NIO Q2 Earnings Preview: Can the Rally Hold as Margins Come Under Pressure?

NIO ($NIO) is back in the spotlight. The Chinese EV maker will announce its Q2 2025 earnings before the U.S. market opens on Tuesday, September 2. With the stock up nearly 45% year-to-date, investors are now asking the big question: can the rally continue, or will slowing growth and margin pressures spoil the momentum?

Source: Yahoo Finance

What Wall Street Expects

Consensus forecasts call for a loss per share of around -$0.31, slightly better than the -$0.34 loss reported a year ago. On the top line, revenues are expected to come in between $2.73–$2.76 billion, which would represent about 15% year-over-year growth.

At first glance, these numbers don’t look bad, especially considering that Q1 revenue grew at a faster pace of about 21%. But the market tends to price in momentum, and slowing revenue growth will likely be noticed.

Deliveries: A Tale of Two Quarters

Deliveries remain the single most important metric for any EV company. NIO reported 72,056 vehicle deliveries in Q2, a 25.6% YoY increase and an impressive 71% jump from Q1. That surge was largely fueled by strong sales of the new ES8 flagship SUV, alongside contributions from its newer sub-brands Onvo and Firefly.

Source: NIO

Onvo delivered 17,081 units in the quarter.
Firefly contributed 7,843 units, giving NIO some traction in the lower-priced segment.

But July data showed a slowdown, with growth dwindling to just 2.5% YoY. This raised concerns that Q3 could start off weaker. The rebound in August, when NIO reportedly delivered over 30,000 vehicles, provides some comfort, but the volatility highlights how quickly momentum can shift in China’s EV market.

The Margin Question

While deliveries are strong, the real challenge lies in margins.

Source: NIO

In Q1, NIO surprised positively with vehicle margin of 10.2% and gross margin of 7.6%, both showing improvement from last year. However, competition in China is brutal. Tesla’s price cuts earlier this year set off another round of EV price wars, forcing Chinese automakers—including NIO—to respond.

The Chinese government has even expressed concerns about the long-term sustainability of aggressive discounting. Still, with NIO cutting prices on its long-range models and battery packs, the risk is clear: margins could slip again in Q2, erasing earlier progress.

If margins contract, the market may overlook delivery growth and focus instead on profitability (or the lack thereof).

New Models and Mass-Market Push

The biggest storyline for NIO this year is the Onvo L90 SUV. Designed as a more affordable mass-market model, it has already shown strong uptake. Analysts at Macquarie believe it could be NIO’s most competitive vehicle yet, given its pricing advantage versus Tesla’s Model Y and Li Auto’s i8 SUV.

Source: NIO

This marks a shift in NIO’s strategy—from a premium EV maker to one competing head-on in the broader mass-market space. It’s a risky but necessary pivot if the company wants to achieve scale and eventually turn profitable.

Beyond China, NIO has been expanding internationally, with recent launches in Singapore, Costa Rica, and Uzbekistan. While international sales are still small, Chinese EV makers have already captured 10% of Norway’s market and contributed to over 60% of global EV sales in 2024. NIO clearly wants to be part of that story.

What Analysts Are Saying

Wall Street is divided.

JPMorgan’s Nick Lai recently upgraded NIO to Overweight, lifting his price target to $8 (about 30% upside). He cited Q2 earnings, the upcoming NIO Day on September 20, and the Guangzhou Auto Show in November as key catalysts.
Macquarie’s Eugene Hsiao also turned bullish, forecasting deliveries of 347,000 vehicles in 2025 and 500,000 in 2026.
On the other hand, the Street’s average price target sits at just $5.01, implying downside from current levels. That reflects ongoing skepticism around margins and profitability.

In short, the analyst community sees upside potential, but the broader consensus remains cautious.

Valuation and Longer-Term Outlook

Here’s where things get interesting. NIO currently trades at a forward price-to-sales ratio of just about 1x, far below its 5-year average of around 6x. By that measure, the stock looks cheap.

But when we look further out, valuation doesn’t look as appealing. Even by 2030, NIO’s forward P/E is projected at ~16–17x, higher than rivals like BYD (~12x) and Li Auto (~11x). Unless NIO can accelerate profitability, it risks looking expensive compared to its peers.

The company is expected to turn profitable around 2028, with consistent earnings thereafter. That’s encouraging, but still a long wait for investors who want near-term results.

Investor Takeaway

NIO’s Q2 earnings are shaping up to be a make-or-break moment for its 2025 rally. Deliveries are strong, but margins remain fragile. Analysts are cautiously optimistic, but consensus targets suggest Wall Street is not fully convinced.

If deliveries stay strong into Q3, margins hold up better than expected, and NIO Day brings new product excitement. In this case, the stock could continue to ride its upward momentum.

But if margins shrink, July’s weak deliveries carry into Q3, and the company guides conservatively. In this scenario, recent gains may prove unsustainable.

For now, I’d call it a “watch-and-hold” situation. There’s no denying NIO’s progress, but until it shows a clearer path to consistent profitability, the risks remain significant.