NIO's First Quarterly Profit

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Reporter Wang Xiaowei

On March 11, NIO Founder, Chairman, and CEO Li Bin participated in a group interview with media including Securities Times. The interview lasted over three hours, and Li Bin postponed an internal meeting specifically for this.

Laughter occasionally erupted during the interview. Just the day before, NIO became the first listed automaker in China to release its Q4 2025 and full-year financial reports, achieving a quarterly operating profit of 1.25 billion yuan under Non-GAAP accounting standards for the first time. Li Bin, once called “the most miserable person in 2019,” has now led NIO out of its loss cycle.

What does this quarterly profit mean for NIO, which is listed in three regions? How is it achieving “self-sustaining growth” under a “heavy asset” model? How will NIO respond to the automotive market pressures in Q1 2026? What new strategies will emerge in the coming years? Li Bin answered these questions one by one during the interview.

Turning inward: “A Million-Fold Cost Thinking”

From the data, NIO’s profitability in Q4 last year seemed natural: deliveries reached 124,800 units, up 71.7% year-over-year; revenue hit 34.65 billion yuan, a record high; gross margin on vehicles rose to 18.1%, the highest since 2022. However, Li Bin believes that the real change in financial figures is not just sales growth, but shifts in product structure and cost logic.

The all-new ES8 became NIO’s “profit cow” in last quarter’s financial report. Its per-vehicle gross profit margin approached 25%, with nearly 39,700 units delivered in the quarter. Its appeal in the 400,000+ yuan market allowed NIO to increase total gross profit without relying on price cuts.

Li Bin sees a “death valley effect” in new cars—long-term hot sales are a thing of the past. Instead, pulse marketing features dominate, with sales often dropping sharply after launch. This raises the bar for sustained success in automakers. “NIO needs a sufficiently deep order pool to delay sales decline, while using systemic capabilities to ensure continuity.”

On the other side of profitability is cost control. NIO’s R&D expenses in Q4 last year were 2.026 billion yuan, down 44.3% year-over-year; sales and administrative expenses totaled 3.54 billion yuan, down 27.5%. The “Basic Operating Unit” mechanism implemented over the past year improved R&D efficiency, which was reflected in the last quarter’s financials.

Li Bin shared a detail during the meeting: for a certain R&D project, industry practice required an investment of 30 million yuan; the team initially requested 20 million yuan, but after his personal intervention, the goal was achieved with only 2 million yuan. He urged each operating unit to think with a “million-fold cost mindset”—any savings multiplied by the expected scale of one million vehicles can influence decisions. “Now, this mindset has shifted from a slogan to muscle memory.”

Denying the “Heavy Asset Model”: Battery Assets as “Mobile Mines”

Li Bin believes that besides net profit, two other points in the financial report indicate a qualitative change in NIO’s profitability.

First is breakthroughs in non-vehicle businesses. By 2025, NIO’s “services and community-related business” revenue surpassed 10 billion yuan for the first time, accounting for 12% of total revenue, and this segment has become profitable for the full year.

Li Bin sees this as a closed-loop commercial model based on vehicle ownership—after surpassing one million cumulative sales, derivative businesses like after-sales, NIO Life, and financial services begin to generate scale effects. This means NIO is no longer just a car seller but is starting to extract ongoing value throughout the user lifecycle.

Second is the business potential of battery assets and the vehicle-battery separation model. Previously, NIO Holdings, Hubei Ketu, CATL, and others invested in NioEnergy, which completed the world’s first green REITs issuance for power batteries. Financial institutions, being the most professional and thorough in risk assessment, have shown deep cooperation and recognition of NioEnergy, confirming the reasonableness and sustainability of the vehicle-battery separation model.

Li Bin mentioned that under this model, batteries are long-term assets held by the company. This incentivizes the company to develop long-life batteries, making battery swapping a system that benefits users, the company, and society. Additionally, batteries contain valuable metals like nickel and cobalt; if metal prices rise later, batteries can appreciate in value, increasing recycling returns. Thus, battery assets are essentially a “mobile mine” for the enterprise.

Similarly, the chip business is also noteworthy. Despite previous continuous losses, market voices questioned NIO’s in-house chip development as “overestimating capabilities.” However, in early 2026, chip subsidiary Shenji completed its first round of financing exceeding 2.2 billion yuan, with a post-investment valuation approaching 10 billion yuan. Once criticized as “heavy assets,” these are now becoming “hard assets.”

When asked by Securities Times about the “heavy asset model,” Li Bin explicitly denied that NIO is a “heavy asset” company. “Although the market thinks NIO’s battery swap investments are large, we are relatively lightweight.” He explained that most of their office buildings are leased, and for new businesses like robotics, which many automakers compete in, NIO remains cautious. “NIO accounts for only 1.5% of China’s auto sales, and there is still significant room for growth in our core business. We prefer to focus on making good cars.”

Sustainability Test: Increasing Competition

Compared to quarterly profits, sustainability is the real test.

This year, the external environment has become more complex. Rising costs of storage chips, fluctuations in copper and aluminum prices, and increased per-vehicle costs by 6,000 to 10,000 yuan have added pressure. Li Bin also admitted that there are situations where even money cannot buy memory chips.

Meanwhile, the implementation of BYD’s fast-charging technology has prompted a reassessment of the battery swap route. Li Bin responded: “Fast charging and swapping are not contradictory. NIO offers both; battery swapping addresses the systemic issue of different battery lifespans.”

NIO plans to launch the ES9, Leado L80, and a large five-seat SUV based on the ES8 platform in 2026, continuing to bet on the high-margin large vehicle market. However, this segment is becoming crowded—Li Auto and Wenjie are also targeting similar price ranges, and more players are entering the pure electric large vehicle market. The road ahead for NIO remains challenging.

“After emerging from the loss tunnel, the road is not smooth—price wars could reignite at any time, AI competitions are burning money, and supply chain fluctuations never stop. But at least it shows we have the ability to complete the first mile on a muddy road. The next step is whether we can turn ‘survival ability’ into a more durable and stable system.” Li Bin said.

Along with the financial report, a long-term equity incentive plan for Li Bin was announced: 248 million restricted shares will vest in ten tranches, linked to the company’s market value and net profit—market cap must sequentially reach $30 billion to $120 billion, and cumulative net profit must reach $1.5 billion to $6 billion.

“NIO’s first quarterly profit is less about reassuring the capital market and more about reassuring customers.” Compared to market valuation, Li Bin clearly values the market more: “Previously, when users recommended others buy NIO cars, one concern was that NIO might lose money. Our core market is China, and we cannot let users have that worry.”

The Q4 profit last year was a victory in financial performance. The longer-term test has just begun.