Ending an 11-Year Loss "Marathon," NIO Finally Achieves Profitability

NIO officially ends its 11-year loss streak. On March 10, NIO released its Q4 and full-year 2025 financial reports, showing a Q4 operating profit of 1.25 billion yuan, marking the company’s first quarterly profit.

In Q4 2025, NIO’s revenue reached 34.65 billion yuan, a 75.9% year-over-year increase and a 59% quarter-over-quarter increase, setting a new record; gross profit totaled 6.07 billion yuan, up 163.1% year-over-year and 100.8% quarter-over-quarter; vehicle gross margin was 18.1%, up 5 percentage points year-over-year and 3.4 percentage points quarter-over-quarter.

For the full year 2025, NIO’s total revenue was 87.488 billion yuan, a 33.1% increase year-over-year; net loss narrowed to 14.943 billion yuan, a 33.3% reduction. Against this backdrop, the company provided a strong guidance for Q1 2026: expected deliveries of 80,000–83,000 units, a 90.1%–97.2% increase year-over-year; revenue of 24.48–25.18 billion yuan, a 103.4%–109.2% increase.

Notably, the 18.1% vehicle gross margin in the quarter is a high point never reached in the past three years. The financial report states that the average vehicle price in Q4 benefited from a more favorable product mix, significantly improving gross margin. The all-new ES8’s gross margin approached 25%, becoming the main profit driver, with approximately 39,700 units delivered in the quarter, accounting for 31.8% of total deliveries.

The increase in per-vehicle gross margin is linked to technological cost reductions. In July 2025, NIO founder, chairman, and CEO William Li announced that the company’s self-developed, automotive-grade 5nm intelligent driving chip “Shengji NX9031” has been applied to new models ET9, ES6, EC6, ET5, and ET5T, achieving design goals. The “Shengji NX9031” performs similarly to four Nvidia Orin-X chips. Li previously revealed that this chip could reduce per-vehicle costs by about 10,000 yuan, significantly boosting NIO’s gross margin per vehicle.

During the Q4 and full-year 2025 earnings call, Li reiterated that Shengji’s second advanced smart chip, targeting a broader customer base, has successfully gone through tape-out and is currently in mass production.

Meanwhile, NIO is further reducing R&D and sales expenses: R&D costs in Q4 were 2.026 billion yuan, down 44.3% year-over-year; sales and administrative expenses were 3.54 billion yuan, down 27.5%. NIO CFO Qu Yuxi stated during the earnings call that in 2026, the company will maintain quarterly R&D spending of 2 to 2.5 billion yuan, and will continue to improve R&D efficiency based on the CBU operating model to avoid ineffective investments.

In fact, NIO has long committed to full-stack in-house development and battery swap system construction, investing over 18 billion yuan in charging and swapping infrastructure, which had previously resulted in continuous losses.

Economist and Ministry of Industry and Information Technology Communication Economy Expert Committee member Pan Helin believes that this profitability indicates a positive shift in NIO’s fundamentals, and that its product positioning adjustments have yielded some results. NIO needs stable cash flow to sustain growth; without consistent profits and cash flow, its business model sustainability could be challenged. “To achieve long-term profitability, NIO’s battery swap business must be profitable, which depends on scaled vehicle sales.”

Yuan Shuai, deputy secretary-general of the Zhongguancun Internet of Things Industry Alliance, pointed out that this profit report confirms NIO’s long-term investment business logic is finally entering a positive cycle. Previously high investments are no longer just cost consumption but are beginning to transform into core capabilities supporting profitability.

However, NIO still faces many challenges on its path to long-term profitability. While the battery swap system is a core advantage, it requires large upfront investments, and ongoing operation and maintenance costs remain high. Expanding user scale and optimizing operations are necessary to reduce unit costs. Additionally, although reducing R&D spending helped achieve short-term profits, in the long run, the fast-paced technological iteration in the smart electric vehicle sector means insufficient R&D investment could lead to technological lag and loss of market competitiveness.

“NIO needs to balance cost control and R&D investment. It should maintain high gross margins on premium models while expanding market penetration of volume models to leverage scale effects. It can also develop service ecosystems and explore new profit growth points to ultimately transition from quarterly profits to sustainable long-term profitability,” Yuan Shuai said.