- Analysts at CMB International believe Nio won't be able to break even in the fourth quarter, citing the difficulty in controlling sales and administrative expenses.
- The team expects Nio to report a net loss of RMB 1.6 billion ($226 million) in the fourth quarter, with a non-GAAP net loss of RMB 700 million.
Nio Inc (NYSE: NIO, HKG: 9866) management reiterated confidence in achieving its first quarterly profit in the fourth quarter during yesterday's earnings call, though a Chinese analyst team expressed pessimism.
Nio may still post a net loss of RMB 1.6 billion ($226 million) in the fourth quarter, with a non-GAAP adjusted net loss of RMB 700 million, CMB International analysts said in a research note today.
The electric vehicle (EV) maker will not be able to achieve breakeven in the fourth quarter as the absolute value of selling and administrative expenses are difficult to be contained at the third-quarter's level, the team noted.
Nio's unaudited earnings report released yesterday showed a net loss of RMB 3.48 billion in the third quarter, the lowest since the third quarter of 2022. This represents a 31.2 percent decrease from the third quarter of 2024 and a 30.3 percent decrease from the second quarter of 2025.
The adjusted net loss (non-GAAP) for the third quarter was RMB 2.74 billion, down 38.0 percent from the third quarter of 2024 and down 33.7 percent from the second quarter of 2025.
The significant narrowing of the net loss was primarily driven by cost control.
Nio's R&D expenses in the third quarter totaled RMB 2.39 billion, down 28.0 percent year-on-year and down 20.5 percent quarter-on-quarter.
Third-quarter selling, general, and administrative (SG&A) expenses totaled RMB 4.18 billion, up 1.8 percent year-on-year and up 5.5 percent quarter-on-quarter.
During the subsequent analyst call, Nio management reiterated confidence in achieving its first quarterly breakeven in the fourth quarter and metioned its goal of reaching full-year breakeven in 2026.
The company also said yesterday that it has no major marketing campaigns planned for the fourth quarter, and expense control will remain within plan.
CMB International observes that Nio management's tone regarding achieving non-GAAP breakeven in the fourth quarter is more cautious than during the second-quarter earnings call.
Nio's fourth-quarter delivery guidance of 120,000-125,000 units and its annual ES8 delivery target of 40,000 units suggest that the Onvo L90's October sales of about 12,000 units may represent its peak, according to the team.
Nio management mentioned yesterday that the company will have five large vehicles on sale next year, driving product mix upgrades.
CMB International believes this assumption implicitly relies on achieving high sales volumes through highly competitive pricing.
However, the team notes that nearly all Chinese automakers currently offer large SUVs, and history has repeatedly shown that price wars make it difficult to sustain high gross margins.
In fact, hardly any Chinese automaker can currently maintain a 20 percent vehicle margin, the team said.
CMB International maintains its Hold rating on Nio stock but lowers its target price from $7.00/HK$55.00 to $6.40/HK$50.
Nio shares closed down 4.35 percent at $5.50 per share on the US market Tuesday. The target price implies about 17 percent upside.
($1 = RMB 7.0806)
