NIO Shares Drop 3.95% on $550M Volume Ranking 170th in Market Activity Amid Mixed Earnings Outlook

On September 3, 2025, NIO (NIO) closed with a 3.95% decline, trading at a volume of $550 million, a 29.62% drop from the previous day’s volume and ranking 170th in market activity. The stock’s performance followed mixed signals from its Q2 2025 earnings report, which highlighted both growth and persistent financial challenges.

The company reported total revenue of RMB19 billion for the quarter, reflecting a 9% year-over-year increase and 57.9% growth from the prior quarter. Vehicle sales revenue rose 2.9% year-over-year to RMB16.1 billion, while other sales revenue surged 62.6% annually to RMB2.9 billion. Despite these gains, vehicle gross margin dipped to 10.3% from 12.2% in the same period last year, attributed to shifts in product mix. The ONVO L90 and All-New ES8 models drove strong demand, with CEO Bin Li confirming production capacity targets of 15,000 units/month for the L90 by October and 150,000 units/month for the ES8 by December.

Operational losses narrowed to RMB4.9 billion for Q2, down 5.8% year-over-year and 23.5% from the first quarter. CFO Yu Qu noted a path to breakeven, forecasting vehicle margins of 16%-17% in Q4, supported by full-quarter deliveries of the L90 and ES8. However, R&D expenses declined 6.6% year-over-year to RMB3 billion, raising concerns about long-term innovation, while SG&A expenses increased 5.5% annually due to personnel costs and expansion. The company also delayed launches of the L60 and other models to prioritize L90 and ES8 production, with new product introductions postponed until 2026.

NIO’s pricing strategy for the L90 and ES8, targeting 20%-25% margins for NIO and 15%+ for ONVO, is underpinned by cost controls and technological integration, including proprietary smart driving chips and operating systems. However, supply chain constraints and production bottlenecks remain key risks. Analysts have maintained a cautious stance, citing weak cash flow and leverage despite bullish technical indicators.

Backtesting results from the Q2 report align with the company’s guidance: vehicle margins improved sequentially, and operational losses contracted at a faster rate than expected. The path to breakeven hinges on achieving 16%-17% vehicle margins in Q4 and maintaining SG&A efficiency at 10% of sales revenue by year-end.