Li Bin's Latest Closed-Door Meeting: Sprinting Toward Profitability, How NIO Turns 1% Hope Into Possibility

"For a long period of time, probably less than 1% of people in the world believed that we could be profitable in the fourth quarter," said William Li, founder and CEO of NIO, at a small media briefing at NIO’s Shanghai Caohejing headquarters on August 3, the day after the release of the second quarter financial report.

This is indeed a challenging goal. After ten years of establishment, NIO is in an investment phase in terms of research and development, infrastructure, and multi-brand strategy. Transitioning from the investment stage to financial returns, moving from a first-quarter loss of 6 billion to a fourth-quarter profit, seems almost like an impossible task, and the skepticism from the outside world is quite reasonable.

However, William Li believes that as long as long-termism is well combined with short-term execution, the outside world will be able to see NIO’s competitiveness. “Focus on selling cars with peace of mind, delivering cars with peace of mind, and improving efficiency with peace of mind. In the fourth quarter, we will work diligently and steadily. Achieving profitability is a huge challenge, but this battle is one we have a chance to win, and one we must win.”

To achieve this goal, Li Bin provided a detailed profit statement: the monthly delivery volume in the fourth quarter is expected to reach 50,000 vehicles, with a gross profit margin recovering to around 16%-17%, while sales management expenses and R&D expenses are controlled within a reasonable range. In other words, in the fourth quarter of this year, NIO's three brands need to achieve a monthly production capacity target of 56,000 vehicles to reach a total quarterly sales target of 150,000 vehicles.

From skepticism to possibility, NIO relies on one small victory after another. "Starting with the L90, everyone felt that we might have a chance. The new ES8 turned out to be better than expected, and everyone's confidence grew stronger," Li Bin recalled.

As a result, NIO's performance showed signs of recovery in the second quarter of 2025. According to the financial report, NIO delivered 72,056 vehicles in the second quarter, representing a year-on-year increase of 25.6% and a quarter-on-quarter increase of 71.2%. Revenue reached 19.01 billion yuan, up 9.0% year-on-year and 57.9% quarter-on-quarter. William Li stated, "In the second quarter of this year, NIO entered a new development cycle. Both sales and operations have returned to an upward trajectory."

Behind the positive trend are a series of reform measures and new product strategies implemented by Li Bin that have shown clear results. Since the beginning of this year, Li Bin has introduced the CBU (Core Business Unit) mechanism internally, requiring each research and development project to clearly define its expected return on investment when initiated and to undergo a closed-loop evaluation upon completion. This means that while NIO remains committed to long-termism, it is also placing greater emphasis on short-term business awareness and investment returns.

In 2019, NIO experienced a crisis and managed to overcome it with the support of its users and timely assistance from the government, although luck played a part in that recovery. This time, facing a relatively long and deep trough, NIO hopes to rely on its own capabilities to emerge from the situation.

Below is the full transcript and Q&A of the meeting:

Li Bin said: "After 10 years of steadfast commitment, we have finally reached the turning point for pure electric vehicles."

Yesterday we released our second-quarter financial report, which inevitably has a certain time lag compared to the current actual operating conditions. This year, everyone is most concerned about two aspects: how well we are selling, and when we can start making a profit, or whether we can be profitable at all. In fact, people do not have much concern about NIO’s products, technology, or brand itself; rather, they focus more on our operating status, efficiency, and sustainability—this is also the core concern of the industry, users, the supply chain, investors, and the media.

From the second quarter financial report, it can be seen that the company's operating conditions are improving, with a significant improvement compared to the first quarter. This includes some one-time adjustments brought about by organizational optimization, and if these factors are excluded, the actual improvement is even greater. If we also consider the contributions from new product launches and new brand operations, the real situation would be better than the numbers indicate. It can be said that in the second quarter of this year, NIO has entered a new development cycle, with both sales and operations returning to an upward trajectory.

In the past few years, NIO has maintained an annual growth rate of 30%-40% during its second-generation product cycle, but it still falls short compared to industry leaders and does not fully meet expectations. With the implementation of new technologies, the launch of new products, and the commencement of deliveries for new brands, the investments we made in previous years are gradually paying off.

