Executive Summary / Key Takeaways

• Strong Domestic Rebound & Strategic Product Mix: NIU Technologies is demonstrating a robust turnaround, particularly in its China market, driven by a strategic shift towards high-end electric motorcycles and product portfolio optimization, leading to significant volume and revenue growth and improved domestic gross margins.
• Technological Edge in Urban Mobility: The company maintains a competitive advantage through continuous investment in smart technology and safety features, including dual-channel ABS and AI-driven assistance, enhancing user experience and solidifying its premium brand positioning.
• International Recovery and Direct Distribution Success: While facing headwinds from U.S. tariffs and European competition in micromobility, NIU's overseas electric two-wheeler segment is experiencing hyper-growth, propelled by a successful direct distribution model and strategic supply chain adjustments.
• Path to Profitability and Expansion: Management projects overall company profitability for 2025, with Q2 2025 marking a net profit turnaround, supported by aggressive channel expansion in China and a focus on margin recovery in international markets.
• Regulatory Adaptation and Market Opportunity: NIU is proactively adapting to new Chinese electric bicycle standards, which, combined with government trade-in subsidies, presents a potential demand surge and further growth opportunities in its core market.

The Resurgence of Smart Urban Mobility

Niu Technologies, established in 2014, has emerged as a prominent provider of smart urban mobility solutions, encompassing electric scooters, motorcycles, mopeds, and bicycles. The company's core mission is to redefine urban commuting through innovative design, advanced technology, and a focus on user experience. Operating primarily in China and expanding its footprint globally, NIU's strategy revolves around a dual-market approach, tailoring its product offerings and distribution models to meet diverse regional demands. This strategic focus has been instrumental in shaping its current market position, particularly as it navigates a dynamic competitive landscape and evolving regulatory environments.

NIU's foundational strength lies in its differentiated technology, which is deeply integrated across its product lines. The company consistently invests in smart technology and powertrain systems, aiming for a seamless driving experience through features like Smart Control Assistance and AI Smart Ecosystems. A significant technological differentiator is the adoption of dual-channel ABS (Anti-lock Braking System), which NIU pioneered in electric bicycles in 2024 with its NXT model. After a year of development, this crucial safety feature is now incorporated into approximately one-third of NIU's electric bicycle models, covering mid- to high-end series. This provides a tangible safety benefit, enhancing rider confidence and setting a new benchmark in the electric bicycle market.

Further enhancing its technological moat, NIU integrates features such as full-color TFT displays with screen mirror navigation, millimeter-wave radar for collision detection, and adaptive traction control in its premium models like the NX and NXT series. The NX motorcycle, for instance, is the first electric two-wheeler in China to earn a 5-star fire safety certification from the China Merchant Vehicle Research Institute, underscoring NIU's commitment to safety and performance. Recent innovations in Q2 2025 include AI Smart Control Assistance features like dual-way throttle and downhill assist, which leverage onboard sensors and gyroscopes to provide effortless control and convenience for consumers. These technological advancements contribute directly to NIU's competitive edge, allowing for higher average selling prices (ASPs), improved gross margins, and a solidified premium market positioning against rivals.

In the broader electric vehicle (EV) ecosystem, NIU operates alongside larger EV manufacturers like NIO (NIO), XPeng (XPEV), Li Auto (LI), and Tesla , though its direct competition is primarily within the light electric mobility segment. While companies like NIO and XPeng focus on premium, full-sized EVs with advanced autonomous driving capabilities, NIU carves out its niche by offering accessible, connected, and urban-focused solutions. NIU's app ecosystem, providing features like repair requests and theft reporting, enhances customer loyalty and generates recurring revenue from services and accessories, a strategic advantage in its segment. This integrated approach allows NIU to compete effectively by offering a comprehensive digital service that enhances the user experience, potentially leading to improved pricing power in urban segments.

Strategic Momentum in China

NIU's performance in the China market has been a significant driver of its recent resurgence. In Q2 2025, China sales volume surged by 54% year-over-year to 318,000 units, building on a 66% year-over-year increase in Q1 2025. This strong volume growth translated into a 45% year-over-year increase in China scooter revenue in Q2 2025, surpassing Q1's revenue growth rate by 6 percentage points. The company's strategic product portfolio optimization played a crucial role, with the ASP in Q2 2025 increasing by 11% quarter-over-quarter, returning close to the 2024 annual level. This recovery followed a Q1 2025 dip in ASP due to the introduction of entry-level MT and MMT models.

