Completely abandon price to survive, can NIO reverse its dilemma?

$NIO Inc. (NIO.US) released its financial report for the second quarter of 2025 before the U.S. stock market opened and after the Hong Kong stock market closed on September 2, 2025, Beijing time. Although the second - quarter performance still fell short of expectations, there were marginal improvements. Let's take a detailed look:

1. The gross profit margin of car sales fell short of expectations this quarter: Previously, NIO had guided that with the launch of the refreshed version of the 5566 model, the average selling price of cars could recover from the low point of inventory clearance in the first quarter. Coupled with the cost reduction brought by the self - developed chip NX9031 installed in the 5566, the gross profit margin of car sales could rebound to around 12% - 13% quarter - on - quarter this quarter.

However, the gross profit margin of car sales this quarter was basically the same as that during the old - model inventory clearance in the previous quarter, at around 10.3%. The core problem lies in the average selling price of cars.

2. The average selling price of cars continued to decline quarter - on - quarter compared with the first quarter: The average selling price of cars this quarter decreased by another 12,000 yuan quarter - on - quarter to 224,000 yuan compared with that during the old - model inventory clearance in the previous quarter, which was lower than the market expectation of 241,000 yuan. The price cut in the second quarter was even higher than that during the old - model inventory clearance in the first quarter, which still reflects that NIO is still cutting prices, and sales volume remains the top priority.

3. The sales volume guidance for the third quarter is acceptable: The sales volume guidance for the third quarter is between 87,000 and 91,000 units. Since the delivery of the LeDao L90 has started, the implied sales volume in September is between 35,000 and 39,000 units, an increase of 4,000 - 8,000 units compared with 31,000 units in July. Dolphin Research believes that such sales volume guidance is acceptable. Especially, nearly 10,000 units of the LeDao L90 were delivered in August, and there is still such an increment.

4. However, the revenue guidance is relatively mediocre, mainly because the average selling price of cars is lower than expected: The revenue guidance for the third quarter is between 21.8 billion and 22.9 billion yuan. If we estimate other revenues in the third quarter to be 2.8 billion yuan (the same as this quarter), the average selling price of cars will continue to decline by 4,000 yuan quarter - on - quarter to 220,000 yuan, which is also significantly lower than the market expectation of 242,000 yuan.

5. Cost reduction and efficiency improvement have begun to be reflected in the three major expenses: The sales and administrative expenses improved by 440 million yuan quarter - on - quarter to 3.96 billion yuan, better than the expected 4.2 billion yuan. This is mainly because the sales channels of LeDao and NIO have been merged, and about 5,000 employees were laid off during the organizational structure adjustment in the second quarter. The hardest - hit area of the layoffs should be the sales and service team.

The R & D expenses also improved by 170 million yuan quarter - on - quarter to about 3 billion yuan this quarter. It is expected that this expense will continue to be cut in the second half of the year (previously, NIO guided that the R & D expenses in the fourth quarter of 2025 would fall back to between 2 billion and 2.5 billion yuan).

6. Loss reduction is still in progress: In terms of operating profit, the operating loss this quarter improved by 1.5 billion yuan quarter - on - quarter to 4.9 billion yuan. This is mainly due to the significant quarter - on - quarter increase in the gross profit margin of other businesses, which drove the increase in the overall gross profit margin, and the reduction of the three major expenses. The operating loss rate also narrowed from - 53.3% to - 26% this quarter.

Dolphin Research's view:

Overall, NIO's second - quarter financial report fell short of expectations. The core problem still lies in the average selling price of cars.

The company continued to cut prices to sell cars this quarter, resulting in the gross profit margin of car sales in the second quarter being lower than the company's guidance, and the implied average selling price in the third - quarter guidance was also significantly lower than the market expectation, which reflects that sales volume is still the top priority for NIO.

Although this financial report fell short of expectations and is expected to cause a correction in the stock price, the main point of market speculation will soon return to the ES8 model.

However, looking forward to the second half of the year, NIO's marginal upward trend remains unchanged:

① The sales volume is expected to continue to improve marginally in the second half of the year: Currently, the LeDao L90 has successfully become a hit model, and the ES8 has also received a good response in terms of the current order volume. Especially, NIO's current business strategy still takes sales volume as the top priority, and it is expected that the pre - sale price of the ES8 will continue to be lowered to promote order conversion.

② The trend of narrowing net losses remains unchanged: Since the ES8 model has a higher gross profit margin, if it can be successfully turned into a hit model, it will continue to accelerate NIO's significant loss reduction. NIO also mentioned in the earnings conference that the gross profit margin targets for the LeDao L90 and ES8 can reach 20% in the fourth quarter of this year, and the target for the overall vehicle gross profit margin is 16% - 17%.

The following is a detailed interpretation

NIO continued to cut prices to sell cars in the second quarter, and the gross profit margin of car sales was lower than expected

As the most crucial indicator every time the financial report is released, let's first take a look at NIO's profitability in car sales:

Previously, NIO had guided that with the launch of the refreshed version of the 5566 model, the average selling price of cars could recover from the low point of inventory clearance in the first quarter. Coupled with the cost reduction brought by the self - developed chip NX9031 installed in the 5566, the gross profit margin of car sales could rebound to around 12% - 13% quarter - on - quarter this quarter.

However, the gross profit margin of car sales this quarter was basically the same as that during the old - model inventory clearance in the previous quarter, at 10.3%. The core problem lies in the average selling price of cars.

Specifically:

1) Average selling price per vehicle: NIO continued to cut prices to sell cars in the second quarter, and the average selling price per vehicle decreased by another 12,000 yuan quarter - on - quarter!

