GUANGZHOU, China — Nio shares rose more than 1% in after-hours trade on Wednesday after the Chinese electric carmaker posted a narrower than expected loss and a surge in revenue.

The start-up lost 0.42 yuan (US$0.07) per share in the second quarter, less than the 0.68 yuan loss expected, according to Refinitiv data. That was narrower than the 1.15 yuan loss per share recorded in the same period last year.

Meanwhile, revenue surged 127.2% year-on-year to hit 8.45 billion yuan ($1.31 billion), more than the 8.32 billion yuan analysts had estimated.

Nio forecast revenues for the third quarter to be between 8.91 billion yuan and 9.63 billion yuan, a rise of around 96.9% to 112.8% from the same quarter of 2020.

The electric carmaker said it delivered 21,896 vehicles in the second quarter, within its own previously-stated range. For the third quarter, Nio forecasts that it will deliver between 23,000 and 25,000 vehicles.

Nio and other electric carmakers are facing headwinds due to the global chip shortage which could weigh on production. In China, a resurgence of the coronavirus could potentially affect sales.

“The issue for Nio, for Tesla, for others, every car that they’re making, they’re selling. It’s really production and chip shortage, and … that’s going to be an overhang on the overall EV (electric vehicle) space,” Daniel Ives, managing director at Wedbush Securities, told CNBC’s “Squawk Box Asia” on Thursday.

William Bin Li, CEO of Nio said in a statement that while the global supply chain “still faces uncertainties.” The company has been “working closely” with its partners to “improve the overall supply chain production capacity,” he said.

Nio is facing increased competition from other electric vehicle start-ups in China including Li Auto and Xpeng as well as incumbent Tesla.

U.S.-listed Nio said it delivered 7,931 vehicles in July, less than both Li Auto and Nio.

Nio, which makes the EC6, ES6 and ES8 SUVs, is also gearing up to begin deliveries of its first sedan, the ET7, next year.

“As the EV adoption begins to reach a tipping point worldwide, we believe it is imperative to speed up the launch of new products to provide more premium smart EV offerings with superior holistic services to the growing user base in the global market,” Li said.

The company aims to deliver three new products next year, including the ET7, he added.

Nio has tried to differentiate itself from competitors through its battery swapping service. Nio users can go to special service stations to swap their depleted battery for a fully-charged one.

Ives said that is one reason why he is bullish on Nio’s stock.

“For Nio, the key for success is really going to be on the battery technology. I believe they have massive innovations on the horizon,” Ives said.

“And I think this is one that when we look out over the next year or two, beside just the stock I think goes massively higher, I think market share potentially can double.”