NIO founder and CEO William Li addressed market concerns during a post-earnings communication session on November 26, stating, "There's no Plan B for profitability—we're fully committed to execution while remaining adaptable." His confidence reflects NIO's resilient Q3 results, which surpassed expectations despite industry headwinds.
The automaker reported a 20% sequential revenue increase in vehicle sales to RMB19.2 billion, driven by rapid deliveries of its L90 model. Notably, vehicle gross margin expanded by 4.4 percentage points to 14.7%, significantly outperforming the 12.9% consensus estimate. Overall gross margin reached 13.9%, a three-year high, validating NIO's cost optimization efforts. "We've entered the fast lane," Li remarked.
However, Q4 delivery guidance of 120,000-125,000 vehicles fell short of Li's earlier 150,000-unit pledge, raising questions about ES8 production capacity and demand sustainability. Li acknowledged that while supply chain constraints are manageable, the real challenge lies in weakening consumer demand following nationwide subsidy reductions. "The industry underestimated how subsidy cuts would dampen Q4's traditional year-end sales surge," he noted, predicting November deliveries would be particularly challenging.
NIO's premium product mix provides a buffer, with the ES8—boasting over 20% gross margin and delivery timelines extending into 2026—serving as a profit anchor. President Qin Lihong revealed several models now achieve 15-25% margins, exceeding initial projections. Li expects Q4 auto gross margin to reach 18% through ES8 volume deliveries and supply chain efficiencies.
Strategic streamlining has positioned NIO for sustainable growth. The integration of sub-brand L90 into NIO's main sales network and completion of NT3.0 platform R&D have reduced operational complexity. These measures helped NIO's market cap briefly surpass RMB130 billion.
Looking ahead, Li remains focused on achieving non-GAAP profitability by 2026 through operational discipline. "We're no longer pursuing growth at any cost—quality matters more than quantity," he emphasized, highlighting NIO's shift toward "high-margin organic growth." The company's CBU (Cost Business Unit) system now prioritizes high-ROI projects, cutting R&D spending by 20% while maintaining output.
Addressing competition from extended-range EVs, Li argued that battery-swapping infrastructure will ultimately prevail as consumers prioritize efficiency over temporary workarounds. He also outlined NIO's technological moat, including its 900V high-voltage platform and proprietary chips, while acknowledging the challenges of maintaining innovation leads in China's hypercompetitive EV market.
"Automaking is a marathon," Li concluded. "By systematically improving every operational aspect by 1-2%, we can achieve 3-5% overall advantage—that's what separates good companies from great ones." With Q3 demonstrating NIO's turnaround capability, the company now eyes sustainable profitability as it enters what Li calls "the final phase" of industry consolidation through 2035.
Comments