(Yicai) Dec. 6 -- Shares in Nio surged as much as 4.6 percent today after the Chinese new energy vehicle startup reported a significant narrowing of net losses in the third quarter from the previous quarter as quarterly sales reach a record high thanks to a series of price cuts.

Nio’s share price [HKG:9866] was trading up 4.2 percent at HKD58.85 (USD3.88) as of 12 noon. Earlier in the day it hit HKD59.05.

Nio’s net losses contracted 24.8 percent in the three months ended Sept. 30 from the second quarter but expanded 10.8 percent year on year to CNY4.5 billion (USD640 million), according to the Shanghai-based company’s latest earnings report. Revenue more than doubled quarter on quarter and surged 46.6 percent from a year earlier to CNY19.1 billion (USD2.7 billion).

Deliveries hit a quarterly high and more than doubled in the third quarter from the previous quarter and surged 75.4 percent year on year to 55,432 units.

The improved performance is thanks to an uptick in sales after prices were reduced. In June, Nio slashed prices across the board by CNY30,000 (USD4,206), which greatly boosted sales, driving July shipments to over 20,000 units for the first time.

Nio’s gross profit margin expanded 4.8 percentage points from the previous quarter, but slumped 5.4 percentage points from a year ago, to 11 percent.

Nio invested CNY3 billion (USD420 million) in research and development during the third quarter, according to the report. This is the fourth consecutive quarter that its spending on R&D has topped CNY3 billion, but it was 9.1 percent less than in the second quarter, largely due to additional local government support for technological innovation.

Fourth-quarter shipments and revenue will not be as high as in the third quarter, Nio said. Deliveries are likely to be between 47,000 and 49,000 autos and revenue will range from CNY16.1 billion (USD2.2 billion) to CNY16.7 billion.

Nio is also buying the two car factories that currently produce its vehicles from state-owned Anhui Jianghuai Automobile Group for CNY3.2 billion (USD440 million), excluding taxes, it said in the earnings report.

This probably means that Nio now has a license to make its own cars and will end the tie-up with Jianghuai, market insiders said.

The firm is also carrying out an internal shake-up and will reduce its headcount by around 10 percent, Chief Executive Officer Li Bin said last month. Projects that do not improve the company’s financial performance within three years will also be axed. Competition is going to get tougher in years to come and staff need to be prepared psychologically, he added.

Editors: Shi Yi, Kim Taylor