Nio Earnings: Breakeven Target Maintained Despite Lower Volume Guidance

Key Morningstar Metrics for Nio

• Fair Value Estimate: $5.30
• Morningstar Rating: ★★★
• Morningstar Economic Moat Rating: None
• Morningstar Uncertainty Rating: Very High

What We Thought of Nio’s Earnings

Nio’s NIO third-quarter revenue grew 17% year on year, slightly missing the low end of guidance. Price competition and product mix change led to an 18% decline in vehicle pricing. With a 41% growth in vehicle volume, vehicle operating margin is back, after three years, to the midteens level.

Why it matters: Nio’s share price fell 4% overnight as the firm lowered volume guidance for the fourth quarter. It attributed the reduction to the cancellation of trade-in subsidies in certain cities, which, in our view, indicates an increasingly uncertain outlook for demand.

• Despite lower volume guidance, management reiterated Nio’s target to break even on a non-GAAP basis in the fourth quarter as economies of scale kick in and expenses begin to taper off. The company expects vehicle margin to reach 18% in the fourth quarter.
• For 2026, Nio expects a 20% vehicle margin, thanks to new models and larger volume, compared with our forecast of 18%. The company believes the partial withdrawal of the purchase tax waiver next year would have a lesser impact on Nio than its peers, as its battery renting vehicles incur lower tax bills.

The bottom line: We keep our forecasts unchanged and maintain our fair value estimate at $5.30 per ADS, which implies 0.8 times 2026 price/sales. With Nio’s ADS price up over 50% in the past six months, shares are fairly valued in 3-star territory.

Between the lines: For the fourth quarter, management guided vehicle delivery to grow 65%-72% year on year to 120,000-125,000 units. The midpoint of guidance implies December monthly delivery to be around 42,000 units, which we think is slightly below the market’s expectation.

• As orders and production of the Onvo L90 and ES8 models further ramp up, Nio expects monthly vehicle sales volume to reach 50,000 units in the first half of next year. Together with additional new model launches in the second and third quarters, management guided full-year non-GAAP net profit turnaround in 2026.