Li Bin's latest closed-door meeting: After turning a profit, NIO will "enter the narrow gate and take the long road"

“Profit is just a starting point—the marathon on the muddy road has only just begun.”

On March 10, NIO’s founder, chairman, and CEO Li Bin received a long-delayed incentive plan.

That day, NIO released its 2025 Q4 and full-year financial results. At the same time the financial report was released, the board of directors approved a long-term equity incentive plan for Li Bin—vesting in ten tranches, with the vesting conditions tied to specific performance targets related to the company’s market value and net profit. The plan took effect on March 6, 2026, with a term of twelve years.

Back in 2014, at the beginning of Li Bin’s startup, in order to demonstrate his determination to build cars, he directly put up $150 million of personal funds as the launch capital for NIO. It was this display of sincerity that successfully moved investors such as Lei Jun, Pony Ma, Liu Qiangdong, and others.

Over the eleven years since NIO was founded, NIO fell into low points multiple times, and Li Bin also bailed the company out with his own money. In 2019, NIO entered an “ICU,” and Li Bin also became, online, “the most unfortunate person.” At this toughest moment, he and Tencent jointly provided NIO with $200 million in convertible-bond financing; he even set up a user trust with one-third of his shares, transferring future returns to users.

However, getting the incentives was not easy for Li Bin. The condition for the first tranche to vest was that the company’s annual profit reached $1.5 billion (more than RMB 124.8k). As NIO co-founder and president Qin Lihong said, the threshold to obtain the first payment is high, but it will incentivize management to keep moving forward.

Coming along with the board’s incentive for Li Bin was the fact that, eleven years after NIO was founded, investors finally waited for NIO’s first quarterly profitability.

In Q4 2025, NIO’s revenue reached RMB 34.65 billion, up 75.9% year over year; total gross profit amounted to RMB 6.07 billion, up 163.1%; operating profit was RMB 1.25 billion, turning loss into profit. In the same period, NIO’s cash reserves reached RMB 45.9 billion, increasing by nearly RMB 15k quarter over quarter.

Why did NIO only become profitable after eleven years? Where did the money for profitability come from? On March 11, the day after NIO released its Q4 earnings report, 《21 Autos · iSee Auto》 held a small closed-door communication session at NIO headquarters in Caohejing, Shanghai. Li Bin, Qin Lihong, and we talked.

First, product scale has shifted from quantity change to quality change. The financial report shows that NIO delivered 124.8k vehicles in Q4 2025, up 71.7% year over year. Among them, the ongoing strong sales of the all-new ES8 became the core engine driving NIO’s profit growth, with gross margin close to 25%. Li Bin said that as the pioneer of China’s high-end pure-electric SUV segment, ES8 has gone through three generations of iterations; in 2025, the brand image and technology dividends were released in a concentrated way. “In Q4, for every additional ES8 we deliver, the company earns another RMB 15k.”

More importantly, NIO’s profitability does not rely purely on selling cars. In Q4, the gross margin of NIO’s other sales businesses reached 11.9%, and it posted profits for three consecutive quarters. Qin Lihong explained that services and community businesses based on vehicle-in-use volume (including after-sales services, NIO Life, financial insurance, etc.) have achieved a historic breakthrough, meaning NIO’s business model is forming a closed loop. “Non-vehicle business can make money, not necessarily as much, but it basically can cover the investments in swapping stations.”

In terms of cost control, NIO internally is going through a profound change. In 2025, NIO fully rolled out the CBU (basic operating unit) mechanism, turning each business unit into an independent “small company.” R&D project approvals shifted from “multi-hundred-million RMB big projects” to “tens of millions and even hundreds of thousands RMB small projects”; the frontline sales teams not only needed to look at delivery volumes, but also to calculate how much money each “business unit makes for the company.” Li Bin even gave an example: for an R&D project, competitors spent 80k; internally, the team thought a budget of about 83k was fine; in the end, he sent it back, and the project was completed with 300k, with even better results.

The results of this “cost reduction and efficiency improvement” are also directly reflected in the financial report: in Q4 2025, the consolidated gross margin reached 17.5%, the highest since 2022; vehicle gross margin was 18.1%, the highest in three years.

After the first profitable quarter—how will NIO ensure sustained profitability is the question the market is most concerned about.

