Why did NIO suddenly start making money?

The single-quarter profit report is not NIO’s ultimate trophy of victory, but merely a ticket to the even more brutal elimination race in 2026, after it has survived nine lives.

NIO has started to turn a profit.

That’s right, the NIO that loses hundreds of millions each year, and has lost 100 billion yuan over its 8-year history.

In Q4 2025, its operating profit reached 1.25 billion yuan, and net profit hit 283 million yuan.

Just two and a half years ago, its quarterly loss was as high as 6.07 billion yuan. According to later reports, at that time, NIO was losing 258k yuan on average for each car sold, money that could buy three BYD Qin models outright in the market at that time.

This company, known for its reckless spending, how did it turn around and become frugal?

In this episode, we’ll talk about NIO’s profitability.

01

Last March, NIO CEO Li Bin set a clear goal at a media briefing:

“If there’s only one thing or one goal NIO must achieve this year, it’s to be profitable in Q4.”

Subsequently, the entire company launched an unprecedented cost-cutting campaign.

First, a wave of layoffs at the level of a death sentence.

The company merged the channels of NIO, Leado, and Firefly brands, and also carried out a major cleanup of the after-sales service team.

Then, teams like after-sales customer service, energy, and branding, which are more cost centers than revenue generators, became the focus of layoffs.

In just one quarter, the HR system was reduced by 5,000 names.

Employees lucky enough not to be laid off found their benefits also cut.

Office mineral water was replaced with filtered water, each person’s annual stationery budget was cut from 120 yuan to 6 yuan per month, employee activity funds were canceled, and the number of events was reduced.

Some senior employees not only lost meal allowances but also had 20% of their monthly salary encouraged to be converted into stock, sharing risks with the company.

Employee benefits decreased, and customer treatment was also downgraded.

NIO’s once-proud service system, especially the NIO Centers (Niuwu) built lavishly for owners, was affected.

Costing millions in renovation, with high-end coffee machines costing tens of thousands, and hand soap priced at hundreds of yuan per bottle, everything was in place. But with the cost-cutting campaign, the weekly fresh butterfly orchids in Niuwu were replaced with cheap artificial flowers, and the hand soap was replaced with regular brands bought at wholesale prices for dozens of yuan.

From employees to car owners, everyone could feel that NIO was tightening its belt.

But this was just a tactical cost-saving move; NIO also needed to establish a set of frugal corporate policies.

Early last year, NIO fully introduced the “Smallest Operating Unit (CBU)” mechanism.

What is CBU?

Simply put, it’s breaking down large departments into smaller, independent units, each responsible for its own costs and outputs, ensuring efficiency.

For example, a sales team used to only look at how many cars they sold, the sales volume, and bonuses.

But under the CBU system, sales costs are also considered.

If the cars you sell rely on online leads purchased by the company, the cost of those leads is included. If you handle customer reception and close deals at the store, store costs are included. If you proactively expand customer contacts and close deals, those costs are not counted, only your salary and bonus.

At month’s end, if the input-output calculation is negative, even the top salesperson faces pay cuts or layoffs.

How small can a unit be? The smallest can be broken down to a specific car, a battery, or a venue, each with its own income and expense report.

For example, Leado’s sub-brand, Firefly, needs to hold a launch event, which is also a business unit, requiring venue and equipment rental, costing tens of thousands of yuan.

The team chose to hold it at the Niuwu in Shanghai, controlling venue costs at around 100k yuan, making the report look better.

Meanwhile, Niuwu itself is a business unit, with daily rent costs. Hosting an event can bring in 100k yuan instantly, making its own financial report look even better.

At the company level, this reduces costs and activates venue assets—two birds with one stone.

Of course, what benefits the company often feels harsh for employees.

With CBU, it’s like waking up every morning with an IOU on your head for eight hours of work—everyone has to consider their input and output.

So, everyone begins to think about how to save more money within their authority and processes, and how to create more benefits for the company.

Unprofitable charging stations are dismantled, luxurious Niuwu and NIO Spaces are closed or downgraded, reusable equipment is not replaced unless necessary.

