Nio (NYSE:NIO) stock is in the green after the Chinese electric vehicle (EV) company reported its third-quarter earnings. During the quarter, revenue tallied in at 19.06 billion Chinese yuan (or $2.7 billion), up by 46.6% year-over-year (YOY) but falling short of the analyst estimate for 19.4 billion yuan. Meanwhile, EPS, which came in at a loss of 2.67 yuan, came ahead of the analyst expectation for a loss of 2.91 yuan. The exchange rate for one U.S. dollar currently equates to 7.14 yuan.

The rise in NIO stock may be attributed to a quarterly boost in profitability and future plans to increase profitability and reduce costs. Net loss was 4.55 billion yuan, marking a 24.8% improvement quarter-over-quarter. Still, the net loss increased by 10.8% YOY.

“We have recently completed a thorough review of the Company’s two-year operating plans to determine our objectives, priorities, and action plans,” said CEO and Chairman William Bin Li. “Meanwhile, we have identified opportunities to optimize our organization, reduce costs and enhance efficiency.”

NIO Stock Rises on Third-Quarter Earnings

Of the 19.06 billion yuan in revenue, vehicle sales accounted for 17.40 billion yuan, up by 45.9% YOY. Other sales came to 1.65 billion yuan, up by 55%. This category includes accessories, used vehicle sales and power solutions.

Unfortunately, Nio’s margins took a hit during the quarter, as cost of sales was 17.54 billion yuan, up by 55.7%. This resulted in gross profit declining by 12.2% to 1.52 billion yuan and gross margin sinking to 8% from 13.3%. Vehicle margin was 11%, down from 16.4% a year ago.

“The decrease in vehicle margin from the third quarter of 2022 was mainly attributable to changes in product mix, partially offset by the decreased battery cost per unit,” said Nio.

For guidance, Nio expects to deliver between 47,000 and 49,000 vehicles during the fourth quarter, which would mark a YOY improvement between 17.3% and 22.3%. That signals a stark decline from its Q3 deliveries of 55,432 vehicles, which rose by 75.4%. Meanwhile, revenue is expected to be between 16.07 billion yuan and 16.70 billion yuan, implying growth between just 0.1% and 4%.

On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.