The company's product development efforts in the first half of 2025 heavily focused on strengthening its electric motorcycle lineup. New models like the NX Pro, NXL, NL, and FX Pro, priced between RMB 4,000 and over RMB 10,000, are equipped with advanced intelligent features and accounted for 12% of total sales volume in Q2 2025. The subsequent launch of the entry-level NX smart e-motorcycle in July further diversified its offerings, targeting young urban riders with a compact design, 100-kilometer range, and intelligent features. Electric motorcycle sales currently represent less than 20% of total volume, indicating substantial growth potential within this segment.

Channel expansion remains a cornerstone of NIU's domestic strategy. In Q2 2025, the company added a net of 185 new stores, with 50% of these additions in Tier 3 and Tier 4 cities, bringing the year-to-date net additions to 569 stores. NIU aims to add over 1,000 stores for the entire year 2025, with management noting a long runway for expansion, estimating a ceiling of 8,000 to 9,000 stores in China. This aggressive expansion has not diluted per-store sales, which have seen a slight increase of 7% to 8%. Furthermore, NIU has significantly strengthened its online presence, managing 11 official branded accounts, 48 localized accounts, and nearly 800 store accounts. These efforts generated about 20,000 live broadcasts, 620 million views, and contributed 250,000 units in sales in Q2 2025, representing 77% of total sales volume.

The upcoming implementation of new national standards for electric bicycles in China, effective September 1, 2025, presents both a challenge and an opportunity. While manufacturers must stop shipping old standard products by August 31, retailers have until November 30 to sell existing stock. NIU is actively developing new product lines and modifying existing ones to comply, anticipating a smooth transition and a potential temporary demand surge in Q4 2025 as consumers purchase old-standard products. This regulatory shift, coupled with government subsidies for trade-in programs, is expected to further boost domestic demand.

Navigating International Headwinds and Seizing Opportunities

The international market presents a more complex picture for NIU, characterized by both significant challenges and emerging opportunities. In Q2 2025, overseas sales volume declined by 35% year-over-year to 31,000 units, primarily due to the impact of U.S. tariffs and intensifying competition in the European micromobility segment. Despite the volume decline, overseas scooter revenues decreased by only 20% year-over-year, as higher-ASP electric two-wheeler products began to contribute more to sales.

A key strategic initiative in overseas markets is the transition to a direct distribution model for electric two-wheelers (mopeds and motorcycles) in core markets like Germany and Italy. This strategy is yielding tangible results, with electric two-wheeler sales increasing more than fourfold in Q2 2025 compared to the same period last year. NIU has successfully secured a top market share position in Germany and Italy for registered vehicles, outperforming competitors with a faster growth rate. The direct distribution retail network expanded from 181 to 244 stores in Q2 2025, tripling the number of stores from the prior year and aligning with the company's target of 250 stores. Management anticipates a continued growth trend in this segment, aiming to return to peak levels seen in 2020 or 2021, and projects exponential sales growth of 3x to 5x for electric two-wheelers in 2025.

Conversely, the micromobility segment (kick-scooters and e-bikes) faced significant headwinds. Sales declined by 41% year-over-year in Q2 2025, largely due to the impact of U.S. tariffs and aggressive price competition in Europe. U.S. sales specifically saw a 17% decline in Q2 2025, partly because retail prices were not adjusted to reflect recent tariff changes, leading NIU to proactively reduce selling volume to avoid channel overstocking. Customer preferences in the U.S. are also shifting towards lower-to-mid-priced scooters, which NIU plans to address with the launch of its entry-level K90 model in Q4 2025. The Asian market, however, emerged as a bright spot, delivering healthy growth with a 21% year-over-year increase.

The U.S. tariffs, which increased from 0% to 25% on Chinese-exported kick-scooters in June 2024, significantly impacted margins, resulting in negative gross margins for products shipped from China to the U.S. for a large part of 2024. To mitigate this, NIU initiated production of U.S. version kick-scooters in Southeast Asia in the second half of 2024, with the first units shipped in January 2025, taking advantage of a 10% tariff bundle. Management expects kick-scooters to return to profitability in 2025 as tariffs are finalized and price increases are negotiated with retailers.

Financial Performance and Outlook

NIU Technologies reported a total revenue of RMB 1.26 billion in Q2 2025, representing a 34% year-over-year growth. This strong revenue performance was accompanied by a significant improvement in gross margin, which reached 20.1% in Q2 2025, up 3.1 percentage points year-over-year and 2.8 percentage points quarter-over-quarter. This positive outcome was primarily attributed to product portfolio optimization and cost reduction initiatives, particularly the platformization of products and components. The domestic market's gross margin, in particular, improved to over 21% in Q2 2025, a strong figure for the past six quarters. However, overseas margins reduced the overall gross margin by 2 percentage points due to changes in kick-scooter product mix, U.S. tariffs, and aged inventory write-downs.

