After losing 100 billion yuan, NIO has finally turned a profit | DeepKr

Lao Zhou still cannot believe that at this time last year, he was lingering near NIO's office, urging the company to pay its dues every day, as "the boss was terrified that NIO would go bankrupt". Now, NIO ships 20,000 to 30,000 vehicle sets per month and has become one of their major clients.

Experiences like Lao Zhou's are very common across NIO's supply chain.

An interior supplier told 36Kr that last year, his company was so worried that NIO would face a sudden liquidity crisis that it pressed NIO to settle mold fees as soon as possible. But NIO was short of cash, so it finally paid off the debt with dozens of Firefly vehicles, plus some LeDao L60 and NIO ES6 units. Some suppliers tried to avoid doing business with NIO back then, and simply quoted "sky-high prices" when NIO inquired for quotations to turn NIO away.

The suppliers' concerns were not unfounded. Over the past 10 years, NIO's publicly disclosed accumulated losses have amounted to about 100 billion yuan. Even in the middle of last year, its released financial report still showed a single-quarter loss of 5 billion yuan. With Ji Yue and Hozon Auto collapsing one after another, the market's speculation on the next automaker to face a liquidity crisis naturally targeted NIO.

Even Li Bin, founder of NIO, said: "It is estimated that less than 1% of people believed NIO could turn profitable."

But NIO achieved that 1% possibility.

On September 1, NIO released its latest quarterly report, recording a profit of 26.1 million yuan under non-GAAP financial standards — which means it has achieved profitability for three consecutive quarters since the fourth quarter of last year.

This is very unusual amid the sluggish overall auto market this year.

The first major pressure is that since the first half of this year, the prices of memory chips, batteries and other components have risen sharply, leading to a general increase in supply chain costs for automakers. The second pressure is the phasing out of subsidies, which has cooled consumers' willingness to purchase. According to the China Passenger Car Association, domestic passenger vehicle sales in the first half of this year fell by about 20% year-on-year.

Even former "top performers" such as Seres and Li Auto have slipped from profitability to losses, while NIO has become one of the rare companies that bucked the trend.

Compared with NIO's past performance, this is also very unusual: it took the company only one year to turn around from an annual loss of 20 billion yuan to profitability.

"Bin Ge always manages to survive desperate situations," a long-serving NIO employee sighed to 36Kr. In the past few years, NIO has been on the verge of operational collapse several times due to bleeding losses, but Li Bin always managed to secure large sums of new funding from outside to pull the company back from the brink. As a result, NIO was trapped in a cycle of "expansion, crisis, financing, expansion".

But this time is different. Li Bin abandoned his past path dependence of relying on financing to sustain operations, shifting his focus from "external fundraising" to "internal optimization": he reshaped product concepts, improved operational quality of every link, strictly controlled costs and expenses, and paid close attention to the supply chain — leading NIO to undergo a radical, painstaking transformation that drove it to profitability and realized self-sufficiency.

This extreme reversal from loss to profitability seems to have happened miraculously within a year, but if we look at the break from past product shackles and the reconstruction of automotive product competitiveness, NIO has been preparing for this "profitability battle" for 4 years.

Monthly sales doubled: letting go of product obsessions and building a "battery-swappable Li Auto equivalent"

"Anyone who wants to make big screens can go work for Li Auto," a former NIO executive recalled to 36Kr. In early product meetings, Li Bin once rebuked an employee who proposed adding large screens to vehicles.

At that time, Li Bin probably did not expect that years later, the popular new NIO ES8, ES9, LeDao L90 and other models would be jokingly called "battery-swappable Li Auto equivalents" by netizens. All these models share unified core selling points: large size, spacious interior, and rich configurations, especially the refrigerator, smart screen and zero-gravity seat that Li Auto popularized, all of which are fully equipped in NIO's new vehicles.

"The ES8 has a relatively spacious interior, so the whole family can travel without feeling crowded," said an owner who just bought this model. Compared with the second-generation ES8 that cost 500,000 to 600,000 yuan, the third-generation ES8 is priced at more than 400,000 yuan, which he considers "very cost-effective".

The effect of the "battery-swappable Li Auto equivalent" strategy was immediate. After the improved new products were launched in August last year, NIO's monthly sales rose sharply, once approaching 50,000 units, doubling year-on-year. In particular, the large SUV ES8 became the best-selling new energy vehicle above 400,000 yuan in some months. Even as the auto market cooled down this year, NIO still maintained monthly sales of around 30,000 units.

Before that, NIO's vehicles were long plagued by dilemmas of large body size but limited interior space, short range, and low cost-effectiveness, leading to persistently underwhelming sales. The root cause was that NIO adhered to many "obsessions" in product definition that deviated from mainstream user demands.