① NIO continued to cut prices to sell cars in the second quarter, resulting in a decline in the average selling price per vehicle

The average selling price of NIO cars this quarter was 224,000 yuan, which decreased by another 12,000 yuan quarter - on - quarter compared with that during the old - model inventory clearance in the previous quarter. The price cut in the second quarter was even higher than that during the old - model inventory clearance in the first quarter. NIO still continued to cut prices to sell cars in the second quarter!

Behind this, it actually implies that the demand for the refreshed 5566 is average (it uses the NT2.0 platform instead of the NT3.0 platform), and the competitiveness of the LeDao L60 has declined. But for NIO, which is in a critical period of survival, sales volume is still the top priority.

② The increased proportion of low - price Firefly cars also dragged down the average selling price per vehicle

The low - price small car Firefly began to be delivered in the second quarter, and its proportion in the vehicle model structure increased by 11 percentage points quarter - on - quarter, which also dragged down the average selling price per vehicle to a certain extent.

2) Cost per vehicle: The self - developed chip + scale effect reduced costs, and the cost per vehicle decreased by 11,000 yuan

The cost per vehicle of NIO in the second quarter was 200,000 yuan, a decrease of 11,000 yuan quarter - on - quarter. This is mainly because the self - developed "NX9031" chip replaced the NVIDIA Orin - X chip in the refreshed 5566, reducing the cost per vehicle by 10,000 yuan. Coupled with a 71% quarter - on - quarter increase in sales volume in the second quarter, the scale effect was released.

3) Gross profit per vehicle: The continued decline in the average selling price per vehicle led to the gross profit margin of car sales in the second quarter falling short of expectations

The gross profit per vehicle of NIO in the second quarter was 23,000 yuan, and the gross profit margin of car sales this quarter was only 10.3%, lower than the market expectation of 12.9%. This is mainly because the average selling price per vehicle still continued to decline this quarter.

The sales volume guidance for the third quarter is acceptable, but the implied average selling price per vehicle in the revenue guidance continues to decline

1) The sales volume guidance for the third quarter is acceptable, and there is still an increment of 4,000 - 8,000 units in September

In the most crucial third - quarter guidance, the sales volume guidance for the third quarter is between 87,000 and 91,000 units. Since the delivery of the LeDao L90 has started, the implied sales volume in September is between 35,000 and 39,000 units, an increase of 4,000 - 8,000 units compared with 31,000 units in July. Dolphin Research believes that such sales volume guidance is acceptable. Especially, nearly 10,000 units of the LeDao L90 were delivered in August, and there is still such an increment.

2) However, the revenue guidance is relatively mediocre, and the problem still mainly lies in the average selling price per vehicle

The revenue guidance for the third quarter is between 21.8 billion and 22.9 billion yuan. If we estimate other revenues in the third quarter to be 2.8 billion yuan (the same as this quarter), the average selling price per vehicle will continue to decline by 4,000 yuan quarter - on - quarter to 220,000 yuan, which is also significantly lower than the market expectation of 242,000 yuan.

Since NIO announced at the end of August that all models would be standard - equipped with a 100kWh long - range battery pack while keeping the starting price unchanged, and the LeDao L90 was launched at a low price, the market is most worried about the gross profit margin of car sales and loss reduction. So the most crucial thing is to see how the company guides the gross profit margin of car sales in the third quarter during the earnings conference and whether it still adheres to the goal of breaking even in the fourth quarter.

Looking at NIO's overall situation:

The revenue and gross profit in the second quarter were lower than expected, but other businesses performed well

NIO's overall revenue in the second quarter was 19 billion yuan, lower than the market expectation of 19.7 billion yuan. The core reason for falling short of expectations still lies in the quarter - on - quarter decline in the average selling price per vehicle. However, other businesses performed well, increasing by 770 million yuan quarter - on - quarter to 2.87 billion yuan, exceeding the market expectation by 600 million yuan. This may be mainly due to the significant increase in the recognition of technical service revenues this quarter (it needs to be explained in the earnings conference call), as well as the increase in energy services and parts sales.

In terms of gross profit, NIO's gross profit margin this quarter was 10%, lower than the market expectation of 11%. This is still because the gross profit margin of the automotive business fell short of expectations. However, other businesses significantly reduced losses this quarter, and the gross profit margin increased by 13 percentage points quarter - on - quarter from - 4.5% in the previous quarter to 8.2%. Dolphin Research believes that this may be due to the increase in high - margin technical service revenues this quarter.

There are finally signs of cost control on the expenditure side

NIO has always been very "generous" in its expenditures to build a luxury car brand. However, in the second quarter when it was also facing a tight cash flow situation, there were finally obvious signs of contraction in NIO's three major expenses:

1) Sales and administration: There was an obvious contraction, and the expenses decreased by 440 million yuan quarter - on - quarter this quarter

Previously, due to the layout of luxurious Nio houses, a very complete service system and a large number of staff, and the separate sales channel layout of LeDao and the NIO main brand, the sales and administrative expenses had always been high.

Finally, this quarter, there were signs of cost control in the sales and administrative expenses. The sales and administrative expenses decreased by 440 million yuan quarter - on - quarter to 3.96 billion yuan, lower than the market expectation of 4.16 billion yuan. The non - GAAP sales and administrative expenses, excluding SBC and one - time layoff expenses, also decreased by 530 million yuan quarter - on - quarter to 3.7 billion yuan.

Dolphin Research believes that this is mainly due to:

① LeDao, which originally had a separate sales channel, has been merged into the NIO main brand, and the sharing of sales channels has led to a reduction in sales and administrative expenses;

② NIO laid off about 5,000 employees during the organizational structure adjustment in the second quarter, and the hardest - hit area of the layoffs should be the sales and service team.