This year marks a milestone for NIO in terms of technology, product launches, and infrastructure development. Based on the already released Q2 delivery data, we are providing guidance for Q3: In August, we delivered over 31,000 vehicles, setting a new record high. Not only did the total volume break through previous records, but both the Le Dao and Firefly brands also achieved new highs. As a strategic product, the L90 achieved first-month deliveries of 10,575 units, setting records for both the industry and the company. Looking ahead to September, we expect to continue breaking records. Our Q3 delivery guidance is between 87,000 and 91,000 vehicles, with projected revenue of 21.8 to 22.2 billion yuan.

In the second quarter, deliveries increased by 71.2% quarter-on-quarter. In August, both year-on-year and month-on-month growth were also significant. The third quarter is expected to see an increase of around 50%. Everyone is very concerned about whether we can achieve profitability in the fourth quarter. Internally, I said that maybe only 1% of people believed we could achieve profitability in the fourth quarter, and now that might have risen to 5%, but it remains a very challenging goal.

We have always been in the investment phase in terms of R&D, infrastructure, and multi-brand development. Shifting from the investment stage to financial returns, and turning a 6 billion loss in the first quarter into a profit in the fourth quarter, seems like an almost impossible task. The doubts everyone has are perfectly reasonable.

But we are clear internally that despite the huge challenges, possibilities still exist. The formula for profit = sales × gross margin - expenses.

In the fourth quarter, we aim to achieve an average monthly delivery of 50,000 vehicles, totaling 150,000 vehicles. Even including Ledao and Firefly, our average unit price remains relatively high in the industry, and the sales revenue in the fourth quarter is expected to reach a record high. Regarding gross margin, the guidance for the fourth quarter is 16%-17%. In the second quarter, it has already rebounded to 10.3%, and the gross margin for non-vehicle businesses has also reached a historic breakthrough of around 8%. With the increased proportion of high-margin products such as the all-new ES8 and L90, achieving a gross margin of 16%-17% is a reasonable target.

In terms of cost control, R&D expenses were previously around 3 billion RMB per quarter. Now, through the business unit (CBU) mechanism and comprehensive ROI calculations, efficiency has been greatly improved. We are confident that R&D expenses can be controlled at around 2 billion RMB while still achieving the same output as the original 3 billion. Sales and administrative expenses are also being optimized, and are expected to be kept within 10% of sales revenue in the fourth quarter. Overall, there is a good chance of achieving non-GAAP profitability in the fourth quarter.

The most critical task is to achieve the delivery target of 150,000 vehicles. Currently, the L90 and the all-new ES8 have strong pre-order numbers, and together with the L60 and Firefly, there are four models with orders awaiting production, indicating strong demand. In terms of production capacity, the L90’s capacity can reach 15,000 units in October, and the ES8’s capacity will increase to 15,000 units in December. By then, LeDao’s total production capacity will be 25,000 units, NIO’s will be 25,000 units, and Firefly will be 6,000 units, resulting in a total capacity of 56,000 units, laying a solid foundation for monthly deliveries of 50,000 units.

The prerequisite for profitability in the fourth quarter is good car sales.NIO has been able to return to a growth trajectory because we have firmly stuck to what we should persist in, and resolutely made changes where necessary.The most difficult part of running a business is knowing what to persist in and what to change. This has been my eternal challenge since I started my entrepreneurial journey.

The strong sales of the all-new ES8 and L90, as well as the popularity of the L60 and Firefly, prove that our persistence and adjustments in product competitiveness are effective. The long-term competitiveness in the automotive industry relies on products. We remain steadfast in our technological path and product planning, but in product definition, we actively learn from peers and listen to the voices of users.

The competition in the automotive industry ultimately boils down to the competitiveness of the products. While aspects like marketing are certainly important, in the long run, only strong products can enable a company to maintain its competitiveness.Product competitiveness is divided into three levels: the bottom level is the technology roadmap, the middle level is product planning, and the top level is product definition.