Whether to install large and multiple screens in the car is a typical example. Li Bin, who graduated with a sociology degree from Peking University, has his own understanding of family education. He expressed in public and internal occasions that "I don't want my children to sit in the car and look at so many screens." Therefore, before 2025, NIO's vehicles only had a vertical central control screen in the cockpit.

Even to solve the problem of no large in-car screen, NIO took a roundabout path by promoting AR glasses to vehicle owners, allowing users to wear AR glasses in the car to watch videos.

A NIO employee recalled that to rationalize this decision, Li Bin listed a series of evidence internally including the market share of AR glasses, user experience of AR glasses, cost and portability of AR glasses, to demonstrate that AR glasses would replace in-car screens. But later facts proved that the entire AR glasses industry is still in the early stage of development. "It was a typical case of making another wrong decision just to make up for a previous mistake."

"Large body but small interior space" has long been a common criticism of NIO's vehicles in the market, and it is almost a fatal defect for current electric vehicles. This problem stems from another obsession of NIO: design priority.

One of NIO's brand labels is "excellent design taste", and the company's design-driven philosophy contributes most of the credit, giving designers extremely high decision-making power at NIO. However, good appearance and practicality are always difficult to achieve at the same time. For automobiles, exquisitely proportioned styling designs often conflict with interior space efficiency, which trapped NIO in its early development stage.

A NIO employee told 36Kr that when the body size of the second-generation flagship ES8 was initially planned, the team intended to design it to ensure "1.8 meters of legroom in the front row, 1.8 meters of legroom in the back row, and 3 fists of space in the second row", so that after the leg rest on the queen co-pilot was lifted, the user's feet would not get stuck.

But the designers of the second-generation ES8 rejected this plan on the grounds that extending the wheelbase and body length would make the overall appearance of the vehicle less refined. As a result, "the third row of the second-generation ES8 is hardly usable for passengers, and there is no front trunk, so the storage space is insufficient."

"In addition, the wheelbase was shortened, but a large 22-inch wheel hub was equipped, which made the second-row seats of the second-generation ES8 unable to be fully flattened, greatly affecting the comfort experience." This problem once led to the resignation of the person in charge of the seat project.

Secondly, premature compatibility with the European market also limited the design of NIO's vehicles. The second-generation ET5 is a personalized coupe of NIO positioned against Tesla Model 3. The similar Xiaomi SU7 still maintains monthly sales of nearly 20,000 units, but NIO's second-generation ET5 has long remained lukewarm in the market.

A NIO insider told 36Kr that one major shortcoming of this model is that "the front cabin is too short", "this model is designed with deep consideration of European market demands, and the BMW 3 Series and Mercedes-Benz C-Class that the ET5 targets are not lengthened in Europe."

All kinds of early product obsessions have become shackles for NIO to capture mainstream Chinese market demands. Competitors, relying on large interior space, refrigerators, smart screens and comfortable seats, achieved monthly sales of 10,000 units for a single model, while NIO's similarly positioned ES8 lingered at around 1,000 units per month for years.

Even later cross-border automakers such as AITO and Xiaomi have reached a monthly sales scale of 30,000 units, while NIO, which has more than 10 models in its product line, is still struggling at around 20,000 units per month.

Those who once tried to educate the market will eventually be educated by the market. NIO invested huge sums of money in building its second-generation platform (NT2), but never produced a hit model. Li Bin finally realized the cost of "developing products while ignoring market demands". According to 36Kr, shortly after the second-generation platform was delivered in the second half of 2022, Li Bin led the company's senior management to hold consecutive product review meetings to find the reasons for the poor performance of the second-generation platform products.

A former NIO executive told 36Kr that the consensus reached at the meeting was that the products were "not grounded", and did not truly consider problems from the perspective of users and the market.

"Take in-car screens as an example, should we make the screens we want, or the screens the market needs?"

Even when it came to the latest (third-generation) platform, Li Bin was still hesitant about the attitude towards large screens. An employee close to Li Bin revealed that during the product definition process of the latest generation of products, Li Bin struggled with the in-car screens for a long time, but finally compromised, and the third-generation flagship SUV ES8 is equipped with five or six screens.

Adding screens alone was not enough. After NIO enlarged the vehicle's shape and interior space synchronously, and added configurations such as refrigerators and multiple zero-gravity seats, its new-generation platform models finally found the password to boost sales.

On September 20, 2025, the third-generation NIO ES8 was launched. With a more aggressive body and wheelbase design, plus large-capacity front and rear trunks, Li Bin had the confidence to shout the slogan "can be a perfect substitute for MPVs" at the launch event.

Another NIO insider told 36Kr that the third-generation NIO ES6 was originally planned to be released in 2026. But last year, NIO's internal assessment showed that the product competitiveness of this model was insufficient, and considering that the five-seat version of ES8 would be available this year, the release time was postponed to 2027. "The insufficient product competitiveness mainly refers to the insufficiently large body size."

