Chinese EV-maker NIO (NIO) continues to test the patience of its shareholders. In Q1, as reported on June 6, the company missed both top and bottom-line estimates by a wide margin, and once again disappointed when it came to losses. On the bright side, deliveries and sales have been growing at a solid pace, with its affordable Onvo-branded models showing promising momentum. However, high expenses continue to weigh heavily, reflecting an ongoing and significant cash burn. Earnings per share fell short of expectations, with NIO reporting a loss of $0.42 per share.
That said, with the ADR still trading at depressed levels, some investors might feel like it can’t get much cheaper. While I partly agree with that sentiment, I think going long on NIO only makes sense once we see clear signs that the losses are stabilizing and that a path to a sustainable bottom line is in sight. Until then, I believe NIO is a Hold.
While NIO has made some solid progress in terms of vehicle deliveries and volume, the Chinese EV makers’ financial performance tells a different story. In Q1 2025, NIO delivered 42,100 vehicles—a 40% increase compared to the same period last year. The issue is that this jump in deliveries didn’t translate into a similar increase in revenue, not even half. Vehicle sales revenue grew by just 18.6%, mainly due to the growing contribution of its more affordable models (its Onvo brand), which aligns with NIO’s strategy to capture broader market segments.
Chart showing NIO’s revenue sources being dominated by vehicle sales.
However, the primary concern remains that the company still falls short in terms of overall profitability. Operating losses increased to $884 million, up from $740 million, a year earlier—even though total revenue rose to $1.66 billion. Looking at vehicle margins, there was a year-over-year increase to 10.2%, but a drop from 13.1% in the previous quarter, which reflects growing pricing pressure in China’s EV market.
All of this continues to intensify pressure on NIO’s liquidity, making the need to raise fresh capital more urgent, likely through further shareholder dilution. In fact, back in March, NIO raised around HKD 4.03 billion (~US$510 million) through a share issuance in Hong Kong.
To clarify, since NIO is a foreign company listed on the NYSE via American Depositary Receipts (ADRs), it follows International Financial Reporting Standards (IFRS) accounting standards. That means it doesn’t publish full quarterly cash flow statements—only annual ones.
Based on 2024 figures, NIO reported a negative operating cash flow of $1.57 billion. Comparing that to the $3.6 billion in cash and short-term investments currently on hand, the company has a cash runway of just about 2.3 years, not even accounting for 2025’s results yet. This indicates that NIO, although not exhibiting any immediate liquidity red flags, is navigating a fine line with limited financial flexibility.
The pressure is mounting for NIO, as CEO and founder William Li has set an ambitious goal to reach breakeven by the fourth quarter of this year. However, a troubling 18% rise in Q1 operating losses suggests the company is currently moving in the opposite direction. To course-correct, NIO is emphasizing cost efficiency, aiming to cut R&D spending by 20–25% year-over-year and keep non-GAAP SG&A expenses under 10% of revenue.
In the near term, NIO expects to deliver 72,000 to 75,000 vehicles in Q2, representing a 25% to 31% increase. If even a portion of that growth translates into more substantial revenue, it could help improve operating cash flow and begin to narrow losses. With tighter cost controls and improving deliveries, breakeven within the next three quarters remains a challenging but plausible target.
Chart showing NIO’s resilience in maintaining vehicle deliveries over the past two years.
But here’s the catch: it’s going to require flawless execution—something that, so far, has been elusive for NIO and many of its peers in China’s EV sector.
Even with sales increasing every few quarters, the drop in vehicle margins (from 13.1% to 10.2% in Q1) highlights just how much the ongoing price war in China is eroding profitability. And that’s a factor largely out of NIO’s control, which adds even more pressure on management to hit their ambitious targets.
The post-Q1 bearish reaction appears to reflect investor frustration that improvements to the bottom line have still not materialized and have now been pushed back to at least the next quarter. For now, R&D expenses were actually 11% higher than in the same period last year, and SG&A costs accounted for a staggering 46% of sales revenue, entirely at odds with the cost-cutting targets management has been promising.
Given that, I think we’ll need to see clearer evidence of progress in the direction the leadership team has been forecasting before fully buying into their efficiency narrative.
On the product side, though, things look more promising. The new models launched in April—such as the ET9 and Firefly—have reportedly secured a solid market share in the premium executive and high-end segments. Demand for the Onvo L60 is also on the rise, and in late May, deliveries began for the updated ES6, EC6, ET5, and ET5T, all of which feature significant upgrades.
NIO’s EL6 electric car
These are all encouraging inputs that could help turn NIO into a more efficient, financially sustainable company, though that’s clearly not the reality today. To me, the question is more about when NIO will arrive, rather than how, primarily since the ongoing pricing pressure is being driven by an ultra-competitive electric vehicle landscape in China.
Until profitability shows real signs of improvement, the need for fresh funding—and the risk of further shareholder dilution—remains on the table. And that just adds to the cycle of value erosion we’ve been seeing in NIO’s ADRs.
Most analysts remain cautious on NIO for the time being. Of the ten analysts covering the stock, eight rate it as a Hold, with only two Buy ratings and one Sell. Still, the consensus price target of $4.51 implies a potential upside of approximately 31% from the current share price, suggesting some optimism remains despite the neutral stance.
See more NIO analyst ratings
NIO’s delivery and revenue growth demonstrate its ability to remain competitive in China’s crowded EV market. However, the more pressing issue is its persistent bottom-line losses—and how long the investment case can hold without visible progress toward profitability, even if breakeven is theoretically achievable within the next three quarters.
Q1 offered little reassurance on operational efficiency, with no apparent signs of improvement. For now, investors are relying on management’s commitment to reduce expenses and curb cash burn before further dilution becomes necessary. Until those goals are met, a low valuation alone isn’t enough to shift sentiment. Given the current trajectory, I maintain a Hold rating on NIO.
