Nio Inc. (NIO) shares climbed Tuesday after the Chinese electric vehicle maker reported third-quarter results that showed impressive delivery growth and expanding margins, even if the top-line number missed Wall Street's expectations.

The company posted quarterly revenue of 21.79 billion Chinese yuan ($3.06 billion), up 16.7% year-over-year and 14.7% sequentially. That came in below the consensus estimate of $3.26 billion, but the real story here isn't about missing analyst targets—it's about operational progress.

Nio narrowed its adjusted loss to 1.14 yuan (15 cents) per ADS, a significant improvement from the 2.14 yuan loss a year earlier, and better than the 24-cent loss analysts were expecting. Vehicle deliveries hit 87,071 units in the quarter, jumping 40.8% year-over-year and 20.8% from the previous quarter. That delivery momentum translated into vehicle revenue growth of 15.0% annually and 19.0% sequentially.

The company often gets labeled as the "Tesla of China," which makes sense given its position as a direct competitor to Tesla Inc. (TSLA). For context, Tesla delivered a record 497,099 vehicles globally in the third quarter, showing growth across all regions. It's a helpful benchmark, even if the scale remains quite different.

Nio's delivery momentum continued into October, when the company delivered 40,397 vehicles. Through October 31, 2025, year-to-date deliveries reached 241,618 units, with cumulative lifetime deliveries now sitting at 913,182 vehicles.

Margins Tell an Encouraging Story

Here's where things get interesting. Gross margin for the quarter expanded to 13.9%, up from 10.7% a year ago and 10.0% the previous quarter. That's the highest gross margin Nio has achieved in three years, driven largely by a favorable product mix tilted toward premium models.

Vehicle margin specifically reached 14.7%, climbing from 13.1% in the prior year and 10.3% in the previous quarter. These aren't just accounting tricks—they reflect genuine operational improvement and better unit economics.

As of September 30, 2025, Nio held 36.7 billion yuan ($5.1 billion) in cash, cash equivalents, restricted cash, short-term investments, and long-term deposits. That's a solid liquidity position for a company still scaling operations.

What Management Is Saying

William Bin Li, Nio's founder, chair, and CEO, emphasized the quarter reflected strong competitiveness across the company's three brands: NIO, ONVO, and FIREFLY. He noted the company is working closely with supply chain partners to ramp up production capacity.

Li highlighted some specific wins: the All-New NIO ES8 became the fastest battery electric vehicle priced above 400,000 yuan in China to surpass 10,000 units delivered. The ONVO L90 remained the top-selling large BEV SUV for three consecutive months. And FIREFLY quickly grabbed a leading position in the small smart high-end EV market.

Stanley Yu Qu, Nio's CFO, pointed to continuous cost optimization and higher contribution from premium models as the drivers behind the gross margin reaching its highest level in three years. He added that operational efficiency initiatives across research and development, sales, and service helped slash adjusted operating losses by more than 30% quarter-over-quarter.

Looking Ahead

For the fourth quarter of 2025, Nio expects vehicle deliveries between 120,000 and 125,000 units, representing growth of approximately 65.1% to 72.0% compared with the same period in 2024. That's aggressive guidance and suggests management sees the momentum continuing.

Revenue for the quarter is forecast to land between 32.76 billion yuan ($4.602 billion) and 34.04 billion yuan ($4.781 billion), implying year-over-year growth of roughly 16.8% to 22.5%. That guidance, however, falls short of the $4.980 billion analyst consensus estimate, which explains why the stock reaction was measured rather than euphoric.

Price Action: NIO shares were trading 2.43% higher at $5.890 in premarket activity Tuesday.