NIO’s Q3 report shows improved sales and narrowed losses, but profitability remains challenging as targets extend to 2026.
On the evening of November 25, amid celebrations of its 11th anniversary, NIO Inc. released a third-quarter earnings report that quickly triggered heated discussions.
Several key performance metrics showed strong quarter-over-quarter improvement, including operating revenue, quarterly deliveries, gross margin and net loss.
For a brief recap, NIO sold 87,000 new vehicles in Q3, generating RMB 21.7 billion ($3.04 billion) in revenue, marking a record high.
Its vehicle gross margin reached 14.7%, and overall gross margin hit 13.9% — the best level in three years.
The central point of debate revolves around losses.
From an optimistic view, NIO’s net loss narrowed sharply, declining more than 30% year-on-year and quarter-on-quarter, reaching RMB 3.48 billion ($488 million).
Conversely, the opposing narrative is simply: “NIO still lost RMB 3.4 billion ($476 million).”
Given the previously announced short-term goal of achieving profitability in the fourth quarter, bridging a loss exceeding RMB 3 billion ($420 million) leaves NIO with only about 90 days.
During the earnings call on the night of November 25, CEO William Li disclosed additional information, including a new target to “strive for full-year profitability in 2026,” and confirmed that NIO will launch three large-segment vehicles next year.
(Li previously revealed that NIO plans to debut three large SUVs in Q2 and Q3 next year — expected to be the L80, ES9 and ES7.)
The detailed analysis of NIO’s Q3 results and earnings call can refer to ChinaEV Home‘s article “NIO Reaffirms Q4 Profit Target, Three Flagship Large EVs Set for 2026”.
On the afternoon of November 26, after addressing questions from global media and investors, Li convened an additional briefing for Chinese media, discussing several supplemental topics.
The most closely watched update is the new goal of “full-year profitability in 2026.” According to Li, organizational restructuring, enhanced efficiency across operations, and a “more pragmatic culture” provide strong confidence in the outlook.
Li also noted that the decision to launch the three large vehicles in relatively concentrated timing during Q2 and Q3 is not inappropriate.
Regarding ONVO and firefly, Li emphasized that both will continue as originally planned: ONVO will focus on family-use scenarios, while firefly will remain a single-model product line.
As NIO co-founder Qin Lihong said, NIO is transforming into a “super focused” company, concentrating on building great cars and managing financial discipline.
While the media session may not answer every question, it at least clarifies the source of Li’s confidence in achieving Q4 profitability and even the more ambitious 2026 goal.
Below are selected Q&A excerpts from the briefing, offering insight into whether NIO can indeed deliver a turnaround in the months ahead.
(Selected excerpts only due to space, with minimal editing of original meaning.)
Q1: What is NIO’s current production capacity status, and how will capacity be improved?
Li: Conditions vary between models, but after the experience of 2023, overall production remains manageable.
For the new ES8, our priority is to stabilize production and deliver as many vehicles as possible before year-end. Each additional unit delivered this year earns an extra RMB 15,000 ($2,100). Because subsidies next year will decline, we are pushing to deliver aggressively in Q4 and the entire ES8 supply chain is operating under high tension.
Actually, few models in the market still have sizable backlogs like the new ES8. The real challenge in Q4 is demand.
Previously the industry expected a strong year-end pull-forward: customers buying now save RMB 15,000 ($2,100) before losing the subsidy next year. But the impact from subsidy cuts was far beyond expectations.
Before mid-October no one anticipated this. In late October many still hoped for a rebound. In November the industry has confronted reality: new-order volume has fallen significantly, with a severe decline across most companies. Many firms are still unprepared psychologically, expecting a seasonal year-end boost that will not occur.
Because NIO has some backlog, our situation is relatively better, but November will still be tough, and December remains uncertain. Our current strategy is to keep prices stable and avoid disorderly changes.
Supply pressure is always short-term; the true challenge is demand.
Q2: Why did R&D spending fall 20% in Q3?
Li: Two reasons: first, within resource boundaries, we optimize and spend less to achieve the same outcome while maintaining competitiveness.
Fundamentally, the CBU model directs us to prioritize high-return, high-priority projects, so while spending decreased, output remained comparable.
RMB 2 billion ($280 million) per quarter is still significant. Much foundational R&D requires heavy spending early, but once infrastructure is complete, ongoing development requires less funding. Therefore, spending naturally declines over time.
Q3: What is the basis for confidence in full-year profitability in 2026? Is the target annual or monthly?
