Nio Inc (NIO  ) reported a wider-than-expected second quarter loss amid its transition to an updated EV platform and worsening China economy. But EV startup is expecting the remaining half of the year to be better as it continues its efforts challenge the EV king Tesla Inc (TSLA  ) and China's best-selling EV brand BYD Company Limited (BYDDY  ) as well as its EV startup peers, XPeng Inc (XPEV  ) and Li Auto Inc (LI  ).

Nio's Second Quarter Highlights

For the quarter ended on June 30th, Nio lost $835.1 million on a GAAP basis, which is more than twice it lost during last year's comparable quarter while generating revenue of $1.21 billion, which is 8.77 billion yuan coming in below the Refinitiv's 9.25 billion yuan estimate. Revenue contracted 14.8% YoY. The adjusted loss per share amounted to 45 cents or 3.28 yuan, also more than the expected 2.45 yuan.

As for the gross margin, it dropped from last year's quarter (16.7%) to 6.2% but rose from the previous, first quarter's 5.1%. During the quarter, Nio delivered 23,520 vehicles.

The Refreshed Lineup Is Already Bringing Results

In May, the China-based EV maker launched a revamped version of its ES6 crossover on its new "NT2.0" platform and in June, it followed up with a station wagon version of its ET5 sedan, boosting deliveries to 20,462 vehicles in July alone. Therefore, CEO William Bin Li is expecting a solid growth in deliveries during the remaining half of the year.

An Improved Balance Sheet

At the end of June, Nio had $4.3 billion in cash and equivalents but on July 12th, it closed a $738.5 million equity investment from a fund controlled by the government of Abu Dhabi.

A Brighter Third Quarter Outlook

Nio guided for deliveries between 55,000 and 57,000 which is a significant improvement of approximately 74% to 80% from 2022's comparable quarter when it delivered 31,607 EVs. Nio guided for revenue in the range between $2.61 billion and $2.69 billion, which is also a significant YoY increase from 2022's comparable quarter when revenue amounted to $1.83 billion.

Meanwhile, XPeng Is Trying To Make A Turnaround With Strategic Partnerships

Meanwhile, XPeng also posted a wider-than-expected loss on Friday as it succumbed to the price war injuries that Tesla inflicted, along with a solid delivery outlook. With its recent partnership with Volkswagen AG (VWAGY  ), XPeng is hoping to reach operating profitability in 2025.

Volkswagen will be using technologies and platforms from XPeng, in its hope to regain its China automotive crown but the price war that Tesla again rekindled last week make that goal even harder to achieve. Together, XPeng and Volkswagen will be making two mid-sized EVs under the Volkswagen brand that are due for launch in 2026. Yesterday, XPeng revealed it has signed a deal to with mobility and ride-sharing giant DiDi Global Inc (DIDIY  ) to buy its smart EV development unit n an exchange of shares worth $744 million. With Didi's know-how and assets, XPeng plans to develop a mass market EV brand, with the EV planned for launch as early as next year.

DISCLAIMER: This content is for informational purposes only. It is not intended as investing advice.