Nio Achieves Quarterly Profit for the First Time in 2025 Q4, Li Bin's Bet "Net Profit of $6 Billion Over the Next 12 Years"

On the evening of March 10th, NIO (NIO.US) released its Q4 and full-year 2025 financial reports, delivering a key milestone in NIO’s development: achieving its first quarterly profit in Q4 2025, with an operating profit of 1.25 billion yuan and a 75.9% year-over-year revenue increase. The full year still resulted in a net loss of 14.94 billion yuan, narrowing by 39.4% year-over-year.

Facing industry challenges such as fast-charging technology disruptions and raw material price increases, NIO clarified its development direction, including continued deployment of its battery swap network and expansion of its chip business both internally and externally. It also announced an equity incentive plan for Li Bin, setting a growth tone for the new year.

First Quarterly Profit Achieved, Full-Year Loss Narrowed

In Q4 2025, NIO’s total revenue was 34.65 billion yuan, up 75.9% year-over-year and 59% quarter-over-quarter. Operating profit for Q4 2025 was 1.25 billion yuan, marking its first quarterly profit.

NIO’s vehicle gross margin in Q4 2025 was 18.1%, up 5 percentage points year-over-year and 3.4 percentage points quarter-over-quarter; other sales gross margin was 11.9%, up 10.8 percentage points year-over-year and 4.1 percentage points quarter-over-quarter; the overall gross margin was 17.5%, up 5.8 percentage points year-over-year and 3.6 percentage points quarter-over-quarter.

During the earnings call, when asked about the core reason for the 11.9% gross margin in service business in Q4 2025, CFO Qu Yu explained that the main factors were a continuous increase in user retention and operational efficiency improvements. In 2025, revenue from service and community-related businesses exceeded 10 billion yuan, and user retention is expected to continue rising in 2026, with corresponding growth in revenue and gross profit. Although 2026 will see the addition of 1,000 battery swap stations, which may cause some operational losses, these losses are expected to be fully offset by profits from the service business, maintaining a positive overall trend.

Additionally, NIO founder, chairman, and CEO Li Bin stated that NIO’s service and community business achieved profitability in 2025, and even with the addition of 1,000 swap stations in 2026, the profitability of this segment will continue to improve.

In 2025, NIO’s total annual revenue was 87.49 billion yuan, up 33.1% year-over-year. Despite achieving its first profit in Q4, the full-year net loss was 14.94 billion yuan, a 39.4% reduction from the previous year.

In terms of deliveries, NIO delivered 326,000 vehicles in 2025, a 46.9% increase year-over-year.

Strengthening the Swap Network and Advancing In-House Chip Commercialization

Recently, BYD (002594.SZ) announced breakthrough fast-charging technology, significantly reducing charging times. Meanwhile, NIO has invested heavily in building its battery swap stations. Some believe that BYD’s fast-charging tech poses a challenge to the existing swap system.

Li Bin stated during the earnings call that fast charging and swapping are not mutually exclusive. NIO has built over 28,000 supercharging and destination charging stations, making it one of the most active automakers in charging infrastructure deployment. This forms an energy supply system that is “charge, swap, and upgrade” capable, meeting various user scenarios. In the foreseeable future, fast charging speed and experience cannot match swapping. Battery swapping addresses the systemic issue of mismatched battery life, and with long-life batteries, smart charging/discharging strategies, and battery health monitoring, it can significantly improve battery safety and extend lifespan.

Furthermore, NIO plans to add 1,000 swap stations annually in 2026. Currently, there are 3,815 swap stations globally. The continued expansion of the swap network remains a core, long-term, and difficult-to-duplicate competitive advantage.

In terms of smart technology, NIO’s subsidiary Anhui Shenji Technology Co., Ltd. (referred to as “Anhui Shenji”) recently completed its first round of equity financing, raising over 2.2 billion yuan, with a post-investment valuation approaching 10 billion yuan. Its “Shenji NX9031” chips have shipped over 150,000 units.

When asked about Shenji’s mid-term strategic plans, Li Bin said that besides developing next-generation high-end chips, they will also develop mid-range chips to cover a broader customer base.

Market-wise, aside from internal use, NIO will actively expand external customers, focusing on robotaxi and embodied intelligence sectors. Several industry clients have already shown interest in Shenji chips, and external business development has made initial progress. Li Bin did not disclose specific vehicle models covered by Shenji chips but mentioned that multiple industry clients are conducting early testing and engagement.

Additionally, Anhui Shenji’s second automotive-grade 5nm process chip has been successfully taped out and is in mass production. Its performance is comparable to three Nvidia Orin X chips but at a lower cost. It is suitable not only for autonomous driving but also for embodied robots and other fields, serving as an inference chip (not for training), with broad application prospects.

Li Bin’s Bet: 2026 Challenges and Product Plans

NIO expects to deliver between 80,000 and 83,000 vehicles in Q1 2026, a year-over-year increase of 90.1%-97.2%; revenue is projected between 24.48 billion and 25.18 billion yuan, up 103.4%-109.2%.

Additionally, NIO announced a long-term “bet” agreement with Li Bin, granting him approximately 248 million restricted shares.

This restricted stock is divided into ten equal tranches, with vesting conditions tied to the company’s market capitalization and net profit targets. The plan took effect on March 6, 2026, and is valid for twelve years. Notably, these shares will only vest in batches after certain performance milestones are met, which are directly related to the company’s market value and net profit.

Specifically, when NIO’s US stock market cap exceeds $30 billion, $50 billion, $80 billion, $100 billion, and $120 billion, one-tenth of the shares will vest at each level. When net profit exceeds $1.5 billion, $2.5 billion, $4 billion, $5 billion, and $6 billion, respectively, another tenth will vest. When the market cap surpasses $120 billion and net profit exceeds $6 billion simultaneously, all remaining incentives will vest.

Industry analysts note that linking stock unlocks to market cap and net profit aims to set clear, challenging long-term goals, aligning shareholder returns with business growth and operational results. It also deeply ties CEO incentives to strategic objectives, motivating leadership to achieve sustainable profitability and value growth amid fierce market competition, ultimately maximizing long-term shareholder interests.

Product plans for 2026 include the launch of the ES9 and Leado L80 in Q2, and in Q3, a large five-seat SUV based on the ES8 platform, along with a facelift of the L60.

Due to rising AI computing demands and geopolitical influences, raw materials like chips, copper, and lithium are expected to increase in price, putting pressure on NIO’s costs and gross margins.

Qu Yu stated that NIO will not pass these costs onto consumers but will work with supply chain partners to improve efficiency and offset raw material price increases. Additionally, with five high-end large SUVs on sale in 2026, which have higher margins and better cost resilience, NIO aims to absorb some of the cost pressures and maintain reasonable gross margins throughout the year.