At the communication session, Li Bin repeatedly emphasized that NIO will not pursue maximizing short-term profits; instead, it wants to achieve growth with quality while maintaining 40%-50% annual growth in vehicle sales. In Q1 2026, NIO’s delivery guidance was 80k to 83k units, up more than 90% year over year. NIO’s product planning for 2026 is also clear: three new models—ES9, the new five-seat SUV based on the ES8 platform, and LeDO L80—will be launched in sequence. Li Bin stressed, “We won’t deliberately pursue the maximization of profits; sales and revenue growth are still the priority targets. For a considerable period of time, we are still a startup company.”

Second is technology investment. NIO will continue to maintain R&D spending of RMB 2.0 billion to RMB 2.5 billion per quarter, focusing on smart driving, chips, and batteries. Li Bin revealed that the second generation of its in-house developed chip, “Shenji,” has successfully taped out and is now in production. Its cost is about one-third lower than the previous generation, which will provide cost advantages for subsequent models. “With our current quarterly investment of RMB 2.0 billion to RMB 2.5 billion, we can achieve R&D results that others can reach with investments of RMB 300k to RMB 170k.”

Third is the deployment of swapping stations. Although BYD (002594) recently released “flash charging” technology, sparking market discussion about charging routes versus swapping routes, Li Bin believes the two are not contradictory. “Improvements in charging technology are good for the industry, but swapping addresses problems that charging can’t solve—for example, different car-and-battery lifecycles, energy efficiency, operational safety, and so on.” He likened it to “airplane engines and the airframe having different service lives, so they need to be handled separately.” In 2026, NIO plans to build more than 1,000 swapping stations, continuing to strengthen its infrastructure moat.

Fourth is organizational change. Li Bin proposed the concept that “the technology architecture determines the organizational architecture,” emphasizing that in the AI era, organizations need to be flatter and more agile. “The basic operating units the company promoted last year can be understood as the essence of operations. Without digital tools and AI, it’s hard to do full cost accounting for every project.” This differs somewhat from the path taken by XPeng and Li Auto betting on AI; Li Bin believes the key essence is to use AI to improve efficiency, and only with a solid organizational foundation for data integration and faster sensing, decision-making, and execution can technology transformation truly land. “Perception latency” in organizational capabilities—i.e., the speed of sensing external changes, decision-making, and execution—will be the key to future competition.

Profitability is just a starting point. In the “marathon on the muddy road,” NIO has just run past the first resupply station. The competition ahead will test system capabilities and strategic resolve even more.

The following is the Q&A section from the media communication session, edited for publication:

“A marathon on the muddy road”

Q: Last year’s Q4 was profitable—what’s your takeaway?

Li Bin: When you run a business, profitability should be the norm. When we founded the company, we already knew it would take around ten years. The auto industry has this pattern: your volume, total gross profit, R&D investment, and sales and service network all need a certain scale. Those in the industry that became profitable earlier than us also went through a sufficiently long period of time.

More than a million users believe in us and spend real money—that’s what we most need to answer for. I share an office with Lihong; the standard for my business trips is 400 RMB per day, and staying for two days to cover the whole quarter also exceeded the limit. We didn’t waste a single penny of company money; I can only work hard, sell cars hard, and spend every cent from the company as well as possible.

Profitability is normal; it’s just one stage in the company’s development.

Q: How do you view the 2026 market competition landscape? How will NIO respond?

Li Bin: Our assessment of the industry has three points: First, the total market size for China’s passenger car market will not increase; it may even decline slightly. In the next few years, everyone should not have any wishful thinking. Second, technology iteration is too fast—no one dares to say they can stay ahead of others by half a year. Third, the marketing paradigm has changed; the “new car effect” creates a “death valley”—after the first-sales period, sales can drop abruptly in a cliff-like way; this is an industry rule that must be respected.

How to respond? The core is system capability and operational management capability. A few years ago, we started building system capabilities in 15 areas. Last year, we rolled out an organization transformation for all staff based on value creation by users; our cost-control capability became much stronger. From the outside, pure-electric is entering a golden period—high-end pure-electric sales in China of 300k RMB and above grew 58% in 2025, while extended-range sales fell 4%. NIO insists on a pure-electric route that can be charged, swapped, and upgraded, and we have increasing confidence in this trend.

Q: How do you maintain the sustainability of profitability? What new vehicle plans are there for 2026?

Li Bin: This year we have three new models: ES9 (an executive-class large three-row SUV), L80 (a two-cabin super five-seater), and a five-seat product based on the new ES8 platform. The markets these models cover are 2 to 3 times bigger than last year’s; we are confident in continuing the achievements of the L90 and ES8.

