Nio announced today its first-ever quarterly profit in 11 years

The Chinese EV maker announced today a significant financial milestone, projecting its first-ever quarterly adjusted operating profit for the fourth quarter of 2025. This achievement comes 11 years after the company’s establishment, marking a pivotal moment in its financial trajectory 

Nio ES8

Nio expects to achieve a significant financial milestone: its first quarterly profit in the fourth quarter of 2025 — both non-GAAP and GAAP —. The Chinese electric vehicle (EV) maker issued a profit alert in pre-market trading on Thursday, projecting adjusted operating profit (non-GAAP) for the fourth quarter to range between about 700 million yuan ($100 million) and 1.2 billion yuan ($172 million). 

This represents the first time the company expects to record a single-quarter adjusted operating profit. By comparison, Nio recorded a non-GAAP adjusted operating loss of 5.54 billion yuan in the fourth quarter of 2024. 

On a generally accepted accounting principles (GAAP) basis, Nio projects an operating profit of approximately 200 million yuan ($29 million) to 700 million yuan ($100 million) for the same period. GAAP refers to US Generally Accepted Accounting Principles. 

Nio believes non-GAAP financial metrics provide a clearer view of the key indicators used by management in financial and operational decision-making. 

The historic first quarterly profit boosts shareholder and car owner confidence and demonstrates Nio's business model viability. 

Driven by the profit alert, Nio surged nearly 11% in pre-market trading on Thursday. Nio management had previously said multiple times that the target was to achieve its first quarterly profit in the fourth quarter of 2025. 

However, the company's management cautiously emphasized that this was based on non-GAAP standards. Today's announced GAAP-based profit forecast came as a pleasant surprise. 

Nio attributed this positive financial turnaround to a combination of strategic factors. These include sustained sales growth throughout the fourth quarter of 2025, an optimized vehicle gross margin driven by a favorable product mix, and the company’s ongoing commitment to comprehensive cost reduction and efficiency improvement measures. 

The projected fourth-quarter profitability was largely driven by the strong performance of the third-generation ES8 following its launch. Nio officially launched the third-generation ES8 at Nio Day 2025 on September 20, 2025, with deliveries commencing the following day on September 21. 

Throughout 2025, Nio delivered slightly over 40,000 third-generation ES8 units, with the vast majority delivered in the fourth quarter. On January 30, the third-generation ES8 reached its 60,000th delivery milestone. 

In January, the model delivered 17,646 units, accounting for 65% of Nio Inc's total deliveries. With a starting price of 406,800 yuan ($57,200), the third-generation ES8 is one of Nio's highest-priced models and carries one of its highest gross margins. Nio management has indicated the third-generation ES8 has a gross margin of about 20%. 

Following a strong fourth-quarter performance, Nio may face challenges in the first quarter 2026, similar to domestic peers, as the first quarter is typically a slow season for China's auto market. 

Since January, the EV industry landscape has become more complex as consumers face an additional 5% purchase tax cost, while China's vehicle trade-in subsidies remain in a transitional phase, impacting demand. 

China's passenger NEV wholesale volume in January is estimated at 900,000 units, representing a 1% year-on-year increase but a 42% decline from December, according to data released Wednesday by the China Passenger Car Association (CPCA). 

From an industry demand perspective, achieving even half of the fourth-quarter 2025's levels would be a positive outcome in the first quarter 2026, Nio founder, chairman, and CEO William Li said. 

Additionally, rising raw material costs — including memory chips and metals — are also raising concerns. UBS analysts said in a January 26 research note that if automakers absorb all cost increases for memory chips and metals, it could completely erode their profits. 

The team estimates that the cost of a typical mid-sized smart EV will increase by 4,000 yuan ($575) to 7,000 yuan, though it remains uncertain whether these costs will be passed on to consumers. 

UBS assumes a mid-size EV requires 200 kilograms of aluminum and 80 kilograms of copper. Cost increases over the past three months indicate aluminum costs rose by 600 yuan, copper by 1,200 yuan, and lithium by 1,000 yuan to 3,800 yuan. Memory chips represent another cost driver. 

UBS learned from industry insiders that DRAM costs for a modern vehicle range from $25 to $150, with a reasonably intelligent vehicle typically costing around $100 in DRAM. Assuming DRAM costs were $100 or 700 yuan before recent price hikes, spot prices have surged 180% over the past three months.  

This translates to an increase in DRAM costs per vehicle from 700 yuan to 2,000 yuan, representing an additional 1,300 yuan cost based on spot price fluctuations, UBS noted. 

The rapid rise of artificial intelligence (AI) has fueled surging demand for data centers, emerging as a key driver of the global memory shortage. 

Additionally, over recent months, prices for lithium carbonate — a critical raw material for lithium batteries — have surged significantly, now impacting EV costs. 

Over the past two months, spot prices for battery-grade lithium carbonate in China have surged by about 80%. Rising raw material costs and memory chip prices represent significant potential cost pressures this year, a challenge facing the entire industry, said William Li, founder, chairman, and CEO of Nio, during a January 6 media briefing. Regarding memory chips, EV manufacturers must compete for resources with AI players and computing centers, he noted.