For the first time in recent quarters, NIU achieved a net profit of RMB 5.9 million in Q2 2025, a substantial turnaround from a net loss of RMB 25 million in the same period last year. This marks a critical milestone in the company's path to profitability.

Operating expenses for Q2 2025 increased by 38% year-over-year to RMB 265 million, with selling and marketing expenses rising due to increased spending on online shopping festivals and marketing events in China. R&D expenses also increased to RMB 44 million, reflecting continued investment in technology innovation.

From a liquidity standpoint, NIU ended Q2 2025 with RMB 1.4 billion in cash, restricted cash, term deposits, and short-term investments, an increase from RMB 1.1 billion at the end of 2024. The company generated a robust operating cash inflow of RMB 519 million in Q2 2025. Capital expenditures amounted to RMB 32 million, primarily driven by new store openings and module costs in China. Management expects the cash position to grow from Q2 2025 onwards, anticipating a higher cash balance at the end of 2025 compared to 2024, without expecting large capital expenditures.

Looking ahead, NIU's management is optimistic about the second half of 2025. The company expects Q3 2025 revenue to be in the range of RMB 1.4 billion to RMB 1.6 billion, representing a significant 40% to 60% year-over-year increase. For the full year 2025, NIU maintains its sales volume guidance of 1.3 million to 1.6 million units, a 30% to 50% year-over-year growth. Management is confident in maintaining a healthy gross margin and stable ASP throughout the second half of the year, with overall profitability expected for the entire listing company in 2025. The gross margin is projected to recover in Q4 2024 and continue to rise in 2025, driven by cost reduction initiatives, an improved product mix, and the recovery of international gross margins as Southeast Asia manufacturing for kick-scooters becomes fully operational.

Competitive Positioning and Risks

NIU operates in a competitive landscape with both direct and indirect rivals. While it faces intense price competition in the European micromobility market and challenges from U.S. tariffs, its direct distribution model for electric two-wheelers has allowed it to secure a top market share in Germany and Italy, growing faster than competitors in those markets. Compared to domestic rivals like Luyuan and Ninebot, NIU trades at a price-to-sales (P/S) ratio of 0.70, which is higher than Luyuan's 0.52 and Ninebot's 0.31, suggesting a relatively higher valuation by investors, though the sector generally appears underappreciated.

NIU's competitive advantages, or moats, include its strong brand recognition as a leading global brand in premium smart electric two-wheelers, its proprietary app technology, and its expanding omnichannel distribution network. The integrated app ecosystem, offering services like repair requests and smart diagnostics, fosters customer loyalty and provides recurring revenue opportunities. The company's focus on product adaptability and innovation for lighter vehicles also gives it an edge in urban commuting solutions.

However, NIU faces several vulnerabilities. Supply chain dependencies, particularly for components and raw materials, could impact costs and product availability. The company's market concentration in China, while a source of strength, also exposes it to domestic regulatory changes and market dynamics. Furthermore, while NIU is strong in its niche, it lags in the overall scale and technological sophistication of advanced features compared to broader EV leaders like Tesla (TSLA), which could affect its long-term market share in highly innovative segments.

The primary risks to NIU's investment thesis include the ongoing impact of U.S. tariffs on micromobility products, which have historically led to negative gross margins for products shipped from China. While the company is mitigating this through Southeast Asia manufacturing and price negotiations, the potential for further tariff increases (from 25% to 45%) remains a concern. Intensified price competition in key European markets also continues to pressure sales performance in the micromobility segment. Additionally, while the new national standard for electric bicycles in China is expected to be a smooth transition, any unforeseen disruptions in product compliance or consumer adoption could impact domestic sales.

Conclusion

NIU Technologies is demonstrating a compelling turnaround story, marked by a strategic pivot towards higher-value electric motorcycles in China and a focused recovery in its international operations. The company's commitment to technological innovation, particularly in smart features and safety, underpins its premium brand positioning and provides a distinct competitive advantage in the urban mobility sector. Despite facing challenges from U.S. tariffs and intense competition in certain overseas segments, NIU's proactive strategies, including direct distribution models and supply chain optimization, are yielding tangible results.

With a clear path to profitability projected for 2025, robust revenue growth, and aggressive channel expansion, NIU is well-positioned to capitalize on the increasing global demand for electric two-wheelers. Investors should closely monitor the continued execution of its product portfolio optimization, the successful integration of new technologies, and the effective management of international market dynamics, particularly the impact of tariffs and competitive pressures. NIU's ability to leverage its technological leadership and expand its market reach will be critical in sustaining its growth trajectory and enhancing shareholder value in the evolving landscape of smart urban mobility.