After ten years of burning money, NIO is starting to turn a profit

Author | Chai Xuchen

Editor | Zhou Zhiyu

In the ongoing multi-year淘汰赛 of new energy vehicles, NIO has always been the most debated player. Supporters believe NIO is the Chinese EV company closest to a “luxury brand”; skeptics have always focused on one question—when will it turn a profit?

On March 10, with NIO releasing its Q4 and full-year 2025 financial reports, this debate finally received a phased answer.

The financial report shows that NIO achieved an operating profit of 1.25 billion yuan in Q4 2025, marking its first quarterly profit in history. Meanwhile, the company’s cash reserves in Q4 reached 45.9 billion yuan, nearly 10 billion yuan more than the previous quarter.

This means that after nearly ten years of investment and expansion, NIO has finally crossed a key threshold. After the US stock market opened, NIO’s share price surged by over 10 percentage points.

Li Bin has publicly stated multiple times that NIO will achieve profitability in a certain quarter. Now, that promise has been fulfilled. But whether this single-quarter profit is a fleeting moment or a complete reversal of Li Bin’s business model remains to be seen; NIO’s subsequent performance will determine everything.

From “Money Burning Company” to Profit Turning Point

In recent years, the biggest question from the capital market about NIO has been: can this model achieve scaled profitability? The Q4 2025 financial report, to some extent, provides an answer.

The report shows that NIO delivered 124,807 vehicles in Q4, a year-on-year increase of 71.7%, and a quarter-on-quarter increase of 43.3%, setting a new record. At the same time, quarterly revenue reached 34.65 billion yuan, up 75.9% year-on-year.

As sales and revenue hit new highs simultaneously, profitability also improved. In Q4, the company’s gross profit margin reached 17.5%, up 5.8 percentage points year-on-year; the vehicle gross margin hit 18.1%, a three-year high.

The continuous rise in gross margin is a key reason why NIO can achieve profitability.

On the other hand, NIO’s non-vehicle business also began contributing profits. The report shows that in Q4, the gross profit margin of other sales reached 11.9%, and related businesses have been profitable for three consecutive quarters.

From a business structure perspective, NIO is gradually forming a diversified profit model of “vehicle sales + service ecosystem.” This means that services and community systems, once seen as cost centers, are gradually transforming into profit sources.

Behind the profitability is rapid scale expansion.

In 2025, NIO delivered a total of 326,028 new vehicles, a year-on-year increase of 46.9%, setting a new record. The full-year revenue reached 87.49 billion yuan, up 33.1%; at the same time, total gross profit was 11.92 billion yuan, an increase of 83.5%.

These data indicate that NIO has begun entering a scale-driven phase.

In the new energy vehicle industry, scale effects are crucial. Whether it’s R&D costs, supply chain expenses, or channel costs, only after reaching a certain sales volume can a company truly unlock profitability.

From this perspective, NIO’s quarterly profit is more like the arrival of a “scale critical point.”

And this trend continues. NIO’s guidance for Q1 2026 shows that the company expects to deliver 80,000 to 83,000 vehicles, a year-on-year increase of over 90%; revenue is expected to reach 24.48 to 25.18 billion yuan, an increase of over 100%.

If this growth pace can be sustained, NIO’s annual sales may further break through.

A New Growth Cycle

At the earnings call, Li Bin divided NIO’s development stages into three periods.

The first stage is the founding and technology accumulation phase; the second is the scale expansion phase; and with the realization of quarterly profitability, NIO has officially entered the third stage—high-quality growth.

If the past few years’ keywords for NIO were “investment,” then moving forward, the keyword may become “efficiency.”

In fact, in recent years, NIO has been conducting internal efficiency reforms, including supply chain optimization, platform-based R&D, and sales network integration. The effects of these measures are gradually reflected in financial data.

NIO CFO Qu Yu stated during the Q4 2025 and full-year earnings call that in 2026, the company will maintain quarterly R&D investments of 2 to 2.5 billion yuan, and will continue to improve R&D efficiency based on the CBU operating mechanism, avoiding ineffective investments and increasing R&D output under the same input.

At the same time, based on 2026 operational conditions and ROI mechanisms, the company will dynamically adjust its R&D pace and investments to ensure key product and core technology investments, promoting long-term competitiveness.

On the market side, the new energy vehicle industry is also changing. Li Bin said during the call that although the overall Chinese passenger car market still faces challenges in Q1, growth in pure electric models remains very strong.

