Li Bin: NIO’s Q4 Profitability Goal Remains Unchanged, Three Large Vehicles Poised for 2026
NIO reaffirmed its commitment to achieving overall profitability in the fourth quarter of 2025, buoyed by record revenue and improving margins despite broader market volatility. Founder and CEO William Li (Li Bin) confirmed the company’s financial trajectory remains on target following a strong third-quarter performance that delivered the highest gross margins in three years.
In an earnings call following the release of the third-quarter results, Li reiterated guidance for a vehicle margin of 18% and total deliveries between 120,000 and 125,000 units for the current quarter. Management emphasized strictly controlling general expenditures to approximately 12% of sales costs, a critical operational adjustment required to break even.
Looking beyond immediate financial targets, Li unveiled an aggressive product roadmap for 2026, comprising three new large-size models designed to capitalize on the growing structural demand for premium pure electric vehicles. The company also announced plans to license its proprietary Shenji NX9031 chips to strategic partners, signaling a move to monetize its technology stack beyond vehicle sales.
These strategic updates come as the Shanghai-based automaker reported its best-ever quarterly revenue of RMB 21.79 billion yuan (US$3.01 billion) in the third quarter. Net losses narrowed significantly, shrinking by over 30% both quarter-over-quarter and year-over-year to RMB 3.48 billion yuan, driven by record deliveries of 87,071 units and the strong performance of its L90 flagship.
Path to Profitability
Li outlined a three-pronged strategy to ensure profitability in the fourth quarter: maintaining high gross margins, increasing volume, and rigorous cost control. The company expects total revenue to reach approximately RMB 33 billion yuan in the fourth quarter.
A key driver of this optimism is the vehicle margin, which reached 14.7% in the third quarter—exceeding internal expectations. Li projects this will rise to approximately 18% in the fourth quarter, supported by the high-margin ES8 model. Deliveries of the ES8 are expected to surge in November and December, with the model itself targeting a margin exceeding 20%. Li expressed confidence that supply chain optimizations could push the company’s overall gross margin to 20% in 2026.
Regarding the phase-out of purchase tax subsidies, Li noted that while there is an impact, it has not materially affected margins. He added that the market is expected to digest policy changes by next year. However, he cautioned that due to seasonal factors, deliveries and profits in the first quarter of 2026 would likely adjust downward compared to the current quarter.
Delivery Guidance and Market Trends
NIO set its fourth-quarter delivery guidance at a monthly average of over 40,000 units, representing a near 50% increase quarter-over-quarter. While this falls slightly short of previous aggressive targets of 50,000 units per month due to macro headwinds, Li emphasized that 40,000 units remains a strong figure for a brand positioned in the premium segment with an average selling price above RMB 300,000 yuan.
Li indicated that the company still aims to reach the 50,000-unit monthly milestone in a specific month next year, driven by improved marketing efficiency and new product launches. He also highlighted that NIO’s Battery as a Service (BaaS) model helps mitigate the impact of tax subsidy reductions by offering consumers a lower tax base.
Disciplined Cost Control
Cost discipline remains central to NIO's financial health. Li confirmed that R&D expenses will remain capped at RMB 2 billion yuan per quarter through next year, with a focus on increasing output through efficiency rather than spending.
The most significant adjustment is in Sales, General, and Administrative (SG&A) expenses. After seeing the ratio of SG&A to sales cost drop from 40% in Q1 to approximately 23% in Q2, NIO aims to further compress this to roughly 12% in the fourth quarter. Based on third-quarter sales costs, this reduction could free up over RMB 2 billion yuan, providing a substantial buffer to support the bottom line.
Strategic Expansion in 2026
Addressing the company's long-term growth, Li revealed that three new models will launch in 2026: two in the second quarter and one in the third quarter. He described all three as "large vehicles," aligning with market data showing that pure electric vehicles are gaining share in the large SUV segment.
Li cited data showing that in the premium market (vehicles priced over RMB 300,000 yuan), pure electric vehicle sales grew 33% in the first three quarters of 2025, while hybrids and extended-range electric vehicles (EREVs) saw a 10% decline. With the upcoming launches, NIO will have five large pure electric models on sale next year. Additionally, the company is developing a new vehicle platform for the sub-RMB 200,000 yuan market to capture broader volume.
Chip Licensing and AI Strategy
In a move to leverage its R&D investments, NIO confirmed plans to license its Shenji NX9031 autonomous driving chip. Li stated the company is open to supplying the chip to strategic automotive partners as well as non-automotive sectors, such as robotics.
The Shenji chip features high memory bandwidth (546GB/s), a critical metric for large model inference and throughput. While NIO currently has no plans to enter the embodied intelligence hardware sector, the company views chip authorization as a standard industry practice to monetize intellectual property. Concurrently, NIO plans to upgrade its "World Model" and end-to-end AI capabilities in the fourth quarter, utilizing the same efficiency strategies applied to its business operations.