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Nio Inc. (NIO) shares traded higher Tuesday after the clean-energy carmaker, and key Tesla Inc (TSLA) rival posted stronger-than-expected first-quarter earnings as it managed to shift more of its ES8 even as subsidies for the flagship sedan waned.

Nio said revenue for the first three months of this year fell 52.5% from the previous quarter, but at 1.631 billion yuan ($236 million) topped Wall Street forecasts. ES8 shipments were also impressive, hitting a better-than-expected 3,989 for the quarter, with overall deliveries at 16,461 units. Nio also unveiled a 10 billion yuan investment from a joint venture with Beijing E-Town International Investment & Development Co. Ltd.

"Deliveries of the ES8 in the first quarter of 2019 exceeded the Company's expectation despite headwinds from EV subsidy reductions, slowing macro-economic conditions, increased competition, and seasonal factors around the Chinese New Year holiday period," said CFO Louis Hsieh.

"Looking ahead to the second quarter, we expect an even more challenging sales environment and anticipate overall sequential demand and deliveries to decrease, as competition continues to accelerate and the general automobile market in China remains muted," he added. "Against this backdrop, NIO is focusing on rolling out our ES6 nationwide, and at the same time, improving overall network utilization and operating efficiencies."

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Nio's American depositary receipts rose 4.7% to $4.04. The stock has declined more than 36% year to date.

The ES8 is a seven-seat SUV with a base price of 448,000 yuan, before incentives, a figure that undercuts Elon Musk's Tesla Model X by around $60,000 in the world's biggest market for electric vehicles, where more than 1.6 million units are expected to be purchased this year.

The Chinese government wants that figure to rise to 7 million units -- around a fifth of its entire market -- by 2025, and Nio is the biggest, and most well-funded, of the more than 400 startups that are looking to capture the potential $18 billion in sales that change will bring.

Tesla, for its part, is ready to price its Model 3 in the region of 300,000 to 350,000 yuan, according to a Bloomberg report published Tuesday, as it moves to build the flagship car, which generates more than a third of its revenues, at a new 'gigafactory' opening later this year in Shanghai.

Tesla shares were marked 0.5% lower by mid-morning at $189.57 each and have tumbled more than 42% since the start of the year. 

Watch: Audi, Jaguar, Ford: Here's What the Future of Electric Cars Looks Like