After years of high-investment expansion, NIO Inc. has reached a critical turning point in its operations, with the company forecasting its first-ever quarterly operating profit. On February 5th, NIO released preliminary performance guidance for the fourth quarter of 2025, projecting adjusted operating profit under non-GAAP measures to reach between RMB 7 billion and RMB 12 billion (approximately USD 1.0 billion to USD 1.72 billion). Following the profit forecast, NIO's U.S.-listed shares rose more than 11% in pre-market trading.
Particularly noteworthy is that even under the stricter GAAP accounting standards, the company is expected to achieve an operating profit ranging from approximately RMB 2 billion to RMB 7 billion. This indicates that the improvement in profitability is rooted in substantial optimization of operational efficiency and cost structure, rather than relying solely on accounting adjustments. Compared to the same period last year, when NIO reported an adjusted operating loss of RMB 55.436 billion in Q4 2024, the projected quarterly operating profit improvement of approximately RMB 62 billion to RMB 67 billion is significant, further validating the reliability of this profitability inflection point. The company attributes this positive change to a combination of factors: steadily increasing sales volume, optimization of the product mix towards higher-margin models, and systematic cost-reduction measures.
Three Key Drivers: Sales, Gross Margin, and Cost Control NIO's shift to profitability is primarily driven by three operational factors, which also form the core dimensions for the market to assess the sustainability of its earnings: Firstly, sales growth is releasing operating leverage. The company has indicated sustained sales growth in the fourth quarter of 2025. For capital-intensive manufacturing, increased delivery volume directly dilutes the fixed manufacturing costs and certain fixed expenses per vehicle, forming the fundamental prerequisite for reaching breakeven. Subsequent financial reports will need to verify the sustainability of sales growth, the contribution structure across its brands (NIO/Onvo/Firefly), and the specific extent of scale effects being realized. Secondly, product mix optimization is enhancing gross margin. The mention of a "favorable product mix driving automotive gross margin optimization" suggests that profit improvement stems not just from scale expansion but also from a qualitative transformation in the sales structure. An increased proportion of high-margin models, growth in optional feature revenue, or stabilization of the end-price system can all substantially improve per-vehicle profitability. The resilience and strength of this driver will be directly influenced by industry competition and the company's own product cycle. Finally, within the framework of ongoing company-wide efforts to reduce costs and enhance efficiency, NIO is systematically strengthening its profit foundation through both cost control and expense optimization. On one hand, by improving bargaining power in raw material procurement, optimizing production processes, and enhancing supply chain synergy, the company is achieving a structural reduction in per-vehicle production costs. On the other hand, it is strictly controlling the spending efficiency in R&D, sales, and administrative expenses, driving a continuous decrease in the expense-to-revenue ratio. If the improvement in gross margin can synergize with effective contraction of the expense ratio, it would indicate that the current profit recovery is built on sustainable operational enhancements, rather than being dependent on short-term market fluctuations or accounting adjustments.
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