about Nio’s capacity to achieve consistent growth and profitability amidst fierce competition and international hurdles. Li Auto, with its strong financial position and hybrid approach, is seen as a more stable investment by analysts, with a consensus rating of "Reduce" and a consensus target price of $27.89 [2].

In conclusion, while both Nio and Li Auto have distinct strengths and strategies, Li Auto's strong financial position and hybrid approach give it a significant edge in the competitive EV market. However, Nio's innovative premium EVs and expanding market reach present a compelling opportunity for investors.

References:
[1] https://www.forbes.com/sites/greatspeculations/2025/08/26/whats-powering-nio-stock-higher/
[2] https://www.marketbeat.com/instant-alerts/li-auto-li-projected-to-post-quarterly-earnings-on-thursday-2025-08-21/