Nio Earnings: Narrowing Loss With Robust Volume and Operating Leverage

Key Morningstar Metrics for Nio

• Fair Value Estimate
  : $6.50
• Morningstar Rating
  : ★★★
• Morningstar Economic Moat Rating
  : None
• Morningstar Uncertainty Rating
  : Very High

What We Thought of Nio’s Earnings

Nio’s NIO first-quarter revenue more than doubled from last year, slightly beating the high end of its previous guidance. Despite price competition in the domestic market, product mix optimization led to a 16% recovery in vehicle pricing and a nearly 9-percentage-point improvement in vehicle margin.

Why it matters: Nio’s results were largely within our expectations, with vehicle margin recovering to a multiyear record of 19%.

• We raise 2026-30 revenue estimates but still expect Nio’s revenue growth to peak in these two years. The lift in our valuation from stronger sales is partly offset by a slightly lower margin trajectory than we originally forecast due to higher input costs.

The bottom line: We raise our fair value estimate to $6.50 per share, which implies 0.9 times 2026 price/sales. Shares are undervalued, trading in 4-star territory.

• After some inconsistent performances in the past, we think Nio has better delivered on its targets over the past year. We expect improving confidence in its execution to reduce the discount to our valuation.

Between the lines: For the second quarter, management guided vehicle delivery to grow 53%-60% year-on-year to 110,000-115,000 units. The midpoint of guidance implies a monthly delivery of 41,500 units in May and June, indicating ES8’s decent sales momentum continues into the second quarter.

• Management acknowledged cost pressure from raw materials price movements this year. As a result, despite scale effects and tapering expenses, Nio conservatively guided vehicle margin to remain at 17%-18% for the full year, offset by a product mix upshift.
• Together with cost reduction efforts and new model launches to drive volume growth, management maintained the target of full-year non-GAAP operating profit turnaround in 2026.

Key Stats: We reduce the 2026 net loss and lift the 2027-30 profit on vehicle price recovery, higher service segment margin, and lower expense ratio assumptions.