NIO Inc

The draft amendment to the Road Traffic Safety Law introduces for the first time a dedicated chapter with special provisions for autonomous vehicles, clarifying that when traffic violations occur while autonomous driving functions are activated, the manufacturer or importer will be responsible for handling them, and requiring that autonomous driving functions must not be falsely or exaggeratedly advertised. The draft has 9 chapters and 170 articles, and also stipulates that autonomous vehicles must pass road traffic rule compliance testing and be legally registered before hitting the road, and implements a compulsory motor vehicle traffic accident liability insurance system. Cui Dongshu, head of the Passenger Car Market Information Joint Conference of the China Automobile Dealers Association, said this legal revision clarifies primary responsibility at the legal level and resolves the long-standing pain point of liability attribution. Market reaction was mixed. Hong Kong-listed new energy vehicle makers broadly fell, with XPeng down 9.19 percent, NIO down 3.45 percent, Li Auto down 3.60 percent, and Leapmotor down 5.71 percent. Among robotaxi concept stocks, Pony AI fell 5.62 percent and WeRide fell 3.95 percent. Meanwhile, the upstream intelligent driving industry chain was relatively resilient, with Desay SV down slightly by 0.45 percent, Momenta up 5.97 percent, and Horizon Robotics up slightly by 0.53 percent.

XPeng stock sank 7% after its Q3 revenue guidance missed Wall Street consensus by roughly 15%, dragging NIO down 4% in sympathy. XPeng reported Q2 2026 revenue of RMB19.74 billion, up 8% year over year but below expectations, and guided Q3 revenue to RMB21.7 billion to RMB23.4 billion versus a RMB25.88 billion consensus. The company's IRON humanoid robotics unit raised over $900 million at a post-money valuation above $6.3 billion, the largest single-round private financing in China's embodied AI industry, with Tencent and Alibaba joining as strategic investors. Tesla slipped 2% and Lucid fell 1%, while Rivian rose 0.7% against the trend.

Japanese, Western, and Chinese automakers are facing sales headwinds in China's auto market. In the first half of 2026, Honda's China sales fell 34.6 percent year on year, Toyota Motor dropped 17.1 percent, and Nissan Motor declined 15 percent, with Japanese brands posting double-digit decreases. European players Volkswagen, Mercedes, and BMW saw drops of 20 to 30 percent, while US automaker General Motors slipped 6 percent. Chinese manufacturers also saw domestic sales fall below the previous year for the first time in two years, with EV leader BYD down 16 percent and Li Auto down 5 percent. A rapid expansion of production capacity for new energy vehicles, including EVs, has led to oversupply, pushing factory utilization rates well below the 80 percent breakeven level. The strain of overproduction is spilling over into exports, with so-called zero-kilometer used cars, where new vehicles are shipped overseas as used cars, now accounting for over 90 percent of used car exports, prompting authorities to question BYD and others. NIO CEO William Li expressed a sense of crisis, saying China's auto industry has entered its most brutal phase, as the state-led push to nurture the EV industry reaches a crossroads.

NIO founder William Li said after the launch of the ES8 five-seat large version that prices of various raw materials such as memory chips, aluminum, copper, lithium carbonate, and even plastic pellets are all rising, pushing up the cost of each ES8 by nearly 20,000 yuan. The selling price would need to increase by 30,000 yuan to maintain the original gross margin. The company is working with the supply chain to hedge part of the pressure, while NIO absorbs the rest to keep prices stable, which remains within a bearable range in the short term. Li pointed out that the technology roadmap is clearly converging on pure electric, and denying it would be self-deception. He also revealed that sales of NIO’s three brands have surpassed those of BBA, and over 68 percent of ES8 users are upgrading or switching from BBA and Porsche. Co-founder Qin Lihong said that the combined NIO, Firefly, and ONVO brand stores under the SKY format have opened more than 40 locations, with new standard stores expected to roll out intensively in the third quarter, reaching around 120 for the full year. Li also stated that NIO has not issued a statement on backing intelligent driving, but given its service standards, it will not fail to provide backing. He believes that developing an all-new model on a mature platform in 20 to 24 months is relatively reasonable.

Tesla shares fell 7% to $395.86 even after the company reported Q2 2026 deliveries of 480,126 vehicles, up 25% year over year and well above the consensus estimate near 406,600 units. The sell-off followed a 13% rally over the prior four sessions, with bears pointing to a stretched valuation at a 421x P/E ratio and the expiration of federal EV tax credits that Cox Automotive projects will cut Tesla's U.S. sales by 20%. Model 3 and Model Y accounted for 442,936 of the deliveries, while Model S, Model X, and Cybertruck combined for 8,822. Tesla's China wholesale deliveries surged 33% to 254,551, and European registrations showed strong gains, with France more than doubling in June. The energy storage segment deployed 13.5 GWh, up over 50% from Q1 2026. Nio stock slipped 2% to $4.87 despite reporting June deliveries of 40,597 vehicles, up 63% year over year, and Q2 deliveries of 107,658 units, up 49% year over year across its NIO, ONVO, and FIREFLY brands. Nio also launched presales of the All-New ES8 Five-Seat variant on June 28, but investor skepticism persists over GAAP profitability and cash burn after a full-year 2025 net loss of $2.14 billion.

NIO CEO William Li said China’s auto sector has likely moved past its golden era, with domestic car sales continuing to weaken into May even as exports held up. Li noted that the rebound in the world’s largest auto market has not materialized and that China’s automobile ownership has reached 370 million vehicles, calling it no longer a growth market but a saturated one. He stressed that NIO remains mainly focused on China, while its overseas shipments launched in 2021 through Norway remain negligible. Li added that plug-in hybrids and internal combustion vehicles remain better suited for global markets, underlining a split strategy across powertrains. NIO plans to grow spending on smart-driving computing resources fivefold this year compared to 2025, and its shares jumped 10.5% in Hong Kong trading, marking the strongest daily percentage gain since March 11.