NIO delivers solid 1Q26 results; Nomura reiterates Buy with a USD8.60 target price

Overview

This report is Nomura’s quick take on NIO INC’s 1Q26 earnings. It notes that NIO’s 1Q26 revenue, deliveries, and gross margin were all within favorable ranges relative to guidance or expectations. Although operating leverage softened due to the seasonal auto downturn, the net loss narrowed sharply YoY, and the company delivered a second consecutive quarter of non-GAAP profitability. Nomura expects deliveries and financial performance to improve sequentially in coming quarters as ES8 orders remain strong, the ES9 launches, and models such as the Onvo L80 contribute.

Core views

The key view is to remain constructive on NIO. First, 1Q26 average vehicle selling price improved QoQ, mainly supported by the ES8 sales mix, which helped gross margin expansion. Second, 2Q26 delivery and revenue guidance is stronger than 1Q26, indicating better demand and production cadence after the seasonal low. Third, the new ES9, Onvo L80, and the 5-seat ES8 in 2H26 are critical to further gains in volume, market share, and margins. Fourth, management still targets non-GAAP operating breakeven in 2026.

Analysis framework

The report combines earnings decomposition, company guidance back-calculation, management earnings-call highlights, and valuation review: it first compares 1Q26 revenue, deliveries, average selling price, gross margin, and net profit on a YoY and QoQ basis; then it infers the implied average selling price from 2Q26 delivery and revenue guidance; finally, it maintains the target price using a DCF framework.

Methodology notes

• Valuation methodDiscounted cash flow valuation

  Assess a stock’s intrinsic value by discounting future cash flows and derive a 12-month target price.

  Nomura’s USD8.60 target price is based on a DCF model, assuming a 9.8% weighted average cost of capital, a 10.1% market risk premium, and a 1.5% perpetual growth rate, with cash flows discounted to 2026 as a 12-month forward valuation; this target implies a 1.1x 2026E price-to-sales ratio.

• Performance analysisYoY and QoQ decomposition

  Use year-over-year and quarter-over-quarter comparisons to assess growth quality, seasonality, and improvement trends.

  The report focuses on decomposing YoY and QoQ changes in revenue, deliveries, average vehicle selling price, consolidated gross margin, vehicle gross margin, operating margin, and net loss to distinguish structural improvement, seasonal operating leverage, and new-model effects.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• NIO.US

  The report covers the company; Nomura maintained its Buy rating and USD8.60 target price.

  Strengths

  1Q26 revenue and deliveries were at the high end of guidance, gross margin improved YoY and QoQ, and the company was profitable on a non-GAAP basis for a second consecutive quarter; stable ES8 demand, plus the ES9, Onvo L80, and 5-seat ES8, provide further product catalysts.

  Weaknesses

  1Q26 still recorded a CNY496mn net loss, and operating margin weakened QoQ; SG&A is expected to rise significantly QoQ in 2Q26 due to new model launches.

  Comparison

  The target price implies a 1.1x 2026E price-to-sales ratio, while the report says the stock is currently trading at 0.7x 2026E price-to-sales ratio.

  Risks

  Production ramp-up may lag demand, new models may fail to further expand market share, operating expense improvement may fall short of expectations, and rising raw material costs could erode gross margin.

Key data

• 1Q26 revenueCNY25.5bnUp 112% YoY and down 26% QoQ, at the upper end of the original guidance and in line with market expectations.
• 1Q26 deliveries83.5k unitsUp 98% YoY and down 33% QoQ, also at the upper end of company guidance.
• 1Q26 vehicle sales revenueCNY22.8bnUp 129% YoY and down 28% QoQ.
• 1Q26 average vehicle selling priceabout CNY273kUp 8% QoQ, mainly driven by stronger ES8 sales; ES8 contributed 54% of total 1Q26 sales volume.
• 1Q26 consolidated gross margin19.0%Up 11.4 percentage points YoY and 1.5 percentage points QoQ.
• 1Q26 vehicle gross margin18.8%Up 8.6 percentage points YoY and 0.8 percentage points QoQ.
• 1Q26 net lossCNY496mnLoss narrowed by 93% YoY.
• 1Q26 non-GAAP net profitCNY43.5mnProfitable on a non-GAAP basis for a second consecutive quarter.
• 2Q26 delivery guidance110k-115k unitsUp 53%-60% YoY, implying average monthly sales of about 41k-43k units in May and June.
• 2Q26 revenue guidanceCNY32.8bn-CNY34.4bnUp 72%-81% YoY.
• 2Q26 implied average selling priceabout CNY267kAbout 2% lower QoQ versus roughly CNY273k in 1Q26, reflecting volume ramp-up of new models such as the Onvo L80 and ES9.
• Target priceUSD8.60Based on the DCF method, implying a 1.1x 2026E price-to-sales ratio.

Impact & implications

In terms of investment implications, the report positions NIO as an NEV name at the intersection of a product cycle and profit improvement. In the near term, the market will focus on ES9 orders, showroom traffic, and spillover effects on ES8 orders after the launch. In the medium term, if the company can sustain its 17%-18% vehicle gross margin target, control SG&A as a share of sales, and ramp new models, visibility on achieving non-GAAP operating breakeven in 2026 will improve.

Risks

• Production ramp-up may not keep pace with demand growth, affecting delivery execution.
• New models may fail to gain additional market share, weakening the case for volume and margin improvement.
• Operating expense improvement may fall short of expectations, putting greater pressure on financial performance.
• Rising costs of lithium, memory, aluminum, copper, and other materials have not been fully reflected yet; management estimates the related impact at about CNY10k per vehicle.
• The 2Q26 launch of new models may drive a significant sequential increase in SG&A.

What to watch

• Orders, showroom traffic, and conversion after the ES9 launch on 2026-05-27.
• Whether ES8 orders can remain elevated in May and subsequent months.
• Whether 2Q26 deliveries can reach the 110k-115k unit guidance.
• 2Q26 vehicle gross margin and progress toward the full-year 17%-18% vehicle gross margin target.
• Execution of the quarterly R&D spending target of CNY2.0bn-CNY2.5bn and the SG&A target of 10% of annual sales.
• Progress toward achieving non-GAAP operating breakeven in 2026.
• Progress on Shenji NX9031 in-house chip penetration reaching 80%-85% in 2H26.
• The rollout of 1,000 additional battery swapping stations in 2026 and the deployment of third-generation stations starting in 3Q26.