Nio AI and Energy Business Undervalued, William Li Says

William Li Says Nio Remains Undervalued

Nio Inc founder, chairman and CEO William Li said the market undervalues the company's AI and energy businesses because investors have not yet fully recognized the broader scope of its technology and operations. Li made the comments Friday during a media briefing following Nio's second-quarter results, according to local media outlet Sina Tech. The company typically holds small-scale media briefings after releasing financial results, and the latest discussion focused on valuation, profitability, technology, energy infrastructure and the quality of Nio's growth. Li argued that Nio should not be viewed solely through the traditional lens of an electric vehicle manufacturer because its technology, AI capabilities, energy operations and services businesses also contribute to its overall value.

Market Valuation Remains Far Below Nio's 2021 Peak

Nio's market capitalization was once substantially higher in 2021, but Li said the company is healthier today than it was at that time. He noted that capital-market valuations reflect multiple factors and added that the automotive industry itself remains somewhat undervalued. Nio's US-traded American depositary receipts closed at $3.86 per share on September 3, compared with the record high of $66.99 reached on January 11, 2021. Following the release of second-quarter results before the US market opened on September 1, Nio shares declined 4.02% that day and another 4.93% the following day before closing unchanged on September 3. The share-price performance highlights the gap between Nio's current market valuation and its historical peak.

Nio Reports Higher Revenue and Continued Operating Profitability

Nio reported second-quarter revenue of 32.14 billion yuan ($4.74 billion), representing a 69.1% year-over-year increase. The company also recorded adjusted profit from operations for a third consecutive quarter, with adjusted operating profit reaching 206.9 million yuan, approximately 3.1 times the first-quarter level. However, the company continued to report a GAAP net loss, which widened 59% sequentially to 528 million yuan. The contrasting results illustrate the company's improving operating performance alongside continued accounting losses. Li emphasized that investors should assess growth through revenue, gross profit and operating profit rather than relying only on vehicle sales, reflecting Nio's broader focus on improving earnings quality and financial performance.

Technology and AI Are Central to Nio's Valuation Argument

Li identified several areas that he believes the market continues to undervalue, including Nio's full-stack technology, AI capabilities and brand assets. The company's technology portfolio extends beyond vehicle hardware into semiconductor development and software-related capabilities. GeniTech Co Ltd, also known as Shenji, is increasingly relevant to that strategy because its internal research and development investments are beginning to create potential external revenue opportunities. The company's NX9031X chips have been deployed in vehicles from Nio Inc and Onvo, with cumulative shipments exceeding 300,000 units. GeniTech also began licensing technologies to a third party in late 2025, creating another potential commercial pathway for technology developed within Nio's broader organization.

GeniTech Could Expand Nio's AI Technology Investment Case

Morgan Stanley said in a July research note that GeniTech was shifting Nio's investment case from that of a capital-intensive electric vehicle maker toward a vertically integrated AI chip platform. That assessment reflects the potential significance of semiconductor capabilities within Nio's technology strategy. The deployment of NX9031X chips across Nio and Onvo vehicles provides an existing vehicle-level application, while third-party technology licensing creates the possibility of revenue beyond Nio's own vehicle production. Li's comments reinforce the argument that Nio's technology assets should be evaluated alongside its automotive business rather than treated solely as supporting components. At the same time, the company must demonstrate that these investments can translate into sustainable commercial and operating results.

Nio's Energy Business Adds Another Potential Value Driver

Nio's energy business is another area Li believes investors continue to underestimate. As of September 4, China, the company operated 4,065 battery swap stations and had completed more than 123 million battery swaps. Its first fifth-generation battery swap stations have begun supporting all three of its brands: Nio, Onvo and Firefly. Li said the market continues to underestimate the strategic value and earnings potential of the energy business. The scale of the battery-swapping network gives Nio an operating infrastructure extending beyond vehicle sales, while the ability to support multiple brands could increase utilization of the network as the company's vehicle portfolio expands. Li views this infrastructure as an important component of Nio's broader business model.

AI Investment Is Reshaping the Automotive Industry

Li said the current AI investment boom is affecting the automotive industry across three major areas: supply chains, talent and capital. Growing demand for computing power has intensified shortages of certain key materials, while embodied-intelligence startups continue to attract technical talent. At the same time, investor attention and capital are increasingly moving toward AI-focused companies. These trends create both opportunities and competitive pressures for automakers developing AI capabilities. Nio's own investments in chips and AI therefore exist within a broader industry transition in which computing infrastructure, specialized engineering talent and access to capital are becoming increasingly important. Li's argument is that investors have not yet fully appreciated the breadth of Nio's participation in these areas.

Vehicle Sales Alone Do Not Define Growth Quality

Li also argued against using vehicle sales alone as the primary measure of Nio's growth quality. He said investors should consider revenue, gross profit and operating profit when assessing the company's performance. Nio's average vehicle transaction price reached 406,000 yuan in the second quarter and increased further to 434,600 yuan in July. Li said the July figure had surpassed the transaction prices of Mercedes-Benz, BMW and Audi. Nio's vehicle margin stood at 18.5% in the second quarter, compared with 18.8% in the first quarter, indicating that the company maintained broadly stable vehicle profitability. Li also said Nio had not traded price for volume during the year, emphasizing the company's focus on premium positioning rather than pursuing sales growth through aggressive price reductions.

Nio Focuses on Earnings Quality and the Premium Market

Since 2025, EBIT, or Earnings Before Interest and Taxes, has been Nio's most important internal operating metric, reflecting the company's greater emphasis on earnings quality. Li said the company will continue concentrating its resources on China's premium automotive market rather than rushing to develop a second or third growth engine. This strategy keeps the company's resources focused on its established positioning while management works to improve operational performance. Li again said Onvo will launch a strategic new model next year, although no details have been disclosed. The brand will continue targeting high-quality family vehicles instead of pursuing particularly low prices. The approach indicates that Nio intends to compete through product positioning, technology and operating performance rather than relying primarily on volume or price reductions.

Nio Must Prove Broader Value Through Operating Results

Li said the timing of a potential capital-market revaluation is not something Nio can determine itself. Instead, the company can continue improving its operations and use financial results to demonstrate the broader value of its businesses. His comments point to a central challenge for Nio: convincing investors that its AI capabilities, semiconductor activities, energy infrastructure, services and premium vehicle operations can collectively generate sustainable value. The company generated more than 10 billion yuan in revenue from its services and community business last year, and Li said that business continued to grow and remain profitable during both the first and second quarters. For investors, the extent to which these businesses translate into stronger earnings and cash-generating capacity will remain critical to Nio's future valuation.

Frequently Asked Questions

Why does William Li believe Nio is undervalued?
William Li believes Nio is undervalued because investors have not fully recognized the company's AI capabilities, semiconductor technology, energy infrastructure, brand assets, services and community business alongside its vehicle operations. Nio's second-quarter revenue increased 69.1% year over year to 32.14 billion yuan, while adjusted operating profit remained positive for a third consecutive quarter. Li also highlighted the company's premium vehicle economics, battery-swapping network and growing technology commercialization opportunities. He said Nio ultimately must demonstrate the broader value of these businesses through continued operational improvement and stronger financial results.