NIO adheres to long-term thinking in its technological roadmap and product planning, such as forward-looking R&D and a pure electric route featuring charging, swapping, and upgradability. Meanwhile, we remain flexible in product definition—for example, by adding single-motor options and optimizing configurations to meet user needs.

This year is a turning point for the pure electric vehicle market.Users are beginning to experience greater benefits from pure electric technology than the inconvenience of recharging. The front trunk design of the L90 and ES8 demonstrates the spatial advantages of pure electric technology, which cannot be achieved by gasoline cars or plug-in hybrids. At the same time, as the charging and swapping network continues to improve, with over 5 million public charging piles nationwide and NIO having deployed more than 8,000 charging and swapping stations, including over 1,000 highway swapping stations, the user experience has significantly improved.

In July, pure electric vehicle sales increased by 24.5% year-on-year, while extended-range vehicles declined by 11.4%, indicating that the market is shifting towards pure electric models. We have adhered to a pure electric route that supports charging, battery swapping, and upgrades, and have finally reached a turning point. Among the new ES8 reservation users, excluding existing NIO users who are upgrading or swapping, owners of extended-range and fuel vehicles account for 80%.

The second point is adherence to multi-brand product planning.By serving a broader user base through the three brands NIO, Ledao, and Firefly, and sharing technology and infrastructure, NIO positions itself as high-end technology, Ledao focuses on family users, and Firefly targets high-end compact cars. Although the multi-brand strategy required significant upfront investment and caused financial pressure, persevering until now has begun to reveal the synergistic advantages of the three brands, with highly reused teams and continuously improving efficiency.

The third thing to be advised to learn is product definition.Product definitions must keep pace with the times, actively listen to user feedback, and learn from outstanding industry practices, such as adding single-motor versions and creating large sofas for refrigerators and TVs, to meet user needs.

Another change is the organizational capability of the enterprise.Through the CBU mechanism and process optimization, R&D and operational efficiency have significantly improved. The rapid release and delivery of the L90 and ES8, at a much faster pace than before, demonstrate the progress in organizational capability, which is essential for NIO.

In 2019, NIO went through a crisis and managed to get through it thanks to the support of its users and timely assistance from the government. However, that instance involved a bit of luck, and we didn't actually "gain much capability." This time is quite different; it's a deeper and longer trough. As we gradually emerge from it, we have a clearer understanding of our strengths and areas needing improvement, and a more resolute determination regarding the capabilities we must develop. We have also gained greater resilience in how we organize. It can be said that this time, we have begun to gain some real skills.

Question section: Translate the above content into English and output the translation directly without any explanation.

How to turn skepticism into possibility regarding fourth-quarter profits?

You just said that fewer than 1% of people in the world might believe we can be profitable in Q4. So far, roughly how many people believe we can achieve profitability in Q4?

We are not facing a crisis for the first time. In fact, NIO went through a cycle back in 2019 and 2020. We hit rock bottom, were on the verge of death, and then came back. After reaching a highlight moment, we entered an even longer cycle. The "1%" is just a figure of speech; I believe there are definitely more than 1% of people in our company who believe in us. There are still many colleagues who believe the company can pull through.

Question: When was this change in confidence internally noticed?

I think that this year, due to some external pressures, all of our colleagues in the company know that we must accomplish this mission. Everyone is aware that there are new cars to be launched this year, and that we need to do a good job with these new cars. Everyone is very clear about the value of the work we are doing, and of course, in the end, we still have to face the test of the market.

I believe that whether internally or externally, starting from the L90, people began to feel that we had a real chance. The new ES8 turned out even better than expected, which further strengthened everyone’s confidence. We need to rely on one small victory after another to gradually boost morale.

The question: Many people in the market seem to view "Q4 profitability" as a sword hanging over NIO's head. Does whether NIO can be profitable in Q4 directly determine its future?

People are indeed very concerned about NIO's sustainability, as it directly relates to our brand image, sales, and various other aspects. As a company listed in three locations, our financial reports are completely transparent.