As a result, NIO, which in the past ten years only focused on big projects and rarely considered input-output ratios, has completely reversed its corporate culture and developed a frugal mindset in just half a year.

So, how much did this cost-saving campaign save?

Looking at the financial report, NIO’s sales, general, and administrative expenses in Q4 2025 were 3.54 billion yuan.

The same period last year? About 4.9 billion yuan.

In one quarter, NIO saved nearly 258k yuan—more than its operating profit for this quarter.

It’s safe to say that without this cost-cutting campaign, NIO would not have been profitable.

02

After talking about cost-cutting, let’s look at how NIO makes money.

In 2025, NIO’s total revenue was 87.4 billion yuan, an increase of over 100k from the previous year. The most explosive quarter was Q4, earning nearly 100k more than the same period last year.

This is mainly thanks to two major battles last H2, which pulled the company back from the brink.

The first was the sub-brand Leado’s L90, a large three-row pure electric SUV.

This is a very un-NIO-like model.

Previously, Li Bin’s aesthetic was very restrained—he disliked oversized full-size SUVs, and didn’t like “fridges, TVs, big sofas,” or putting a bunch of screens inside just for tech appeal.

But then, competitors hammered it.

Market demand, Li Bin’s preferences—who cares?

So, on the L90, features like rear entertainment screens, zero-gravity seats, and a car fridge appeared. The essential fridge, TV, and big sofa were all there. Li Bin finally learned to adapt.

The core selling point of the L90 is its size.

It massively expands space.

Most three-row, six-seat SUVs on the market have a third row mainly for emergencies, with cramped space, uncomfortable seating, and for multi-generational family outings, some compromise is inevitable.

And once the third row is up, the trunk has nowhere to put things.

“Big car, not big”—at least, it feels cramped when seated. That’s a common issue with three-row, six-seat SUVs.

L90’s breakthrough is here. Its boxy shape resembles a big cube, unlike the sleek Tesla Model Y, Li Auto i8, or other pure electric models. It looks a bit clunky, but the space is maximized.

Built on NIO’s new NT3.0 platform, with miniaturized motors and ultra-thin batteries, it cleverly saves space.

The result? Each row offers over 1 meter of legroom. Even with full occupancy, the trunk’s depth and height are fully utilized. Officially, it can fit seven 21-inch suitcases.

But that’s not enough. L90 also needs a selling point that instantly communicates its “big” to consumers.

That is the front trunk.

At last year’s Shanghai Auto Show, Leado’s L90 stunned everyone when opening the front trunk.

With a volume of 240 liters, it’s super impressive. The largest front trunk on the market before was only about 160 liters.

Even more astonishing, the front trunk doesn’t just open from above like others. The front face of the car and the front trunk open together, with an opening width of 830 mm. Not only can you put things in, but you can even sit on it.

NIO even invented a “sit-in-front-trunk fishing” stunt, performed by Li Bin at the launch, and repeatedly promoted in sales talks, making consumers feel more intuitively that this car can really hold a lot.

And then, the most terrifying part.

Starting at 265.8k yuan, and with the BaaS (Battery-as-a-Service) scheme, it’s only 179.8k yuan plus 599 yuan monthly rental.

Compare that to similarly sized models like the Wenjie M9, M8, or Li Auto L9, which start at over 350k yuan. Leado’s L90 entry price is roughly half. Are you sure you’re not actually a Leapmotor?

Within four days of pre-order, over 30k small deposits were made, and the first full month’s deliveries exceeded 10,000 units, making it the fastest NIO model to reach 10,000 deliveries. It was a small explosion.

Leado L90 became a hit. NIO then pushed further, launching its flagship, the third-generation ES8, two months later.

Once on the market, it caused a stir.

No one expected the new ES8 to be so affordable.

The previous generation ES8 started at 528k yuan.

The new ES8’s price? Dropped by 120k yuan, starting at just 406.8k yuan. Even more extreme, with BaaS leasing, it’s under 300k yuan at 298.8k yuan.

Remember, the ES8 was NIO’s first mass-produced model, which established its high-end luxury EV positioning and put the brand on par with BBA (BMW, Benz, Audi).

