Chinese electric-vehicle maker NIO reported a smaller net loss in the third quarter, reversing a recent widening trend, as sales and margins improved significantly despite stiff competition in the world’s largest auto market.
US-listed shares of NIO jumped 7.3% in premarket trading.
The Shanghai-based company on Tuesday said its net loss narrowed to 3.66 billion yuan, equivalent to $515.3 million, from 5.14 billion yuan a year earlier. That was better than the 3.71 billion yuan estimate of analysts polled by Visible Alpha.
Its revenue rose 17% to 21.79 billion yuan, slightly below the market consensus of 22.14 billion yuan.
The improved bottom line comes as the Chinese EV maker’s sales momentum is picking up, alleviating investors’ concerns about its path to profitability following four consecutive quarters of widening losses.
The EV maker delivered 40,397 units in October, a third straight monthly record and the first time it crossed the 40,000 mark. In the third quarter, it delivered 41% more vehicles than in the prior year, with the 87,071 units sold meeting its guidance.
NIO said its gross margin reached 13.9% in the latest quarter, an improvement from 10.7% a year earlier, which it attributed to higher vehicle margin, supported by lower material costs per unit.
The company is considered one of the top three emerging Chinese EV brands, alongside XPeng and Li Auto. XPeng has witnessed robust sales growth and looks on course to become profitable in the fourth quarter. Li Auto is already profitable, though recent weaker sales have weighed on earnings.
NIO has tried to set itself apart in China’s crowded EV space by focusing on advancing battery technology. It relies on battery-swapping stations rather than battery-charging ones for better efficiency, but the former requires higher setup costs.
In the final quarter of the year, the company said it expects to deliver between 120,000 vehicles and 125,000 vehicles and revenue of 32.76 billion yuan to 34.04 billion yuan, up 66%-73% from the previous year.