Just like after yesterday’s financial report release, there are still people talking about how much we lost, and this kind of discussion happens every quarter. Such attention not only affects user conversion efficiency, but also impacts various aspects including recruitment and supply chain cooperation—it’s not just limited to car sales.

Therefore, I believe that proving our ability to achieve profitability at an appropriate time is very important, as it is a practical business necessity.

From the perspective of company operations and development stages, we must achieve this as well. This is not something we say just for others to hear; internally, we are very clear that this goal must be accomplished by this point in time.

The path of industry competition is indeed very long. In 2021, we lost 500 million in one quarter, with a gross margin of over 20%, which doesn't tell the whole story. That 500 million was originally intended to prepare for profitability in 2022, but due to various reasons, we couldn't achieve our goals in 2022. So, this year we have to get back up and prove that we can succeed.

Question: From the second quarter financial report, it can be seen that the company's net loss has narrowed. How do you view the extent of this narrowing, is it better or worse than expected?

It's pretty much as expected; it's part of the plan.

Question: If there is a profit in Q4, and then Q1 faces the off-season, how many quarters do you think this profit trend is likely to continue?

This is not just a problem for one company. I believe everyone will face great pressure in Q1 next year because there was a reduction in the purchase tax this year, which is very tangible. Therefore, the concentrated front-loading at the end of this year is bound to happen.

I estimate that in the first quarter of next year, from the perspective of industry demand, achieving even half of what we did in the fourth quarter of this year would be quite good. This puts pressure on every company, and it is basically a common issue across the industry.

Anyway, we aim to be one of the better ones in this industry at solving this problem. The main thing is to see if, with enough luck this year, we can save some orders for the first quarter of next year, which would make things a bit easier.

Both generate revenue and control costs

NIO mentioned in its earnings call that "external technology service revenue" contributed a certain gross margin. What does this external technology service revenue refer to? 

If you look at some news, you will find that our major shareholder, CYVN Holdings from Abu Dhabi, has acquired McLaren. In fact, we now have a deep technical cooperation with McLaren, so this is the main source of technical service revenue.

When did the technical collaboration with McLaren start, and when did we begin recording our revenue from it?

Cooperation already started in the first quarter, and there was more in the second quarter. This is not stable—sometimes there is more, sometimes less.

With the introduction of battery swap partners and the continued increase in vehicle ownership, will NIO reach a turning point in the profitability of its battery swap business next year?

Achieving large-scale profitability from battery swapping requires a relatively long time, as it is a return on investment based on the volume retained.

Currently, our battery swapping station serves three functions:

One is the revenue from battery swapping services. Currently, the break-even point for battery swapping services is about 60 swaps per day. Our average daily battery swaps have already reached over one hundred thousand times, with each station averaging more than 30 swaps. Although 20% of the stations have reached profitability, the overall average is still some distance away from the target of 60 swaps needed to break even.

Another value of battery swap stations is that they can help us sell cars. This year's construction mechanism has changed; specifically, the locations for deployment and which regional company funds the project through crowdfunding are now more flexible. Calculations show that as long as a station can help sell 20 cars a year, the station itself can achieve profitability.

The third is the brand effect, such as the construction of battery swap stations on National Highway 318.

The financial report mentioned that next year is expected to maintain a quarterly R&D investment of 2 to 2.5 billion yuan, which is a reduction of about 500 million to 1 billion yuan. Where are the main savings expected to come from?

Basically, R&D expenses consist of people and projects. For people, we have made quite a few optimizations in the first and second quarters of this year. As for the projects, the main focus is on prioritization—cutting out projects that are not cost-effective.

Deepseek has proven this point: when there is less money, you focus on what is essential. When there is more money, everyone spends their time thinking about how to spend it. The same applies to R&D teams—without much money, you have to seriously prioritize and consider whether a project should be pursued and what outcomes it can produce, rather than just blindly working and spending money.

Simply put, I think 2 to 2.5 billion can achieve roughly the same output as our previous 3 billion.

Question: Recently, competitors have been buying cards. Will this become a major expenditure for NIO in the future?

At first, we bought a lot of cards, but later we realized that having more cards doesn’t necessarily make the model better.

