NIO Narrows Q2 Net Loss by 89.4%, CFO Warns of Rising Cost Pressure

Maham Fatima Wed, September 9, 2026 at 7:25 PM PDT | 4 min read

NIO -3.24%

On September 1, NIO Inc. (NYSE: NIO) reported second-quarter results that signaled a company finally growing into its ambitions. Deliveries jumped 49.4% year over year to 107,658 vehicles across its NIO, ONVO, and FIREFLY brands, while the net loss shrank 89.4% to RMB 0.5 billion. The company posted its third consecutive quarter of adjusted profitability—a milestone that would have seemed distant a year ago. However, a fresh cost problem is emerging just as the old ones fade.

Three Brands Firing Together

Growth is now showing up on the bottom line rather than just the top line:

• Vehicle gross margin climbed to 18.5%, up from 10.3% a year earlier.
• Overall gross margin rose to 18.4% from 10%, driven largely by a richer product mix.

The product mix tells the real story:

• The NIO brand's average selling price hit RMB 430,000 in July—higher than the going rate for Mercedes and BMW over the same period.
• The flagship ES8 crossed 140,000 units delivered in just 335 days, the fastest pace in China's RMB 400,000 price bracket.
• The newer ES9 is attracting fresh buyers, with 75% of its owners new to the NIO ecosystem.
• The ONVO brand delivered 60,000 L90 units in its first year on sale, leading the roughly RMB 300,000 electric SUV segment.

Behind the vehicles, NIO is leveraging its charging network as a durable competitive edge:

• The fifth-generation power swap station now costs RMB 1.4 million to build—RMB 100,000 less than the prior generation.
• The company operates more than 4,100 swap stations worldwide.
• A software upgrade rolled out on June 18 pushed urban smart-driving mileage up 92.8%, evidence that its self-developed WorldModel system continues improving well beyond any one-time launch bump.

The Bill for Growth Is Rising

None of that came cheap. CFO Stanley Qu warned that "the cost structure of the automotive industry has been under pressure," pointing to a roughly RMB 14,000 per-vehicle cost increase driven by rising chip, battery, and raw material prices during the quarter.

Selling and marketing spending is also climbing:

• SG&A expenses rose 11.6% year over year to RMB 4.4 billion as the company promoted its new launches.
• R&D spending fell 28.7% to RMB 2.1 billion on lower headcount.
• The company still plans to spend RMB 6 billion to RMB 7 billion on capital expenditures for the full year, mostly on product development and its service network.

Set against all that spending, actual profit remains razor-thin:

• Adjusted net profit came in at just RMB 26.1 million—a figure that looks like a rounding error next to RMB 32.1 billion in quarterly revenue.
• Third-quarter delivery guidance of 108,000 to 111,000 units is barely above the June quarter's actual 107,658.
• Management's fourth-quarter target of 40,000 vehicles per month depends on a recovery in the broader passenger vehicle market that has not yet materialized.

Wall Street Isn't Fully Convinced

• Hedge fund ownership of NIO slipped from 31 funds to 27 in the most recent quarter—a modest pullback in institutional conviction.
• Short interest stands at 6.49% of the float, signaling a real, if not overwhelming, bear camp betting against the stock.
• Shares trade at a forward price-to-earnings ratio of 67.11 as of September 9—a multiple that prices in years of the growth management described, rather than the sliver of profit the company actually delivered this quarter.

That gap between the earnings NIO has and the earnings its valuation assumes is the tension investors are weighing right now.

The Next Few Quarters Will Tell

NIO has answered the question that mattered most a year ago: Can it sell enough cars, at high enough prices, to stop bleeding cash? The answer this quarter was yes.

What it hasn't answered is whether it can keep doing that while absorbing higher chip and battery costs without leaning harder on spending elsewhere. For the growth story to hold, the premium brand mix and power network scale need to keep outrunning those input costs.

While we acknowledge the potential of NIO as an investment...