Nio defies EV slowdown as sales nearly double

SHANGHAI: Nio Inc. said revenue almost doubled in the second quarter after the Chinese manufacturer saw strong sales of its electric vehicles.

Sales surged to 17.5 billion yuan ($2.5 billion), slightly higher than analysts expected, after the Shanghai-based company delivered more than 57,000 cars in the three months ended June.

The shares rose as much as 9% in New York on Thursday, but have still lost half their value this year, as the broader industry grapples with a drop in consumer demand.

The company reported a 4.5 billion yuan loss for the quarter, which was wider than a year earlier but not as bad as analysts feared.

Nio’s gross margin improved to 9.7% from 1% a year earlier, according to a statement Thursday.

The company is confident of improving margins further through efficient spending on research and development and charging infrastructure, chief financial officer Stanley Qu said in a statement.

Nio aims deliver between 61,000 and 63,000 vehicles in the current quarter.

In addition to its manufacturing capacity, Nio has invested heavily in its battery-swapping technology and charging infrastructure in an effort to alleviate customers’ range anxiety. But that expenditure has come at a high cost.

Caught up in China’s intense price war as automakers roll out new products with lower prices, Nio is betting the charging network will help boost sales of both its main brand and its new mass-market Onvo marque.

The company is hoping to sell 40,000 vehicles a month of its namesake brand, with a margin of 25%, Chief Executive Officer William Li said Thursday on a call with analysts.

Onvo will start deliveries this month and is expected to ship 20,000 units in the fourth quarter, with margins settling at 15% in the long run, he added.

However, some analysts have expressed concern over the company’s cash burn due to its hefty development spending, not only on cars but also on mobile phones and its own semiconductors.

The company had the highest R&D spend last year of the three US-listed Chinese EV startups, exceeding both Xpeng Inc. and Li Auto Inc.

It plans to stick to a quarterly R&D expense of around 3 billion yuan, said the executives on the call.