We are currently managing the computing power of these cards very strictly. So, do you really want to spend this money or not? That's why we also rent out many cards. Generation after generation of cards are running computations, but we don’t even know what they’re calculating. So a lot of management needs to be detailed. Actually, having more cards doesn’t necessarily mean better results, nor does having fewer cards mean you can’t produce good outcomes. Everyone is now doing the math.

"Thorough reform is imperative."

Question: In 2024, NIO has already begun internally piloting efficiency improvement measures such as CBU, but full implementation will not occur until 2025. Why does it take two years from identifying the problem to fully rolling out the solution? Why didn't NIO intensify its actions in 2023, and instead wait until 2025 for large-scale implementation?

All CEOs hope that everyone will act immediately upon their command. However, it is even more difficult for an organization to overcome its inertia and change. This requires the entire organization to reach a consensus, establish new processes and mechanisms, and even adjust the culture, which is actually very challenging.

Speaking of crises, they didn't just appear in 2023. In 2022, we were already far from achieving our annual business targets—half due to external reasons, and half due to internal issues.

Because of external factors, people tend to blame the outside and overlook internal issues. Reaching a consensus is not easy, especially since NIO is a company with tens of thousands of employees. From headquarters and the management team to frontline staff, achieving consensus requires a process and also needs external pressure to drive it.

Otherwise, everyone will not feel the same pressure. Often, people tend to make poor choices during the best times, but are able to make good decisions during tough times. This is the process of organizational evolution.

NIO has already undergone two such organizational transformations, which also reflects the organization's resilience and ability to learn and grow.

Question: Compared to before setting the profit targets, is the overall team morale more positive now, or is there more pressure and anxiety?

I think the morale of our entire team is getting better and better.

Adjusting is painful for the entire company and the team, but everyone knows it is the right thing to do.

This moment is an opportunity to improve our abilities. You are participating in an organizational transformation, taking part in the process of rising from the bottom. In fact, in a person's career, such opportunities are quite rare. Joining such a fiercely competitive industry, for our team, there was a period when we worked together to climb out from the lowest point, relying on our own capabilities. This is indeed a very meaningful experience.

I myself also need to grow. As I mentioned earlier about my own growth, first of all, I need to complete my own psychological preparation. I need to truly realize that a thorough transformation is absolutely necessary, and that I need to make many changes, and the company also needs to make many changes. I should not carry any burdens; I need to return to the essence, to the core of business, and to the essence of creating value for users. Everything should be considered from the perspective of the fundamentals.

The media often gives you various titles. How do you view these evaluations? Or, would you create a certain kind of persona for yourself?

Now I've become a bit wiser. There's no need for personas or anything like that. Just be a real person and avoid any pretentious stuff.

Question: The L90 became the fastest model in Ledao's history to reach over ten thousand deliveries, which is inseparable from Dr. Shen Fei's leadership. Why did you choose Dr. Shen Fei to serve as Ledao’s top executive at that time?

At that time, the situation for Le Dao was also difficult, with quite a bit of negativity. Morale was low internally, and there were many doubts externally. We believed that to overcome these challenges, we needed to establish a system suitable for Le Dao, similar to what NIO had to do.

However, LeDao and the NIO brand are not completely the same. LeDao targets family users, so how do we establish an efficient system from brand communication to sales execution and service? I think this is an important consideration for us when choosing the leader or the person in charge.

So at that time, we decided to have Shen Fei take on the task. I believe Shen Fei is a colleague with a very strong capability in building systems within our company. In fact, our entire system for chargeable, swappable, and upgradable batteries—as well as the whole charging and swapping network—requires a very comprehensive set of skills, from R&D to supply chain, to operations, site deployment, construction, and management. I think he has done a really excellent job.

So the core reason for making him the person in charge of Ledao is to have him establish the Ledao system.

I also think that one very good quality Shen Fei has is that he never wavers when it comes to direction. For example, with the current marketing model, he is determined to carry it out and has his own very detailed thinking when it comes to execution.

