After ten years of burning money, NIO has started making a profit.

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Author | Chai Xuchen

Editor | Zhou Zhiyu

In the ongoing knockout competition in the new energy vehicles sector, NIO has always been the most discussed player. Supporters believe NIO is China's closest new energy car company to being a "luxury brand"; skeptics have always focused on one question—when will it make money?

On March 10th, with the release of NIO's Q4 2025 and full-year financial report, this debate finally received a phase answer.

The financial report shows NIO achieved an operating profit of 1.25 billion RMB in Q4 2025, marking the first time in its history to post a quarterly profit. At the same time, the company’s cash reserves reached 45.9 billion RMB in the fourth quarter, a nearly 10 billion RMB increase quarter-on-quarter.

This means, after nearly a decade of investment and expansion, NIO has finally crossed a critical threshold. After the US stock market opened, NIO surged more than 10 percentage points.

Li Bin has publicly stated many times that NIO would achieve profitability in a certain quarter. Now this promise has been fulfilled. But whether quarterly profitability is just a fleeting moment or a fundamental turning point for Li Bin's business model—NIO's future performance will decide everything.

From “Money-burning Company” to Profit Inflection Point

In the past few years, the biggest question from the capital market about NIO was: can this model achieve scalable profitability? The Q4 2025 financial report, in some sense, gave an answer.

The report shows NIO delivered 124,807 units in the fourth quarter, up 71.7% year-on-year and 43.3% quarter-on-quarter—a new historical high. Meanwhile, quarterly revenue reached 34.65 billion RMB, a 75.9% increase year-on-year.

As record highs in deliveries and revenue were achieved simultaneously, profitability also improved. The comprehensive gross margin in Q4 reached 17.5%, up 5.8 percentage points year-on-year; vehicle gross margin reached 18.1%, the highest in three years.

The continuous rebound of gross margin is a key reason NIO was able to achieve profitability.

On the other hand, NIO’s non-vehicle business also began contributing profits. The financial report shows other sales gross margin reached 11.9% in Q4, 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 service and community systems, previously seen as cost centers, are gradually becoming sources of profit.

Behind profitability lies rapid scaling.

In 2025, NIO delivered a total of 326,028 new vehicles, up 46.9% year-on-year—a historical record. Full-year revenue reached 87.49 billion RMB, up 33.1% year-on-year; meanwhile, total gross profit reached 11.92 billion RMB, up 83.5% year-on-year.

These data indicate that NIO has entered the scale-driven stage.

In the new energy vehicle industry, scale effect is crucial. No matter R&D costs, supply chain costs, or channel expenses, only when sales reach a certain scale can a company truly unleash its profitability.

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

And this trend continues. NIO’s guidance for Q1 2026 shows anticipated deliveries of 80,000 to 83,000 units, up more than 90% year-on-year; revenue is expected to reach 24.48 to 25.18 billion RMB, up over 100% year-on-year.

If this growth pace continues, NIO’s annual sales may break new ground.

A New Round of Growth Cycle

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

The first stage was the establishment and technology accumulation stage; the second was the scale expansion stage; and with quarterly profitability, NIO has officially entered the third stage—high-quality growth stage.

If the keyword for NIO in previous years was "investment," then the keyword going forward is likely to be "efficiency."

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

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

At the same time, according to 2026’s operation status and ROI mechanism, the company will dynamically adjust the pace and investment in R&D to ensure sufficient intensity for key products and core technologies, enhancing the company's long-term competitiveness.

On the market level, the new energy vehicle industry is also changing. Li Bin stated on the call that although China’s passenger car market faces overall challenges in Q1 this year, pure electric models are still growing strongly.

In the past year, the growth of China's new energy vehicle market was mainly driven by pure electric models. With this trend, NIO, as a pure electric brand, still has some market space. On the earnings call, Li Bin was straightforward—he’s very confident in 40% to 50% annual sales growth.

Therefore, NIO needs to achieve total sales of 450,000 to 490,000 vehicles this year, averaging about 40,000 vehicles per month. This is a big challenge for NIO. In the first two months of this year, NIO delivered nearly 48,000 new vehicles in total, averaging 20,000 units per month, falling short of the monthly target by half. The underlying issue is the current imbalance in NIO's model sales structure.