Of course, there are risks too. Competition is intense, and rival products and services are excellent. How to make users choose us requires more effort. In Q1, delivery guidance increased by more than 90% year over year; our full-year profitability target is very firm—we won’t sacrifice long-term investment for short-term profits.

Q: How do you view the impact of competitors launching large-battery extended-range models on pure-electric?

Li Bin: Choosing a technology route requires thinking at the foundational level. When charging and swapping infrastructure is not yet well developed, extended-range has its reasonable place. But users pay a price for it: the cost, weight, and maintenance of the extended-range system; for the long term, they carry an oil tank and an engine that they use only a few times a year, which takes up space and increases electricity consumption.

From the data: in the 300k RMB-plus high-end market in 2025, pure-electric penetration rose from 14% to 27%; extended-range declined 4% year over year. In the high-end market, pure-electric penetration has effectively doubled. The market will make the final choice.

NIO only does pure-electric. Today, there are only two companies worldwide doing this—one is us, and the other is Tesla. This allows us to improve efficiency across R&D, sales, service, and management.

Q: Will the swapping model be challenged by BYD’s flash-charging technology?

Li Bin: We are very happy to see BYD’s breakthrough in fast-charging technology; that is good for the pure-electric industry. Charging and swapping should not be set against each other—they solve different problems. NIO has also deployed more than 28,000 charging piles, but swapping solves problems that charging can’t. These include different lifecycles for the vehicle and battery, energy efficiency, operational safety, and so on. Like airplane engines and the airframe having different service lives, they need to be handled separately. Even if battery technology keeps advancing, differences between battery and vehicle-body lifecycles will still exist. No matter how fast supercharging is, it is still one-third slower than swapping.

Qin Lihong: Recently, some media said “flash charging vs swapping might first kill off gas users,” and I think there’s some truth to that.

Q: How do you view the impact of rising raw material prices on the industry? How will NIO respond?

Li Bin: Copper, aluminum, and storage chips are all rising. Within this year, memory price increases could add about RMB 3,000 to RMB 5,000 in cost to high-end intelligent electric vehicles. Raw materials also add another RMB 3,000 to RMB 5,000. Combined, the cost per car would increase by RMB 6,000 to RMB 10,000. We are still within the range we can bear, so there’s no need to pass it on to consumers. Memory chips might be hard to buy even if you have the money, but the advantage of in-house chips is that we can anticipate risks and prepare various replacement solutions. For example, ES8 once faced a chip supply issue; we added new solutions, and behind that there was a lot of R&D work.

Q: What is your view of the five-seat large-car market?

Li Bin: Why do we believe that the large five-seat category will explode this year? Because user demand is changing: whether it’s for business with a small family in mind, or for driving yourselves—someone like me and Lihong at our age would definitely drive a large five-seater to travel and have fun if we didn’t start a business. A truly usable large five-seater is very different. This year, our two large five-seat products—L80 and the large five-seater based on the third-generation ES8—we have high expectations for.

Q: How does ES8 deal with the “death valley” of new models?

Li Bin: Two moves: First, in the initial sales period, accumulate enough orders so the “water level” doesn’t drop fast; second, keep up with new orders—rely on marketing communication and channel capability. ES8 is doing well; after the Spring Festival, new orders recovered better than expected. Also, the “firefly” sells better and better the more it sells, and the more it sells, the higher it goes.

Qin Lihong: A preview: ES8’s 80,000th unit will be completed delivery in the latter part of this month, and we will keep telling the market that ES8 sales are going smoothly.

“The technology architecture determines the organizational architecture”

Q: How will NIO adjust its organizational architecture amid the AI wave? How do you view the robotics business?

Li Bin: My long-standing view is that the technology architecture determines the organizational architecture. NIO has, for years, adapted its organization according to a 12-layer full-stack technology approach, and management is very flat. In the AI era, the whole company in the future will be an “agent,” and we need to lay the foundation for cross-department data integration and faster sensing, decision-making, and execution.

With the basic operating unit (CBU) we rolled out last year, you can understand it as the essence of operations. Without digital tools and AI, it’s hard to do full cost accounting for every project and every user consultant. AI helps us manage with more precision and significantly improves efficiency.

As for robotics, I think the technology stack of an automaker is similar to robotics. But in China’s auto industry, when you measure by volume, we only have 1.5% share. So we should focus on making the cars first. When the robotics market matures and people sell several million units per year, it will not be too late to enter then, because the capability model is the same.

Q: What progress has been made on the Shenji (God Pivot) Gen 2 chip?

