After 11 years, NIO finally achieves quarterly profitability! Equity incentives directly target a trillion-dollar market cap goal

As of the market close on March 10, NIO (NIO.US, 09866.HK) rose by 15.38%, closing at $5.70; today, the Hong Kong stock market continued to surge, with an intraday high increase of over 17%, closing at 43.22, up 13.32%.

The upward momentum comes from positive financial report stimuli.

On March 10, NIO released its financial performance for the fourth quarter and full year of 2025, reporting a revenue of 34.65 billion yuan for the fourth quarter of 2025, a year-on-year increase of 75.9%, reaching a historical high, with a corresponding net profit of 283 million yuan, marking the company’s first quarterly profit since its establishment.

In the previously released earnings forecast, the company had clearly outlined three key factors for achieving its quarterly profit target.

First, the sustained growth in sales in the fourth quarter of 2025; second, a favorable product mix driving optimization of automotive gross margins; third, ongoing implementation of comprehensive cost reduction and efficiency improvement measures.

NIO’s Chairman Li Bin stated, “The quarterly profit reflects the continuous improvement of NIO’s systematic capabilities and operational efficiency.”

Looking at 2025 as a whole, NIO achieved annual revenue of 87.49 billion yuan, a year-on-year increase of 33.1%, reaching a historical high; it recorded a net loss of 14.943 billion yuan, a year-on-year reduction of 33.3%.

Regarding gross margin, the fourth quarter gross margin for complete vehicles was 18.1%, a year-on-year increase of 5 percentage points, reaching the highest level in three years; the overall gross margin was 17.5%, a year-on-year increase of 5.8 percentage points, reaching the highest level since 2022.

In terms of cash reserves, the company’s cash reserves in the fourth quarter reached 45.9 billion yuan, a quarter-on-quarter increase of nearly 10 billion yuan, achieving positive free cash flow for two consecutive quarters, further enhancing the company’s risk resistance and operational resilience.

From the perspective of sales volume, in the fourth quarter of 2025, the company delivered a total of 124,800 vehicles, a year-on-year increase of 71.7% and a quarter-on-quarter increase of 43.3%, reaching a historical high; the total annual delivery of new vehicles was 326,000, a year-on-year increase of 46.9%, also a historical high.

The expected delivery volume for the first quarter of 2026 is 80,000 to 83,000 vehicles, a year-on-year increase of 90.1% to 97.2%; operating revenue is expected to be 24.48 billion to 25.18 billion yuan, a year-on-year increase of 103.4% to 109.2%.

In addition, NIO’s infrastructure is continuously being improved. Battery swapping has become the mainstream solution for electric vehicle charging in China, systematically addressing the industry challenges of vehicle and battery lifespan; NIO has achieved a milestone of 100 million battery swaps.

As of December 31, 2025, NIO has built a total of 3,737 battery swapping stations, 4,877 charging stations, and 27,728 charging piles globally.

NIO’s Chairman Li Bin stated during the earnings call that the Chinese passenger car market in the first quarter of this year is very challenging, with a slight decline compared to last year. However, he believes that the growth of pure electric models is very strong, and last year, the growth of the entire new energy vehicle market was driven by pure electric models.

This year, pure electric models will continue to maintain relatively fast growth. Li Bin stated that the large three-row and large five-seat SUV market has entered a “golden age for pure electric vehicles.”

NIO will launch three new models, with the tech flagship SUV ES9 set to launch in the second quarter of this year, a large five-seat SUV based on the new ES8 platform launching in the third quarter, and the Lido L80 launching in the second quarter.

He stated, “Combined with the Lido L90 and the newly launched ES8 that is selling well, these five medium and large SUVs lay a very solid foundation for annual sales growth this year.”

“NIO’s current product rhythm aligns with market development trends, and we are very confident in achieving 40% to 50% growth for the year.”

At the same time as the earnings report was released, NIO introduced an equity incentive plan.

The plan will grant approximately 248 million restricted shares of the company to the company’s founder, Chairman, and CEO Li Bin.

These restricted shares are divided into ten equal batches, and their vesting conditions depend on the company achieving specific performance targets related to market value and net profit, as well as Li Bin continuing to serve in key positions.

The plan is set to take effect on March 6, 2026, with a validity period of twelve years.

NIO emphasized that the aforementioned shares will only vest in batches after achieving certain performance targets. The performance targets are directly related to the company’s market value and net profit.

Specifically, when NIO’s market capitalization exceeds $30 billion, $50 billion, $80 billion, $100 billion, and $120 billion in turn, one-tenth of the aforementioned shares will vest to Li Bin.

When NIO’s net profit exceeds $1.5 billion, $2.5 billion, $4 billion, $5 billion, and $6 billion in turn, one-tenth of the aforementioned shares will also vest to Li Bin.

When the company’s market value exceeds $120 billion and net profit exceeds $6 billion, all incentive shares will be fully vested.

It is worth noting that during the earnings call, NIO’s CFO Qu Yu stated that based on the fact that the company has five large SUVs on sale this year, as well as the strong performance of large vehicles in terms of gross margin (the ES8 gross margin exceeded 20% in the fourth quarter of 2025, approaching 25%), NIO will strive to achieve annual profitability on a Non-GAAP basis in 2026.

Source: Manager Magazine