Nio (NIO 0.15%) reported fiscal 2025 first-quarter earnings on June 3, 2025, delivering 42,094 vehicles in the first quarter, up 4.1% year over year and total revenue (GAAP) of RMB 12 billion, up 21.5% year over year and down 38.9% quarter over quarter. Vehicle gross margin (GAAP) reached 10.2%, and management reaffirmed its delivery guidance of 72,000–75,000 units for the second quarter, with targets for breakeven and double-digit gross margin in Q4 2025. Key developments include accelerated cost controls, strategic new model launches, and a disciplined transition to an inventory-based sales model under competitive industry dynamics.

Disciplined Multi-Brand Expansion Paired with Structurally Lower Costs

Nio's organization now manages three brands -- Nio, Onvo (referred to as "Amo/Ambu"), and Firefly -- with distinct product launches in Q2 and further major additions slated for Q3. Cost control measures have been implemented through cross-brand resource integration, logistics, and R&D streamlining, directly reducing operating expenditure targets.

"With that, we are going to witness the savings from the operating spending perspective, and such saving will be reflected in our Q2's earnings and also the corresponding results ... in Q4, as we also have the breakeven target, we aim to control our R&D expenses to be within 2 to 2,500,000,000 RMB per quarter. That represents a 20 to 25% year-over-year decrease from last year."
— William Li, Founder, Chairman of the Board, and CEO

Execution on sharply lowered R&D and SG&A targets strengthens the path to breakeven, improves cash flow prospects, and enhances flexibility for continued product innovation while defending market share across divergent customer tiers.

Margin Improvement Driven by In-House Technology and Premium Model Transition

The Nio brand’s transition to internally designed smart driving chips and high-margin new vehicle variants is expected to drive vehicle margin improvement to approximately 15% in the second quarter, supporting a rebound in corporate gross margins. ES6, EC6, ET5, and ET5T model launches, along with cost reductions of roughly RMB 10,000 per vehicle, are expected to boost profitability in the second quarter.

"as the new models are equipped to wear the in-house developed chip, this can also contribute around the 10,000 RMB saving and cost reduction per unit. With that, in Q2, the vehicle gross margin of the new plan will be improved to around 15%."
— William Li, Founder, Chairman of the Board, and CEO

Deployment of proprietary semiconductor technology directly underpins improved margin expansion and signals the company’s capability to scale technology as a competitive cost advantage across its growing model range.

Operational Leverage Anchored by Accelerating Deliveries and Inventory Model Shift

NIO’s operational plan for the fourth quarter includes monthly deliveries of 25,000 units each for the NIO and Onvo brands, enabled by the ramp of a third manufacturing plant in September and a deliberate shift toward inventory-based sales to match consumer expectations for immediate delivery. Management links this volume to a target of 17%–18% vehicle gross margin and SG&A expenses within 10% of sales revenue in the fourth quarter.

"... your assumption is kind of also a guidance for us to achieve our operational target and also profitability. In Q4 this year, and we are confident in that."
— William Li, Founder, Chairman of the Board, and CEO

Scaling production and shifting to inventory-based sales are expected to drive both higher delivery volumes and improved cost absorption, supporting the company’s stated breakeven ambitions for Q4 2025.

Looking Ahead

Management guides Q2 2025 deliveries in the 72,000–75,000 range, expects double-digit overall gross margin and a 15% vehicle margin in the second quarter, and targets monthly deliveries of 50,000 units across all brands in the fourth quarter. Operating expenses are forecast to decline substantially, with R&D capped at RMB 2 billion–2.5 billion per quarter and non-GAAP SG&A below 10% of sales, with targets set for the fourth quarter, enabling the company to target breakeven in Q4. No specific full-year international sales target was provided, but Firefly brand launches in multiple overseas markets are planned in H2 2025.