Nio Stock Jumps In Hong Kong: EV Maker Rejects ‘Overaggressive’ Price Cuts Amid Soaring Material Costs

• The company warned that rising costs for chips, batteries, lithium, copper, and aluminum are increasing pressure across the EV industry.
• Nio reported its second straight quarter of non-GAAP profitability, the ES8 SUV being a key profit driver.
• Nio said its upcoming ES9 flagship SUV is already boosting ES8 demand, with ES8 order intake rising 30% after the ES9 launch announcement.

Shares of Nio, Inc. (NIO) jumped 3% in Hong Kong in early Friday trading after the Chinese EV maker said it would reject “overaggressive” price cuts and prioritize margins over volume growth despite mounting pressure from rising chip, battery, and raw material costs.

U.S.-listed shares of Nio ended Thursday marginally higher at $5.6, but are on track to record their best work week in nearly a month. 

Nio Rejects Aggressive Price War Tactics

While China’s EV market remains locked in a fierce pricing battle, Nio made it clear during its recent first-quarter (Q1) earnings call that it would avoid sacrificing profitability to chase volume growth. “We don't need to be overaggressive with the prices,” CEO William Li said during the call.

Li added that the company was already scaling back incentives and promotions as costs continue to rise across the EV supply chain. “Our strategy is to maintain a reasonable volume increase, while keeping improving our margin and the EBIT [earnings before interest and taxes] performance as those are our key business targets,” Li said.

Nio warned that rising costs for semiconductors and raw materials are beginning to impact the EV industry. “There is the rising material cost pressure faced by the entire industry, including the memory chips, battery materials like the lithium carbonate, as well as NCM [nickel cobalt manganese], and also copper and aluminum raw materials,” CFO Stanley Qu said. 

According to the company, the impact is already significant. “Starting Q2 and beyond, on average, the cost impact per unit is more than RMB 10,000 [$1,469],” Qu added. 

Li said that lower pricing no longer guarantees competitive advantages: “There is no economy of scale for such components, which means that a higher volume does not translate into a good margin performance of the car,” he said. Nio expects full-year vehicle margins to remain around 17%-18%.

Nio Q1 Review

On Thursday, Nio reported its second straight quarter of non-GAAP profitability, posting an adjusted operating profit of 66.8 million yuan, compared with an adjusted operating loss of 5.95 billion yuan a year earlier. Revenue surged 112% from the previous year to 25.53 billion yuan, while overall gross margin jumped 19% from 7.6% in the prior-year quarter.

Vehicle deliveries nearly doubled to 83,465 units in the first quarter, exceeding the upper end of the company’s guidance range. Looking ahead, Nio guided second-quarter deliveries to between 110,000 and 115,000 vehicles, up 53% to 60% from a year ago. Revenue is expected to be in the range of 32.78 billion yuan and 34.44 billion yuan.

The company also ended the quarter with 48.2 billion yuan in cash and equivalents, while net current assets turned positive despite a GAAP net loss of 332 million yuan.

ES8 Drives Nio’s Margin Recovery

A major driver behind Nio’s improving profitability was the strong performance of the third-generation ES8 SUV, which has become the centerpiece of the company’s premium strategy. The ES8 contributed 45,185 deliveries in Q1 and accounted for over 54% of the company’s total deliveries. The premium SUV starts at 406,800 yuan and remains among the most expensive models from domestic Chinese EV brands.

“In Q1, the increase in the vehicle margin is mainly because of the higher contribution by the higher margin models, especially the ES8, contributing 50% of the margin,” Qu said. The company is now preparing to launch its ES9 flagship SUV on May 27. “We also believe that it [ES9] is going to change the landscape of the battery electric vehicle segment above RMB 500,000,” Li said.

Nio also said the ES9 launch has already boosted demand for the ES8 instead of cannibalizing sales. “One week after the ES9 launch, actually, the order intake for the ES8 increased by 30%,” Li said.

Nio Pushes Beyond Mass-Market EVs

Rather than competing directly in mass-market EV price wars, Nio is leaning into premium branding and higher average selling prices. “Among many users, they have already established a consensus where NIO will be the next car after Mercedes, BMW, and Audi,” Li said.

Nio said its average selling price in Q1 was 390,000 yuan, 50,000 yuan higher than BMW's and 50% higher than Audi's in China. Li also said: “Many users actually pursue beyond simple functions or configurations. They are more seeking for the emotion, connection, and resonance.” 

How Do Retail Traders Feel About Nio?

On Stocktwits, retail sentiment for Nio was ‘extremely bullish’ amid a more than 400% surge in weekly message volume.

One user said, “Last 2 earning reports have been absolutely stellar. The 1-month god candle will come. Can’t deny these last 2 earnings.”

Another user struck a bullish tone on the upcoming ES9 launch, saying, “I’m predicting the orders to be 50k orders low band, upwards of 80k orders.”

Nio’s U.S.-listed stock has risen 42% year-to-date.

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