The auto industry in China is recovering after being hit by the impact of the coronavirus pandemic and Nio forecast current-quarter sales would be above expectations.

It said it delivered a total of 3,533 of its ES8 and ES6 vehicles in July, a jump of about 322% year-on-year.

Nio now plans to increase capacity at the JAC plant in Hefei, eastern China, where it makes its sport-utility vehicles (SUVs).

"Without significant investment, we should be able to increase the production capacity of our current plant to 150,000 units a year under two shifts," Chief Executive Officer William Li told analysts on Nio's earnings call.

Nio aims to raise its vehicle manufacturing capacity to 4,500 to 5,000 units a month by the end of August or September, Li said, without giving current capacity figures.

He also said Nio's next model after three electric SUV models will be a sedan. He did not elaborate.

The automaker has not made a gross profit since the fourth quarter of 2018 but its U.S.-listed shares have surged nearly fourfold this year as enthusiasm builds for EVs.

Shares of other EV manufacturers such as Tesla Inc have also surged in recent months and automakers are looking to the markets for funds.

Nio secured a 7 billion yuan ($989 million) investment in April from state-controlled Chinese investors.

Shares in the Chinese company initially jumped by more than 8% when the market opened on Tuesday, before retreating and were last down around 4%.

The company forecast revenue of between 4.05 billion yuan and 4.21 billion yuan for the third quarter. Analysts expect revenue of 3.53 billion yuan, according to IBES data from Refinitiv.

Nio said it also expects vehicle deliveries to be between 11,000 and 11,500 units in the third quarter, up from 10,331 in the second quarter.

Revenue more than doubled to 3.72 billion yuan in the second quarter that ended on June 30, beating estimates of 3.51 billion yuan.

Excluding items, Nio reported a loss of 1.08 yuan per American depository share. Analysts had expected a loss of 1.84 yuan per ADS.

($1 = 6.9394 Chinese yuan renminbi)

(Reporting by Akanksha Rana in Bengaluru and Yilei Sun in Beijing; Editing by Shailesh Kuber and Susan Fenton)