Li: The goal is full-year NON-GAAP profitability. Q1 is typically the most challenging quarter. Traditionally, Q4 volume equals 1.6-1.8 times Q1 volume, meaning Q1 equals about 60% of Q4. For next year, we expect Q1 to be relatively stable.
Q4: Has ONVO’s positioning or product strategy changed? When will a RMB 200,000 ($28,000) product arrive?
Li: ONVO’s mission is clear — serving mainstream family customers.
When we launch depends on pacing and brand-building. A broader lineup will come, but it is currently in planning and not ready for disclosure.
Q5: How will NIO achieve profitability next year?
Li: The core shift is from volume targeting to operating-quality targeting — a fundamental transformation. We are no longer chasing scale for its own sake.
(Follow-up question: Without scale, cost reduction remains difficult.)
Li: Not necessarily. After reaching a certain volume threshold, cost-reduction efficiency plateaus.
I’m pleased that within the company, discussion of price-cutting for volume is rare. Next year, the operating priority is profit. Volume matters, but only as a means. We care more about business quality.
Frontline teams must look at financial contributions. Selling three ET9s versus three heavily discounted vehicles are not equivalent.
We assess gross margin and cost, not just volume. Under the CBU model, sensitivity to volume is lower — profit matters more.
Q6: Will NIO develop non-automotive AI products?
Li: Smart EVs naturally include intelligent features, so adjacent exploration is reasonable. We released AR glasses previously.
But the automotive space still offers massive potential with only 1-2% share today. For a long time we will stay focused on vehicles, smart EVs, service and related value-added products.
Robotics is undeniably a major future market, but that does not mean we should pursue it today.
I’m more interested in whether any company wants to adopt our chips, or if one day humanoid robots design swapable-battery structures compatible with NIO’s system.
All of that is premature. Our focus is execution. People should not worry about NIO lacking imagination — the concern is too much imagination. We must stay grounded.
Qin: Many assume NIO does too many things. But from Q3 results and soon the Q4 report, it will be clear NIO is becoming a super-focused company, working only on car-related businesses.
Q7: Is there a “Plan B” for profitability?
Li: There is no Plan B. No company has a Plan B for profit. We go all-in. I rarely think in terms of backup plans. There is none.
Q8: Before proving volume success, how does NIO persuade suppliers to secure supply?
Li: Relationship-building matters, but more importantly, conveying long-term competitiveness. If talks fail, we part amicably. Many suppliers trust us deeply.
Compared with 2019, our situation is significantly better.
Qin: The media likes stories of founders fixing problems personally, but real cooperation relies on suppliers’ professional assessment. Everyone knows product capability; pricing is the uncertain variable.
Li: We have long promoted transparent supply chain relationships — now supported by the industry association. Both sides calculate open-book cost structures to ensure fair profit but avoid excess profit.
The supply-chain CBU supports suppliers to calculate business returns. Under this model, partners naturally want to collaborate.
Q9: Why cluster three large SUVs in Q2-Q3 next year? Will the 5566 refresh be advanced to Q4 2026?
Li: We only have three launches next year.
Scheduling launches too closely increases burdens and disrupts sales stability. Our strategy internally is disciplined step-by-step improvement across six performance dimensions and stabilizing volatility.
Q10: What impact will the disappearance of year-end demand pull-forward have on NIO?
Li: Except ES8 and firefly, most models will be affected.
Firefly has some backlog. It was impacted in late October but recovered quickly in November. Aside from these, nearly all models face pressure.
Qin: There is no plan for price restriction.
Li: ET9 impact is minimal due to high price; firefly is mostly new-purchase or add-on demand.
The disappearance of tail-end effect is a systemic industry challenge — not unique to NIO.
Q11: Will firefly still adhere to the one-model-only strategy?
Li: No change. One model, continuous iterative updates.
Qin: Limited editions will bring creativity.
Q12: Will NIO’s non-vehicle businesses be open to external customers? Will ONVO consider an MPV?
Li: ONVO already built an MPV — the L90, which spatially functions as an MPV alternative.
NIO remains open to external supply. Charging-pile business is a typical example: 85% of usage comes from other brands.
We welcome others to use our chips and operating system. We do not aim to become a Bosch-type supplier, but we are open to component cooperation.
Our supplier for NOMI, HiWave, already serves multiple brands. Similarly, we hope FAS technology can support Porsche or others.
We never reserve internal first-launch priority. Non-vehicle businesses focus on installed-base value.
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