The ES8 was NIO’s face.

But by 2026, NIO really lowered its face to sell cars.

Market feedback was even more enthusiastic than with the L90.

The first full month of delivery exceeded 10,000 units, setting a monthly sales record for Chinese models over 400k yuan. In just 160 days, total sales surpassed 70k units.

In ten years of entrepreneurship, NIO had never experienced what a “blockbuster” feels like. But in 2025, the battles of L90 and ES8 truly helped the company make money and pulled it back from the brink.

03

So, the question is: how did NIO go from losing money on high-priced cars to making profits by lowering prices and offering discounts?

The answer lies in the two models, L90 and ES8.

L90’s large space and low price must have involved sacrifices.

And that sacrifice was in range.

The large, boxy shape increased aerodynamic drag, reducing range.

To cut costs, the battery capacity was reduced, which also lowered range.

As a result, the standard range of L90 is 570 km, but with a 60 kWh battery, it drops to only 410 km. Both are far below the current mainstream six-seat EVs, which often have 600-700 km of range.

Similarly, the new ES8 also downgraded some features compared to the previous generation.

For example, the four Nvidia Orin-X chips used before are gone, as is the high-strength steel-aluminum mixed body. Additionally, due to its larger, boxier shape, its range didn’t see a leap forward.

These are necessary trade-offs to lower the price.

But how to balance these sacrifices to maximize positive benefits for users and minimize negative impacts is a key consideration.

For L90 and ES8, giving up some range is a relatively minor negative.

After all, in an era of widespread fast-charging stations and “charge for ten minutes, drive a thousand miles,” range anxiety still exists but is no longer as deadly as in previous years.

Both L90 and ES8 are large, six-seat SUVs aimed at families—main vehicles or even the only vehicle—so they need to be versatile, spacious, comfortable, and stylish. These qualities are just as important as extreme range.

Moreover, NIO has invested the most in charging and swapping infrastructure among new energy vehicle startups.

Its unique battery swapping network, with over 3,700 swapping stations and more than 28,000 charging piles, is designed to solve range anxiety. The massive investment aims to reassure consumers and help them decide to buy.

And it worked.

Battery swapping became NIO’s strongest salesperson.

Thanks to the swapping network and energy replenishment system, BaaS leasing is no longer just a concept. It’s a real financial lever, reducing the purchase barrier by nearly 100k yuan, and without hurting gross profit, it’s the most effective sales booster.

NIO’s sales staff now often mention “battery swapping” as a selling point after discussing the car’s features, which helps close deals.

NIO also disclosed that in areas with dense swapping stations, sales tend to be higher.

In short, the 2025 turnaround was heavily driven by the battery swapping model.

And the investment in swapping infrastructure is exactly what NIO has been bleeding for over the past decade.

Now, this investment is finally paying off.

NIO’s other investments are similar.

From seats in cars to electric powertrain tech, NIO can reduce costs through self-research.

Although in the past, NIO made many poor investment decisions—like opening over a hundred Niuwu stores, each costing tens of millions, or building a mobile phone team to develop Nio Phone, or blindly expanding its product lineup with more models than other startups—these are now starting to pay off.

It must be admitted that in 2025, the money spent in the past finally began to close the loop.

Li Bin, through a brutal decade, built a mountain from the wilderness. Now, as the company returns to reason, respects the market, and the stones start rolling down from the peak, NIO has re-entered the upper ranks of China’s new energy vehicle battlefield.

But this does not mean Li Bin can sleep peacefully.

2026 has arrived, and the harsh reality leaves no time for respite. The price war will only intensify, Xiaomi’s countermeasures, BYD’s scale advantages, and traditional automakers’ desperate counterattacks are all brewing in the shadows.

After the battles of the gods, NIO now needs to learn how to build a stronghold and fight a prolonged war if it hopes to achieve Li Bin’s 2026 goal: full-year profitability.

A single-quarter profit report is not NIO’s ultimate victory trophy, but merely a ticket to survive the even more brutal elimination race in 2026 after surviving nine lives.