The ES8 became NIO’s main delivery model in the first two months, occupying more than half of total deliveries, while ES6, ET5, which were supposed to be volume models, failed to fully play their roles in this period.

Insiders believe this sales structure can boost profit performance in the short term but will constrain total sales growth in the long run. Li Bin, however, is not worried about this.

Three-Brand Strategy Begins to Take Effect

On the earnings call, Li Bin stated that this year NIO will accelerate penetration into more prefecture-level cities through the SKY store system that unites the three brands. The core of this strategy is to maintain brand positioning differences while sharing sales and service networks. This not only reduces channel costs but also improves sales efficiency.

On the product front, NIO will enter an intensive product cycle this year.

According to official plans, NIO, Ledao, and Firefly—the three brands—will launch a total of ten new or revised models in 2026. Almost a quarter of 2026 has passed, and in the remaining less than ten months, NIO will need to average nearly one new car per month, a veritable “car sea strategy”.

This means NIO is no longer fixated on boutique blockbuster models but will conduct intensive product launches to fully cover various price points, segments, and user groups. By doing this, NIO can secure its high-end base while capturing the mass market in lower tiers, achieving breakthroughs in both sales and profit.

Notably, most of these products are concentrated in the large five-seat and large three-row SUV market. Li Bin believes this segment is entering the "golden era" for pure electric models. Data shows that since September 2025, pure electric large three-row SUV sales have led all power forms for five consecutive months.

In the second half of 2025, sales in this segment grew over 350% year-on-year. With this trend, NIO's product layout clearly shows some foresight.

Beyond aggressive product launches, NIO will also ramp up efforts in battery swapping infrastructure.

This year, NIO plans to build 1,000 new battery swap stations, expanding the total to 4,700. More importantly, NIO is finally linking infrastructure across its three brands: the first fifth-generation swap station compatible with NIO, Ledao, and Firefly will begin piloting in March, and achieve scalable deployment in the second quarter.

Once the fifth-generation stations are fully rolled out, the three brands will share the swap network—greatly increasing station utilization, lowering single-station operating costs, and allowing Ledao and Firefly to truly benefit from NIO’s core ecosystem, fully leveraging their selling points.

Li Bin’s “Long-term Bet”

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

According to the plan, the company will grant Li Bin about 248 million restricted shares, but the vesting conditions are directly tied to the company's market value and net profit.

Specifically, when NIO’s market value passes $30bn, $50bn, $80bn, $100bn, and $120bn, the shares will vest in batches; meanwhile, the company’s net profit needs to reach $1.5bn, $2.5bn, $4bn, $5bn, and $6bn respectively.

Only when market value breaks $120bn and net profit exceeds $6bn will all incentive shares fully vest.

This is essentially a "long-term bet" that will last more than a decade. Analysts believe such incentive mechanisms deeply tie the CEO's personal gains to the company's long-term value, and the targets are highly challenging.

In other words, NIO must not only achieve profitability, but also continuously scale up and build stronger competitiveness in global markets. On the earnings call, Qu Yu set a flag: NIO aims to achieve full-year Non-GAAP profitability in 2026.

A New Starting Point

For NIO, quarterly profitability is important, but it’s more like a starting point than a finish line.

China's new energy vehicle market is entering a more intense competition phase. Price wars, technological upgrades, and channel rivalry are intensifying. In such an environment, one-time profitability cannot determine a company’s long-term fate.

But at least, NIO has proven one thing: the business model and technological path it has persisted with for years are not unsustainable. When a company long accused of only burning money finally starts making a profit, the market narrative changes.

Li Bin kept his word. The real question is—after crossing the profitability threshold, can NIO turn this profit into a long-term, stable business model? This is the capital market’s most pressing concern going forward.

Risk Disclosure and DisclaimerThe market has risks, invest with caution. This article does not constitute personal investment advice, nor does it take into account the special investment objectives, financial situation, or needs of individual users. Users should consider whether any opinions, views, or conclusions in this article suit their specific situation. Investment based on this article is at your own risk. ```