The current market is far more competitive than imagined, so NIO would rather delay the launch by a full year, enlarge the body size, and add configurations such as zero-gravity seats.

The experience that "larger vehicles sell better" is not only used by NIO to define SUV models, but also replicated to the personalized coupe model ET5.

36Kr learned that NIO plans to lengthen the body and wheelbase of the third-generation ET5. The rear space of the ET5 next year is expected to achieve qualitative improvement, and the new model will focus on sportiness while taking into account the rear family travel experience.

The deeper change lies in the logic of product definition. A NIO insider said that in the past, when defining products, NIO simply benchmarked Mercedes-Benz and BMW, "and thought relatively little about who the vehicles would be sold to".

Now, NIO's product definition learns more from the most successful vehicle cases in the current industry. When defining a vehicle, the team also thinks about what the target groups want. "When defining the third-generation vehicles, NIO first divided the customer groups into three categories: for me (self-pleasure), for business and for family, and then carried out product definition based on these segmented scenarios".

Fortunately, the internal "harmony" within the company coincided with the "right timing" of accelerated penetration of pure electric vehicles, further amplifying the revenue of NIO's third-generation vehicles.

The improvement of battery swapping and charging infrastructure and the popularization of ultra-fast charging technology have quickly alleviated users' energy replenishment anxiety for electric vehicles, promoting rapid growth in pure electric vehicle sales. Data from the China Passenger Car Association shows that in 2025, pure electric vehicle sales increased by more than 24% year-on-year, outpacing the overall new energy vehicle market and also exceeding the growth rate of plug-in hybrid vehicles including extended-range models.

Since the beginning of this year, the rise in oil prices has further boosted the growth of pure electric vehicles. An automaker executive told 36Kr that the sales of fuel vehicles of his own company "suddenly dropped by 50% in the first half of the year, which caught us completely off guard and was totally out of our expectation".

After NIO completed a whole set of reflection and adjustment around product definition, superimposed on the upward trend of the pure electric track, its third-generation vehicle products began to deliver satisfactory results.

On August 21, Li Bin posted good news on his WeChat Moments: on the first anniversary of the third-generation ES8's debut, the 140,000th unit of this model was delivered, and the latest flagship SUV ES9 had accumulated more than 20,000 units of delivery 73 days after its launch.

At the same time, a fine-grained operational optimization campaign aimed at profitability has penetrated every layer of the company.

Seeking revenue externally: NIO transforms into a "component supplier"

At an internal meeting last year, Li Bin said: "Every sum of money, every position, every project, every fixed asset investment must have someone paying for it. You can either earn money from outside, or generate revenue through internal efficiency improvement."

NIO's way of earning money from outside is not only limited to selling more vehicles, it has also transformed itself into a manpower outsourcing company and a component supplier.

"Now for any business worth more than 2 million yuan, Bin Ge will try his best to secure it," a NIO management member told 36Kr.

"Many employees are working on outsourcing projects." A NIO employee gave 36Kr some examples: some employees traveled to Europe earlier this year to help a supplier bid for a project from an overseas automaker, which could "earn NIO several million yuan" if successful.

Some employees are developing APPs for China Mobile, "which is estimated to earn only 700,000 to 800,000 yuan, but Bin Ge thinks it is real revenue", and this sum of money is net profit for the company, since NIO has already paid for the manpower cost.

In addition to selling manpower, NIO also sells technologies, and it "wants to sell any of its technologies".

Among NIO's numerous technology stacks, the chip business has brought in considerable revenue.

NIO's chip subsidiary, Shenji Technology, has initially opened up external supply channels. According to 36Kr, NIO's Shenji chips have obtained a designated order for edge computing projects from Hefei.

Last year, Shenji Technology established a joint venture Chuangyuan Zhihang with Axera and OmniVision. An industry source close to Axera told 36Kr that external supply of chip technology has brought NIO a considerable technology licensing fee, and the revenue of Chuangyuan Zhihang will further increase if the chip shipment volume is large enough.

Now, the first assisted driving chip of the joint venture Chuangyuan Zhihang is expected to enter the supply chain of a leading automaker. The initial plan is to use two of the joint venture's chips to develop L3 autonomous driving services. Several other leading automakers have also shown strong interest in this chip.

Self-development of assisted driving chips was once one of NIO's most capital-intensive businesses. Li Bin once calculated the R&D cost of the NX9031 chip at the 2025 China EV 100 Forum: the R&D investment for one NX9031 Shenji chip is enough to build 1000 battery swapping stations.

However, according to calculations by industry insiders, automakers with annual sales of less than 2 million units cannot cover the cost of self-developed chips, and