NIO's First Quarterly Profit | Li Bin: From Calculating the Big Picture to Calculating the Details

NIO Founder, Chairman, and CEO William Li sat down for a group interview with media including Securities Times on March 11. The interview lasted over three hours, and Li Li postponed an internal meeting specifically for this occasion.

Laughter occasionally echoed during the interview. Just the day before, NIO became the first listed automaker in China to release its Q4 2025 and full-year financial reports, achieving a quarterly operating profit of 1.25 billion yuan under Non-GAAP accounting standards for the first time. Li Bin, once called "the most miserable person in 2019," has now led NIO out of its loss cycle.

What does this quarterly profit mean for NIO, which is listed in three markets? How is it achieving "self-sustaining growth" under a "heavy asset" model? How will NIO respond to the automotive market pressures in Q1 2026? What new strategies will emerge in the coming years? Li Bin answered these questions one by one during the interview.

Turning inward: "A Million-Fold Cost Thinking"

From the data, NIO’s profit in Q4 last year seemed almost inevitable: deliveries reached 124,800 units, up 71.7% year-over-year; revenue hit 34.65 billion yuan, a record high; gross margin on vehicles rose to 18.1%, the highest since 2022. However, Li Bin believes that the real driver of the financial turnaround is not just sales volume growth, but changes in product structure and cost logic.

The all-new ES8 became a "profit cow" in NIO’s Q4 financial report. Its per-vehicle gross profit margin approached 25%, with nearly 39,700 units delivered in the quarter. Its appeal in the 400,000+ yuan market allowed NIO to increase total gross profit without relying on price cuts.

Li Bin believes new cars exhibit a "death valley effect"—the era of long-term hot sales for a single model is over. Instead, pulse marketing features have become the norm, with sales often dropping sharply after launch. This raises the bar for sustained success in the auto industry. "NIO needs to use a sufficiently deep order pool to delay sales decline, while leveraging systemic capabilities to ensure continuity."

On the other side of profitability is cost control. NIO’s R&D expenses in Q4 last year were 2.026 billion yuan, down 44.3% year-over-year; sales and administrative expenses totaled 3.54 billion yuan, down 27.5%. The "Basic Operating Unit" mechanism implemented over the past year improved R&D efficiency, which was reflected in the last quarter’s financials.

Li Bin shared a detail during the meeting: for a certain R&D project, industry norms require an investment of 30 million yuan. The team initially requested 20 million yuan, but after his personal intervention, the goal was achieved with only 2 million yuan. Li Bin demands that each operating unit think with a "million-fold cost mindset"—any savings multiplied by the expected scale of one million vehicles can influence decisions. "Now, this mindset has shifted from a slogan to muscle memory."

Denying the "Heavy Asset Model": Battery Assets as "Mobile Mines"

Li Bin sees two additional signals in the financial report that indicate a qualitative change in NIO’s profitability quality beyond net profit.

First is the breakthrough in non-vehicle businesses. By 2025, NIO’s "services and community-related business" revenue surpassed 10 billion yuan for the first time, accounting for 12% of total revenue, and this segment has become profitable for the full year.

Li Bin believes this demonstrates a closed-loop business model based on vehicle ownership— as cumulative sales exceed one million units, derivative businesses like after-sales, NIO Life, and financial services begin to generate scale effects. This means NIO is no longer just a car seller but is starting to extract ongoing value throughout the user lifecycle.

Second is the commercial potential of battery assets and the vehicle-battery separation model. Previously, NIO’s battery company, NIO Power, backed by Hubei Science and Technology Investment and CATL, completed the world’s first green REITs issuance for power batteries. "Financial institutions, with their most professional and thorough risk assessments, have deep cooperation and recognition of NIO Power, confirming the reasonableness and sustainability of the vehicle-battery separation model."

Li Bin mentioned that under this model, batteries are long-term assets held by the company. This incentivizes the company to develop long-lasting batteries, and the swap mode aligns user, corporate, and social interests. Additionally, batteries contain valuable metals like nickel and cobalt. If metal prices rise later, batteries can appreciate in value, creating greater recycling benefits. Thus, battery assets are essentially a "mobile mine" for the company.

Similarly, the chip business is also gaining attention. Despite previous continuous losses, market voices questioned NIO’s in-house chip development as "overestimating capabilities." However, in early 2026, the chip subsidiary Shenji completed its first round of financing exceeding 2.2 billion yuan, with a post-investment valuation approaching 10 billion yuan. Once criticized as "heavy assets," these are now becoming "hard assets."

When asked by Securities Times about the "heavy asset model," Li Bin explicitly denied that NIO operates this way. "Although the market perceives that NIO’s investment in battery swapping is large, the company remains relatively lightweight." He explained that most office buildings are leased, and for new businesses like robotics, NIO remains cautious. "NIO accounts for only 1.5% of China’s auto sales, and there is still significant room for growth in our core business. We prefer to focus on making good cars."

Sustainability Test: Increasing Competition

Compared to quarterly profits, sustainability is the real test.

This year, the external environment has become more complex. Rising costs of storage chips, fluctuations in copper and aluminum prices, and increased per-vehicle costs of 6,000 to 10,000 yuan are putting pressure on margins. Li Bin also admitted that there are situations where even money cannot buy memory chips.

Meanwhile, BYD’s fast-charging technology has prompted a reassessment of the battery swap route. Li Bin responded: "Fast charging and swapping are not contradictory. NIO offers both, and swapping addresses the systemic issue of different battery lifespans."

NIO plans to launch the ES9, Leado L80, and a large five-seat SUV based on the ES8 platform in 2026, continuing to bet on the high-margin large vehicle market. However, this segment is becoming crowded—Li Auto and Wenjie are also targeting similar price ranges, and more players are entering the pure electric large vehicle space. The road ahead for NIO remains challenging.

"After emerging from the loss tunnel, the road is not smooth—price wars could reignite at any time, AI competitions are burning money, and supply chain fluctuations never stop. But at least it shows we have the ability to complete the first mile on a muddy road. The next question is whether we can turn the 'survival ability' into a more durable and stable system." Li Bin said.

Along with the financial report, a long-term equity incentive plan for Li Bin was announced: 248 million restricted shares will vest in ten tranches, linked to the company’s market value and net profit—market cap must sequentially reach $30 billion to $120 billion, and cumulative net profit must reach $1.5 billion to $6 billion.

"NIO’s first quarterly profit is more about reassuring customers than impressing the capital markets," Li Bin emphasized. Compared to market valuation, he values the market more: "Previously, when users recommended NIO to others, one concern was that NIO might lose money. Our core market is China, and we cannot let users have that worry."

The Q4 profit was a financial victory. The longer-term test has just begun.