Over the past year, China’s new energy vehicle market growth has been mainly driven by pure electric models. Under this trend, as a pure electric brand, NIO still has certain market space. During the performance briefing, Li Bin expressed confidence in achieving 40-50% annual sales growth.

Based on this, NIO needs to sell approximately 450,000 to 490,000 vehicles this year, averaging about 40,000 per month. In the first two months, NIO delivered nearly 48,000 vehicles, averaging about 20,000 per month, half of the monthly target. The deeper issue is the current sales structure of NIO’s models.

The ES8 was the main model delivered in the first two months, accounting for over half of total deliveries, while models like ES6 and ET5, originally tasked with volume, did not perform sufficiently during this period.

Industry insiders believe that this sales structure can boost short-term profit performance but may constrain overall sales growth in the long run. Li Bin is not worried about this.

Three-Brand Strategy Begins to Take Effect

During the earnings call, Li Bin said that this year, NIO will accelerate into more prefecture-level cities through the SKY store system, jointly operated by three brands. The core of this strategy is to share sales and service networks while maintaining brand positioning differences. This can reduce channel costs and improve sales efficiency.

On the product side, NIO will also enter a dense product cycle this year.

According to official plans, NIO, Leado, and Firefly brands will launch a total of 10 new or facelift models by 2026. Nearly a quarter of 2026 has passed, and with less than 10 months remaining, NIO is almost launching a new model every month, a “sea of cars” tactic.

This means NIO is no longer solely focused on high-end flagship models but aims to cover different price points, market segments, and user groups through intensive product launches. This strategy aims to maintain its high-end core while expanding into mass markets, achieving both sales and profit breakthroughs.

Notably, most of these products focus on large five-seat and large three-row SUVs. Li Bin believes this segment is entering a “golden era” for pure electric models. Data shows that since September 2025, sales of pure electric large three-row SUVs have led all powertrain types for five consecutive months.

In the second half of 2025, sales in this segment increased by over 350% year-on-year. Under this trend, NIO’s product layout appears to be forward-looking.

In addition to product offensive, NIO will also heavily invest in battery swap infrastructure.

This year, NIO plans to build 1,000 new swap stations, expanding the total to 4,700. More importantly, NIO is finally integrating the underlying infrastructure of its three brands: the first fifth-generation swap station compatible with NIO, Leado, and Firefly will start trial operation in March, with large-scale deployment in the second quarter.

Once the fifth-generation stations are fully deployed, the three brands will share the swap network, greatly improving station utilization, reducing operating costs per station, and allowing Leado and Firefly to fully leverage NIO’s ecosystem advantages, showcasing their unique selling points.

Li Bin’s “Long-term Bet”

On the same day as the financial report, NIO’s board approved a new long-term incentive plan.

According to the plan, the company will grant Li Bin approximately 248 million restricted shares, with vesting conditions directly linked to the company’s market value and net profit.

Specifically, as NIO’s market cap reaches milestones of $30 billion, $50 billion, $80 billion, $100 billion, and $120 billion, the shares will vest in batches; simultaneously, net profit targets are set at $1.5 billion, $2.5 billion, $4 billion, $5 billion, and $6 billion.

Only when the market cap exceeds $120 billion and net profit surpasses $6 billion will all the incentive shares fully vest.

This is essentially a long-term “bet” spanning over ten years. Analysts believe that such an incentive mechanism deeply ties the CEO’s personal gains to the company’s long-term value, with highly challenging goals.

In other words, NIO must not only achieve profitability but also continue to scale and establish a stronger global competitive position. During the earnings call, Qu Yu set a goal: NIO aims to achieve non-GAAP full-year profitability in 2026.

A New Starting Point

For NIO, quarterly profitability is important but more like a starting point rather than an endpoint.

The Chinese new energy vehicle market is entering a more intense competition phase. Price wars, technological iterations, and channel battles are intensifying. In such an environment, a single profit does not determine a company’s long-term fate.

But at least, NIO has proven one thing: its long-standing technological route and business model are not unsustainable. When a company long questioned as “just burning money” finally turns profitable, the market narrative begins to change.

Li Bin has kept his word. The real question now is—after crossing the profitability threshold, can NIO turn this profit into a long-term stable business model? That will be the most critical concern for the capital market moving forward.

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