Nio Maintains 50% Growth Outlook Despite CEO Warning of Sharp Decline in China's Auto Market

Shares of Nio Inc. (NYSE: NIO) traded lower in Hong Kong on Monday after Chief Executive Officer William Li warned that China's automobile market could experience a 15% to 20% decline this year. Despite the cautious industry outlook, Li maintained Nio's expectation of delivering between 40% and 50% sales growth during 2026.

Meanwhile, the company's U.S.-listed shares recorded a second consecutive weekly decline, ending the week down approximately 3%.

CEO Sees Toughest Phase for China's Auto Industry

Speaking at the China Auto Chongqing Summit, Li described the current environment as the most intense stage of competition the country's automotive industry has experienced. He stated that expectations of a near-term recovery in vehicle sales are unrealistic and suggested that manufacturers should prepare for continued market pressure.

According to Li, China's retail vehicle sales dropped 19.5% year over year during the first five months of 2026. The slowdown intensified in early June, with sales declining by more than 22%. Even with these challenging conditions, Li reiterated that Nio remains committed to achieving 40% to 50% annual sales growth.

He compared the industry's development to "a marathon on a muddy road," emphasizing that sustained success comes through long-term execution rather than quick wins.

Li also pointed to the continued expansion of electric vehicles across China. New-energy vehicles represented 62.9% of the domestic market in May, while battery-electric vehicles alone accounted for 42.2% of total sales. He added that the transition toward EVs is expected to continue as charging and battery-swap infrastructure becomes more widespread.

Nio Continues to Outperform the Broader Market

Despite industry headwinds, Nio has continued posting strong operating results.

The company delivered 150,526 vehicles between January and May, representing a 68.7% increase compared with the same period last year.

Financial performance also remained positive. Nio generated an operating profit of 1.25 billion yuan (approximately $184.6 million) during the fourth quarter of 2025 and remained profitable in the first quarter of 2026 with an operating profit of 68 million yuan.

Management also reaffirmed second-quarter delivery guidance of between 110,000 and 115,000 vehicles.

Li credited the company's multi-brand strategy for helping Nio expand market share even as the overall Chinese auto market weakens.

Product Portfolio Continues to Gain Momentum

Li highlighted strong performance across several of the company's brands.

According to the CEO, Firefly has surpassed the combined sales of Mini and Smart within China's premium compact EV segment and has remained the segment leader since its launch. Customer demand continues to exceed available supply, resulting in ongoing delivery wait times.

The flagship ES8 has also maintained its position as the best-selling large SUV in its category for six consecutive months.

Meanwhile, demand for Onvo's L60 and L90 models remains strong.

Last week, Onvo officially began nationwide deliveries of the updated L60, which features Nio's self-developed Shenji smart-driving chip, newly introduced LiDAR-equipped versions, and a lower starting price.

The company also expanded its international presence by opening its first retail location in Greece, Nio House Athens, through its partnership with Motodynamics Group.

Heavy Investment Drives Cost Reductions

Li emphasized that Nio continues investing in technologies it believes will define the next stage of competition within the EV industry.

Over the past 11 years, the company has invested more than 68.8 billion yuan in research and development while allocating over 20 billion yuan toward expanding its charging and battery-swap network.

During the same industry forum, Nio Associate Vice President Ma Lin said the company's internally developed Shenji chips have increased operational efficiency while lowering costs that were previously associated with Nvidia-powered systems.

The company has also implemented broader cost-reduction initiatives. As a result, first-quarter research and development expenses declined by more than 40% year over year, while vehicle gross margin improved to 18.8%.

Retail Investors Remain Divided

Retail sentiment on Stocktwits remained bearish, accompanied by relatively low discussion volume.

One investor argued that Nio's valuation appears attractive, noting that the stock trades at approximately 0.6 times sales, 1.7 times cash, and carries a market capitalization of around $12 billion. The user suggested the shares could eventually trade within the $10 to $12 range once options-related pressure eases.

Another investor focused on management's guidance, saying the CEO's continued projection of 40% to 50% annual growth at this stage of the year indicates confidence in the company's outlook.

Over the past 12 months, Nio's U.S.-listed shares have gained approximately 44%.