Nio Inc., the Chinese electric vehicle (EV) manufacturer, has seen its stock drop following the release of its third-quarter financial results, which fell short of market expectations. The company reported a wider-than-expected net loss and revenue that missed analysts' estimates, as it continues to navigate a challenging pricing environment in China's competitive EV market.

In the third quarter, Nio's adjusted net loss widened to 5.14 billion yuan ($710 million), surpassing the consensus estimate of a 4.75 billion yuan loss. Revenue for the quarter rose to 18.7 billion yuan ($2.6 billion), but this was still below the expected 19.14 billion yuan. The company's gross margin improved to 10.7% from 8.0% a year earlier, with vehicle margins climbing to 13.1% from 11.0%, attributed to lower material costs per unit despite a decline in average selling prices.

Nio delivered 61,855 vehicles in the third quarter, marking a 12% increase from the same period last year. However, vehicle revenue dropped by about 4% year-over-year, highlighting the impact of the ongoing price war among Chinese automakers. This competitive environment has forced many manufacturers, including Nio, to cut prices to maintain market share, which has adversely affected profitability.

Looking ahead, Nio has projected fourth-quarter vehicle deliveries to be between 72,000 and 75,000, representing a 44% to 50% increase year-over-year. The company expects its revenue to rise to between 19.68 billion yuan and 20.38 billion yuan, which is still below Wall Street's expectations of nearly 3.2 billion yuan.

The broader market reaction to Nio's results was mixed. While Nio's stock fell by 0.8% in early trading, other major players in the EV market, such as Tesla, saw their shares rise despite the challenging conditions in China. Tesla's stock increased by 2.1% on the day Nio reported its earnings, indicating that the market's focus may be shifting towards other factors influencing the EV sector.

Nio's performance underscores the difficulties faced by Chinese EV manufacturers in a highly competitive market, where aggressive pricing strategies are necessary to drive sales but can significantly impact financial results.