Nio Delivered 37,705 EVs in May and Is Making Its Own Chips Now. Can It Compete With BYD at Scale?

Investors in Chinese electric vehicle (EV) maker Nio (NYSE: NIO) have a right to be skeptical of the company. Over the last five years, the stock has lost 87.5% of its value, and it is now trading at less than $6 a share.

That said, the company has aggressively retooled its growth strategy and is now boasting new models, record deliveries, and solid revenue growth.

But is it enough? Can this longtime underperformer finally break out of its slump and challenge rival BYD for dominance?

Image source: The Motley Fool.

Where the market is

The Chinese EV market seems to have shifted sharply toward lower-priced cars while still embracing SUVs. So it's no surprise that Nio's latest offering, from its budget sub-brand Onvo, is for a value-priced five-seat SUV.

The Onvo L80, which is currently available only for preorder in China, boasts a starting price of 245,800 renminbi (about $36,000). That price looks very much like a specific attempt to undercut rival Tesla (NASDAQ: TSLA), whose Model Y five-seat electric SUV has a starting price of 263,500 renminbi (about $38,400) and is still the most popular EV in China.

Onvo's two earlier vehicles include the L90 three-row SUV, released in 2025, and its budget-priced L60 crossover SUV, which debuted in 2024 at a cost of just 149,900 renminbi (about $21,000). The L80 and L90 share most of the same components, which undoubtedly helps the company keep production costs low. The company is also setting up new subsidiaries focused on integrated circuit manufacturing.

The company isn't ignoring the premium market, having debuted its Nio ES9 six-seater premium SUV on May 27. Nio claims it's the largest vehicle of its kind in China, with a range of up to 385 miles. But a new vehicle lineup isn't worth much if those vehicles aren't selling. Luckily for Nio, they are.

Image source: Getty Images.

Nio's sales are skyrocketing

Nio announced 37,705 deliveries in May, up 62.3% year over year, a sharp uptick from April's 29,356 vehicle deliveries, which represented year-over-year growth of just 22.8%. That growth comes despite slumping domestic auto sales in China overall.

The new vehicle lineup has powered a return to revenue growth for the automaker. Between Jan. 1, 2020, and Jan. 1, 2023, trailing-12-month sales increased by an impressive 544.1%. But then growth dropped to an anemic 29.4% between Jan. 1, 2023, and June 1, 2025 (about a year ago). Since then, revenue growth has been back in high gear, with first-quarter revenue surging 122% year over year.

But generating revenue has never seemed to be a problem for Nio. Converting that revenue into profits, on the other hand, has been harder. Nio finally managed to eke out a tiny quarterly profit of $17.1 million in Q4 2025 before sliding back into a net loss of $71.8 million in Q1. The good news is that margin compression isn't to blame. In fact, Nio's Q1 margins of 18.8% were a noticeable improvement from 2025's 10.2%.

Of course, any company can have one good quarter. The question now is whether Nio can sustain its higher revenue and stronger margins over the long term despite fierce competition and China's sluggish auto market. Cost-conscious recent moves like standardizing its vehicle base and moving to in-house chipmaking should help. Investors who think it can succeed may want to consider buying shares of Nio at their current rock-bottom price.

John Bromels has positions in Nio and Tesla. The Motley Fool has positions in and recommends Tesla. The Motley Fool has a disclosure policy.