Nio Inc. (NYSE:NIO) shares slipped in premarket trading Thursday after its founder and chief executive warned of looming headwinds for China’s electric vehicle industry.
Speaking at a media roundtable in Shanghai on Sept. 3, William Li cautioned that the first quarter of 2026 could bring slower growth as tax incentives begin to taper.
Li explained that the expiration of a key phase of China’s vehicle purchase tax relief would pull demand into the final months of 2025, leaving fewer buyers early next year.
He stressed that this impact will not be isolated to one brand but will weigh on the entire EV sector, according to CnEV Post reports, citing local media.
According to Benzinga Pro, NIO stock has gained over 49% in the past year. Investors can gain exposure to the stock via Invesco Golden Dragon China ETF (NASDAQ:PGJ).
Li said the fading policy support will pressure automakers across the board. He noted that if the industry can sustain even half of the fourth-quarter sales pace during the first three months of 2026, it should be considered a positive outcome.
According to Li, preserving some order flow into the new year would help soften the blow, the report adds.
Despite the near-term hurdles, Nio remains focused on delivering its first non-GAAP profitable quarter by the end of 2025.
Historically, China’s auto sector reaches its peak sales volume in the fourth quarter, providing a crucial window for the company to achieve this target, per CnEV Post.
China extended its new energy vehicle (NEV) tax incentive in mid-2023, stretching it until 2027 with gradually reduced benefits.
Through 2025, buyers can receive exemptions capped at 30,000 Chinese yuan ($4,200). From 2026 onward, the break will shrink to half the standard 10% rate, with a maximum discount of 15,000 yuan per vehicle.
Additional perks remain for battery swap–enabled models.
Nio offers both bundled battery purchases and its Battery-as-a-Service (BaaS) option, which allows customers to buy the vehicle body and lease the battery.
The company disclosed that in August, more than 70% of buyers of its Onvo L90 SUV chose the BaaS model.
Price Action: NIO shares are trading lower by 4.11% to $6.060 at last check Thursday.
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