NIO Sees Dawn, Li Bin Signs "Bet Agreement"

Founded 11 years ago, NIO has finally tasted a bit of profit.

On March 10, NIO released its Q4 and full-year 2025 financial reports, delivering its first single-quarter profit statement, making it another company in the new force camp to achieve quarterly profitability, bringing a glimmer of hope for NIO.

However, it should be noted that NIO still has not escaped the loss dilemma for the full year, with accumulated losses exceeding hundreds of billions of yuan.

Against the backdrop of growth driven by pure electric models in the industry, Li Bin set a target for NIO to achieve a 40%-50% increase in sales and full-year adjusted profitability by 2026.

The 248 million restricted stock incentive plan approved by NIO’s board of directors ties Li Bin’s personal interests closely to the company’s market value and profits, officially kicking off a long-term “bet.”

Current Signs of Profitability

NIO’s Q4 2025 financial report shows that the company’s adjusted net profit was 727 million yuan, a significant reversal from a loss of 6.622 billion yuan in Q4 2024 and a loss of 2.735 billion yuan in Q3 2025. This is the first time since its founding in 2014 that the company has achieved quarterly profit, marking a historic moment.

Stimulated by this positive news, NIO (NIO.US) surged over 15% on the day of the earnings release. Yesterday, NIO-SW (09866.HK) continued to rise, with intraday gains exceeding 16%, hitting a new high since 2026.

But NIO’s full-year performance still has not escaped the quagmire of losses. Although the company’s annual loss narrowed significantly by 33.3% year-over-year, the full-year net loss in 2025 still reached 14.943 billion yuan. Since going public and releasing financial reports in 2018, the company’s cumulative losses have exceeded 100 billion yuan.

The notable improvement in NIO’s 2025 performance results from the coordinated efforts of three major strategies: scaling up, increasing gross margin, and controlling costs. Its three brands—NIO, Leado, and Firefly—have completed differentiated layouts, covering high-end, mainstream family, and boutique small cars across various price ranges. In 2025, deliveries reached 326,000 units, a 46.9% increase year-over-year. In Q4 alone, deliveries hit 124,000 units, up 71.7% year-over-year and 43.3% quarter-over-quarter, setting a quarterly delivery record. The rapid increase in sales effectively diluted costs.

Product structure optimization and in-house R&D cost reductions drove gross margin upward. In Q4, NIO’s vehicle gross margin was 18.1%, and the comprehensive gross margin was 17.5%, both reaching new highs since 2022. The all-new high-margin ES8 became a core contributor, with in-house developed Shenji NX9031 chips reducing per-vehicle costs by 20,000 yuan compared to external procurement. Platform technology further distributed R&D costs.

Refined management eliminated unnecessary expenses. Despite total revenue of 87.488 billion yuan in 2025, a 33.1% increase year-over-year, R&D expenses in Q4 dropped 44.3% year-over-year, and sales and management expenses decreased 27.5%. The internal cost control mechanisms eliminated inefficient investments, greatly improving operational efficiency.

Tackling 2026

During the 2025 earnings call, Li Bin expressed full confidence in NIO’s development for the new year and clearly set a target for 40%-50% sales growth for 2026. Based on this, NIO needs to deliver approximately 450,000 to 490,000 vehicles this year.

Li Bin’s confidence is not only based on NIO itself but also on the fact that China’s new energy vehicle market is entering a growth phase led by pure electric models.

According to the China Association of Automobile Manufacturers (CAAM), in 2025, China’s new energy vehicle production and sales reached 16.626 million and 16.49 million units, respectively, with year-over-year increases of 29% and 28.2%. Pure electric models are the main growth driver. Under the influence of favorable policies and infrastructure improvements, market penetration of pure electric vehicles continues to rise, and NIO is a steadfast player in this field.

To support the sales growth target for 2026, NIO is adopting an “attack rather than defense” strategy, formulating comprehensive development plans across product, infrastructure, and channels.

On the product side, NIO, Leado, and Firefly will launch a total of 10 new or facelift models this year, almost monthly, breaking the previous slow iteration pace of boutique models.

In infrastructure, NIO plans to build 1,000 new battery swap stations in 2026, expanding the total to 4,700. The first fifth-generation swap station compatible with all three brands started trial operation in March, with large-scale deployment in the second quarter to connect the three brands’ swap networks.

On the channel side, NIO is implementing a “three-in-one” sales model, integrating the three brands into SKY stores to reduce high store construction and staffing costs, and accelerating the sinking of the sales network.

However, NIO’s sales growth target still faces significant challenges. In the first two months of 2026, deliveries totaled nearly 48,000 units, about half of the monthly target of 40,000 units. While seasonal factors like the Spring Festival holiday partly explain this, the core issues are an unbalanced product mix and slow capacity ramp-up.

Currently, the ES8 accounts for more than half of NIO’s total deliveries, while popular models like ES6 and ET5 underperform. The slow ramp-up of production capacity at F3 and F4 factories also hampers delivery efficiency, becoming obstacles to achieving sales goals.

Li Bin’s Long-term Bet

Just before NIO released its 2025 financial report on March 6, the board of directors officially approved the 2026 equity incentive plan, granting Li Bin, founder, chairman, and CEO, 248 million restricted shares. The plan is valid for 12 years, with vesting deeply tied to the company’s market value and net profit, effectively a long-term “bet” between Li Bin and NIO.

According to the plan, these 248 million restricted shares are divided into ten equal tranches, with unlocking conditions set by dual thresholds of market value and net profit.

When NIO’s US stock market capitalization exceeds $30 billion, $50 billion, $80 billion, $100 billion, and $120 billion, Li Bin will receive 1/10 of the shares at each milestone; similarly, when net profit exceeds $1.5 billion, $2.5 billion, $4 billion, $5 billion, and $6 billion, he will unlock another 1/10. Only when the market cap surpasses $120 billion and net profit exceeds $6 billion can all 248 million shares be fully vested.

Based on current data, Li Bin still faces considerable difficulty in reaching these targets.

NIO’s US market cap is about $14 billion, far below the first milestone of $30 billion, with more than double the gap. The ultimate goal of $120 billion market cap is even more distant.

In terms of net profit, NIO only achieved a quarterly profit in 2025, but the full year remained deeply in the red. Although the company set an adjusted profit target for 2026, reaching the minimum unlocking threshold of $1.5 billion will be extremely challenging.

To fulfill this “bet,” Li Bin needs to lead NIO to continue efforts across multiple areas. First, increasing sales and achieving the 2026 delivery target is the first step.

The competition in China’s new energy passenger vehicle market will intensify in the new year, and balancing profit and scale growth will be a major test of Li Bin’s leadership and NIO’s management team.

Meanwhile, the company must also remain vigilant about financial stability. As of the end of 2025, NIO’s current liabilities stood at 78.58 billion yuan, slightly higher than current assets of 76.63 billion yuan, with a current ratio below 1, indicating ongoing short-term debt pressure. Continuous optimization of operating cash flow is needed to mitigate liquidity risks.

2026 is a critical year for NIO to move from “quarterly profit” to “sustainable profitability.” The 248 million restricted shares incentive plan not only deeply links Li Bin’s personal interests with corporate development but also sends a long-term signal to the market.

This is not only a bet between Li Bin and NIO but also a harsh test of whether NIO can break free from life-and-death struggles.