Key Takeaways
- NIO’s third quarter revenue forecast of approximately $5 billion fell short of analyst expectations of $5.3 billion
- Second quarter revenue reached $4.7 billion, marking a 69% year-over-year increase, with adjusted profits reaching breakeven
- J.P. Morgan shifted its rating from Overweight to Neutral while reducing its price objective from $7.00 to $4.50
- The company’s vehicle gross margin expanded to 18.5% during Q2, though future cost challenges from battery and chip expenses loom
- The investment bank dramatically reduced its 2027 adjusted earnings projection by 52%, now anticipating a net loss of 975 million yuan
The Chinese electric vehicle manufacturer posted second quarter revenue of $4.7 billion, representing a 69% year-over-year surge, while achieving breakeven on an adjusted profit basis. Analysts had anticipated a 4-cent per share deficit on $4.8 billion in sales, making the actual performance marginally better than projected.
However, the company’s American Depositary Receipt plunged 6.4% in after-hours trading and continued declining by approximately 1.4% to $4.17 during Tuesday’s U.S. session. The shares had already retreated 17% year-to-date and 34% over the trailing twelve months prior to the earnings announcement.
The primary concern centered on the third quarter projection. The automaker forecasted revenue of around $5 billion, significantly trailing the $5.3 billion consensus estimate from Wall Street analysts. This shortfall triggered the negative market reaction.
Management anticipates delivering approximately 109,500 vehicles during the third quarter, suggesting roughly 37,500 September deliveries. Year-to-date through August, the manufacturer has delivered 262,893 vehicles in 2026, reflecting 58% year-over-year growth.
Chief Executive William Bin Li emphasized robust performance across the vehicle portfolio. The refreshed ES8 model achieved its 140,000th delivery milestone in just 335 days. The ES9, which launched in May 2026, has likewise demonstrated strong traction.
Li also spotlighted the ONVO brand as the market leader within China’s $30,000 to $45,000 large SUV category, while noting that Firefly has maintained the number one position in China’s premium small-car segment for 15 consecutive months.
Investment Bank Reduces Rating and Price Objective
J.P. Morgan moved its rating on the stock to Neutral from Overweight on Tuesday, slashing its price target from $7.00 to $4.50. The firm pointed to softening demand in China’s passenger vehicle sector, intensifying price wars, and minimal international market penetration.
The institution recognized the company’s Q2 vehicle gross margin of 18.5% as encouraging, particularly considering approximately 4 billion yuan in per-vehicle cost inflation versus late 2025 levels. However, analysts cautioned that additional cost pressures are approaching.
Company leadership itself identified another 2,000 to 3,000 yuan per vehicle cost escalation expected during the second half of 2026, primarily stemming from battery and memory chip expenses. Given the competitive landscape, transferring these costs to consumers will prove challenging.
The investment bank reduced its 2026 revenue projection by 5% and its 2027 estimate by 9%. Its adjusted net income outlook shifted dramatically, now forecasting a 975 million yuan deficit in 2027, compared to a previous projection of 2.52 billion yuan in profit.
Updated Financial Projections
The firm also lowered its delivery expectations, projecting 430,000 vehicles in 2026 and 480,000 in 2027, representing growth rates of 32% and 12% respectively. Analysts anticipate China’s overall passenger vehicle demand to remain flat or decline by up to 5% in 2027.
This environment makes NIO’s ambitious long-term target of 40% to 50% volume expansion appear increasingly difficult to achieve. J.P. Morgan indicated it favors BYD and Geely among Chinese automotive manufacturers due to their superior earnings stability and international expansion capabilities.
The EV maker delivered 71,770 vehicles during the combined July and August period. The company’s full-year delivery objective now faces heightened challenges given the competitive pressures and demand dynamics within the Chinese market.
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