Li Bin: The Shenji Gen 2 chip (the second chip in the sequence) is equivalent to the compute power of three ORIN-X chips. It taped out successfully a few months ago and is in the process of mass production. Its cost is about one-third lower than the previous generation, which will help us continuously reduce costs on the technology side.

Q: Any cooperation regarding a battery passport?

Li Bin: From day one, we have done traceability and ID management for every battery. From the full lifecycle—from production to retirement and disassembly—we have achieved a closed loop. The swapping model itself requires batteries to be tracked and managed throughout their lifecycle, and we are far ahead of the industry.

Q: Is there a plan to integrate NOMI with smart driving?

Li Bin: From a technical standpoint, it can be done, but safety rules need to be considered. Currently, driving intelligence has higher priority in terms of efficiency and throughput; in the short term, we won’t make integrating NOMI and smart driving a key focus. In the long run, we will explore.

“Save where you can, spend where you should”

Q: What was the most worthwhile spending saved last year? How do you balance cost control with long-term investment?

Li Bin: There’s a real story. In a certain R&D project, industry typically spends 30 million. A colleague thought that 500k-plus was fine, so the project approval got sent back by me. In the end, everyone worked together to figure out a way and got it done with 2 million, and the results were even better. There are many things like this in the company; everyone does their own calculations, and they even find fun in accounting.

But we won’t let saving money harm long-term competitiveness. For anything important to the company’s long-term competitiveness, resources are definitely sufficient—R&D will remain at RMB 2.0 billion to RMB 2.5 billion per quarter; and this year NIO will still build more than 1,000 swapping stations. Now it’s “save where you can, spend where you should.” If you can’t clearly explain the return beforehand, don’t do it. Fundamental R&D and investment in core technologies will surely be protected.

Q: Regarding financial policies, is NIO’s seven-year low-interest rate effectively a disguised price cut?

Qin Lihong: No, it’s not a follow-the-trend move. We originally wanted to launch it earlier, but the market transactions were sluggish in January and February, and issuing a policy then might be like firing a blank shot. We launched after the Spring Festival because this is truly an ultra-long-term low-interest offer: the all-in fee rate is more than 0.4%, annualized interest is under 1%, and you can repay early anytime without any lock-in. This isn’t a price cut. The money we charge hasn’t been reduced by a single cent—we mainly pass the benefits on to users.

Q: At what average daily swap order volume can a swapping station become profitable?

Li Bin: Previously, we estimated that about 60 orders per station per day would make it profitable. This year, we plan to build more than 1,000 stations, and that should be fine. During the Spring Festival period, the highest number of swaps in a single day exceeded 170k times.

Q: What caused accounts receivable to grow by 55%? What are the payment terms?

Li Bin: Our operating cash flow is positive, and we sell directly—when we collect, we collect immediately. The accounts receivable period for our supply chain was actually shortened; we responded to the country’s call to push back against “involution.” With partners, the relationship is healthy. Payments are made using cash plus bank bankers’ acceptances, not commercial paper. The company’s financial soundness is much stronger than it was before the third quarter last year.

“High-end isn’t something you just claim”

Q: How do you view more and more automakers making models priced at over RMB 500k? How does NIO maintain its high-end positioning?

Li Bin: A high-end market needs “an advanced mindset”—originality, technical leadership, and an end-to-end experience that exceeds expectations. Vehicle-to-vehicle parameters are becoming more and more homogeneous; what truly differentiates is emotional experience. Our investments in core technology forward R&D, design originality, and service community have given us a differentiated advantage.

Qin Lihong: NIO’s high-end brand positioning will definitely be maintained, but tactical details are still being explored. For example, after we focused on ROI last year, the sense of ceremony was insufficient in the delivery process for a period of time; after we noticed, we pulled it back. The big direction for high-end doesn’t change; the efficiency calculation formula at the brand-end sides will differ across brands—we are finding the most suitable granularity while building an efficient high-end brand.

Q: How will the NIO, LeDO, and firefly brands coordinate? Will there be internal friction?

Li Bin: There is very little overlap in the sources of users for the L90 and ES8. L90 comes more from mass-market users and from Toyota, Honda, and BBA entry-level users; it comes from far fewer NIO users. The firefly team has fewer than 100 people and operates with high efficiency. LeDO will have new products later, giving users more choices.

Q: Any adjustments to the overseas strategy?

