NIO achieved its first quarterly profit since its inception in the fourth quarter of 2025, a historic financial turnaround primarily driven by record vehicle deliveries and robust market demand for high-margin models.
US-listed NIO shares jumped about 5% in premarket trading.
The Chinese electric vehicle (EV) maker reported a net income of 282.7 million yuan ($40.4 million) for the three months ended December 31, according to earnings report released on Tuesday.
The result stands in stark contrast to the massive net loss of 7.11 billion yuan recorded in the same period of 2024.
Excluding share-based compensation expenses, the company's adjusted non-GAAP net income reached 726.8 million yuan in the fourth quarter. This falls in line with the estimated range provided in a rare positive profit alert issued by the company last month.
Revenue for the fourth quarter surged 75.9% year-on-year to 34.65 billion yuan. Meanwhile, the company's overall gross margin expanded significantly to 17.5%, up from 11.7% in the fourth quarter of 2024.
The core driver behind this profitability milestone was the record-high delivery of 124,807 vehicles in the fourth quarter. The third-generation ES8, which has a starting price of over 400,000 yuan and boasts a gross margin of around 20%, played a crucial role.
In addition to strong sales performance, aggressive cost-control measures paved the way for the fourth-quarter profit.
Driven by organizational optimization and reduced personnel costs, research and development expenses in the fourth quarter were slashed by 44.3% year-on-year to 2.02 billion yuan.
Selling, general and administrative expenses for the quarter also dropped 27.5% year-on-year to 3.53 billion yuan. This was primarily attributable to a decrease in personnel and related costs in marketing and other supporting functions.
However, following the strong fourth-quarter performance, NIO and its domestic peers are facing new industry headwinds as they enter 2026.
The company expects vehicle deliveries for the first quarter of 2026 to be between 80,000 and 83,000 units. Total revenues for the first quarter are projected to range from 24.48 billion yuan to 25.18 billion yuan.
NIO's founder, chairman, and CEO William Li previously warned that the entire Chinese EV industry would face immense growth pressure in the first quarter as national stimulus policies fade.
Market demand in the first quarter has been severely impacted by the Chinese Lunar New Year holiday and the transition period for EV trade-in subsidies. Furthermore, the additional purchase tax costs faced by consumers have further dampened near-term buying sentiment.
Beyond demand-side pressures, rising prices for raw materials such as memory chips and metals could once again threaten automakers' profit margins.
As of the end of 2025, NIO's balance of cash and cash equivalents and other funds stood at 45.9 billion yuan.
Investors will be closely watching management's remarks during the earnings call, as well as the sustainability of its profitability in the face of macroeconomic challenges.
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