Nio (NYSE:NIO) reported a larger-than-expected net loss for the third quarter as declining revenue and reduced selling prices weighed on its performance in China’s fiercely competitive electric vehicle (EV) market. The company posted a net loss of 5.14 billion yuan ($710 million), compared to 4.63 billion yuan in the same period last year, missing analysts’ expectations of a 4.75 billion yuan loss.

Revenue fell by 2.1% to 18.67 billion yuan, falling short of the Street consensus estimate of 19.14 billion yuan. The decline was attributed to lower average selling prices, driven by shifts in the product lineup and intensified pricing competition among Chinese automakers aiming to capture market share.

Despite the revenue drop, Nio showed signs of improving profitability. The company’s gross margin rose to 10.7% from 8.0% a year earlier, while vehicle margins increased to 13.1% from 11.0%. These gains were attributed to lower material costs per unit, which helped offset the impact of reduced selling prices.

Looking ahead, Nio projected deliveries of 72,000 to 75,000 vehicles in the fourth quarter, representing a year-over-year growth of 44% to 50%. Revenue for the quarter was expected to range between 19.68 billion yuan and 20.38 billion yuan.