Li Bin: This year we focus on the Chinese market while still entering the global market. We use the country general-agent approach to replace direct sales; the brand order is adjusted to firefly, LeDO, and NIO. In Europe, electricity costs are getting more expensive, and with the increase in tariffs, pure-electric has faced a bit of a “tailwind-to-headwind” situation globally. Strategically, we need to be pragmatic and focus on the Chinese market.

Qin Lihong: This year’s overseas work is about laying the groundwork; volume is not the top pursuit. We mainly do two things: building initial sales capability (partners and sales outlets), and building initial user satisfaction. Every week, I and Li Bin will personally attend overseas user satisfaction meetings to ensure word of mouth continues to be built. The season of rewards may need to wait a few more years.

“Profitability is just a starting point”

Q: After becoming profitable, can NIO be evaluated by the standards of mature companies?

Li Bin: For a long time, we will still be a startup company. Last year, our sales in China’s passenger car market were only 1.5%, and our sales revenue was about 2.5%. Even in the Chinese market, we still have enormous room to grow.

We will treat sales volume, the number of users, and revenue growth as priority targets, and we will not deliberately pursue maximizing profits. In the auto industry, we are still a nobody and need to keep training system capabilities and building the way we operate.

Q: Why choose this timing for the equity incentive plan?

Qin Lihong: When the board approved it, Ge (Bin) was asked to recuse himself. The plan was set half a year ago, but at the time, it wasn’t appropriate to roll out CEO equity incentives based on the operating situation. So we kept waiting until the quarterly profitability and then disclosed it. The incentive goals are meant to spur everyone to move forward. We referenced industry cases—this threshold is quite high: the first tranche requires annual profit of $1.5 billion. This isn’t a distribution of property—it’s an incentive.

Li Bin: When we went public, I transferred the shares to set up a user trust; NIO’s shares are all bought with my own money. I’m very grateful that the board is willing to recognize me and provide incentives—I still have to seize the day.

Q: Have you and Lihong felt that there were particularly difficult moments?

Li Bin: We went through 2019. International political impacts, company stage, product quality, and supply chain reversals all turned toward the bad direction. Just when we finally managed to solve one thing, another harder challenge came. Compared with the past two years, the problems are small potatoes compared with 2019.

Qin Lihong: It’s not that our hearts were big—things were simply pretty bleak in the past.

Q: When making decisions during difficult times, could there be small issues with butterfly effects?

Li Bin: In 2019, there were indeed short-term actions, but at this point we don’t feel we did anything wrong. When there’s no money, it forces you to think about what is most important, clarify priorities, and focus on true value creation. For example, while they did extended-range, we didn’t; we resolutely did pure-electric and swapping, and it became clear.

Q: Is the closed loop of the profitability model fully in place? What other reform plans are there?

Li Bin: Three aspects have basically been validated: the new car business has the capability to build a high-end brand, achieve reasonable gross margin, and have a certain level of sales volume; the non-car business (after-sales community business based on vehicle-in-use volume) is now closed loop and sustainable; and on operational efficiency, we are competing for an efficiency improvement of 3 to 5 percentage points. Last year internally, we unified our thinking—for example, “a million-times thinking.” Previously, adding one part for an extra dollar meant the total cost was just that; now, we need to multiply by a million times to see the total cost. This is being internalized into daily management decision-making. What we’re discussing now is maintaining 40%-50% growth in the third growth cycle; we seldom bring up other big financial targets.

Q: Can the methodology of ES8 being a breakout hit be replicated to other models?

Li Bin: Whether it can be replicated—I can’t say for sure. But correct attribution is extremely important: neither belittling ourselves nor fooling ourselves. We need to analyze the reasons at the macro, industry, and specific-model levels clearly, and also consider time factors and luck. Perception must be fast, decisions objective, execution resolute; organizational capability is about “latency.”

Qin Lihong: Actually, firefly itself is a breakout hit.

Li Bin: In a certain stage last year, we had three breakout hits, and it’s been really hard to have three such hits constantly.

Q: This year’s goal—do we defend technology or defend gross margin?

Li Bin: From an operating perspective, we are firm on full-year profitability, but we will not sacrifice long-term investment. Sales volume isn’t something to “defend”; we focus on operating quality. R&D investment will remain at RMB 2.0 billion to RMB 2.5 billion per quarter, and we will add 1,000 swapping stations.

Q: What is the plan for R&D investment?

Li Bin: RMB 2.0 billion to RMB 2.5 billion per quarter—so we can maintain long-term competitiveness. For new products, we will be restrained; the priority is to get the product right and improve R&D efficiency. Our current R&D spending is at least one-third more efficient than before.