So the road ahead is still quite long, but at least for now, things have stabilized. This journey will be a long one, because from the perspective of the Onvo (Le Dao) brand, in the long term, it will definitely have the highest sales among NIO’s three brands. Just like Toyota’s sales are much higher than Lexus, and Volkswagen’s are higher than Audi’s—this is reasonable. So the pressure on the entire Onvo team is actually very great.

The competition in the pure electric vehicle market is extremely fierce now. In order to cope with this competition, what do you think is NIO's most core differentiator?

To understand NIO as a company, we need to think in terms of a system. We are not focusing on a single point; rather, we are thinking from a systemic perspective. This is possibly the difference between us and others.

There are two types of thinking in the world: one is single-point breakthrough, which has led to the success of many companies, and the other is systematic thinking, which is like a long slope with thick snow.

Before I started NIO, I spent three years thinking about many details. What I told investors in 2014 is actually not very different from what I say now. Although there may be some differences in timing, the underlying logic has not changed much.

The year 2026 will still be the "year of big cars."

Question: Has the launch of the ES8 put significant pressure on the sales of the ES7? Will NIO consider adopting a "feature enhancement with price reduction" strategy in the future?

The all-new ES8 is an anchor model. The first generation served as the anchor, achieving the highest sales and the best gross profit. By the second generation, the model positioning had shifted, with costs rising to over 500,000, deviating from the anchor.

We are now returning to anchor point positioning. Recently, we have made over a hundred features standard on the 5556 model, with the aim of readjusting the pricing and technical platform layout for all our products. In the future, we will definitely replan our entire product system around the anchor models.

The all-new ES8 has now become the main sales pillar of the NIO brand. How long do you think the ES8's period of strong sales momentum is expected to last?

Previously, I also revealed that there will be the ES9 and ES7 next year, both of which are large vehicles. In China, there are similar incentive policies for large vehicles, which means you don't need to add much cost, but the profit margin will be much better.

In fact, if you take a look, both the ET5T and EC6 are very good products. After upgrading the intelligent system in the 2025 models and making Baidu standard, they remain highly competitive products. Compared to the new ES8, their gross margin is definitely still quite a bit lower. Therefore, in this cycle, we will definitely prioritize the larger vehicles, as they are more profitable. From a volume perspective, they can also achieve a reasonable scale.

It's not that the 5566 model is unimportant, but from a business perspective and in terms of total gross profit, its contribution definitely cannot compare to the ES8 and the subsequent larger models.

Question: After the successful launch of the L90 and ES8, are there any plans or measures in place to continue delivering blockbuster products? Or, what lessons have been learned from the L90 and ES8?

Continuously producing bestsellers is probably a dream every CEO of an automobile company has. Sometimes a model becomes a hit, sometimes it doesn't. Sometimes it may not perform well initially, but as your organizational capabilities improve, it will return to the level it should be at.

The competitiveness of a product determines the upper limit of its sales, and there are many other organizational capabilities involved. To sustain this, we must keep improving ourselves continuously. This year, we have undertaken significant actions in terms of organizational transformation in marketing. Although we haven’t talked much about it externally, our marketing system has undergone a complete overhaul. For example, with the L60, compared to April and May, our manpower was reduced by 40%, while sales increased by 40%.

This reflects a lot of adjustments behind the scenes. On one hand, we need to raise the upper limit of our products, and on the other hand, our organizational and system capabilities in marketing need to keep up. This way, we can be sustainable, or in other words, we can fully realize the potential of each product. We will continue to put in more effort.

The current mindset at NIO is to advance gradually and work persistently, focusing on diligent and solid work.

Question: NIO is currently transitioning to the third-generation platform, and existing models like the EC7 and ET7 have relatively low sales. Will these existing models be gradually phased out during the transition to the third-generation platform?

Next year, we will complete the lineup for larger vehicles. There are no plans to update the EC7 and ET7 next year. Let's not discuss anything beyond next year, as it's too far ahead, but we certainly have various internal plans.

Question: Next year, the LeDao brand will launch the L80. Currently, the L60/L80/L90 series all focus on the family SUV market. Is LeDao considering launching A-class or B-class sedan products in the future?

We have the same approach. We are first completing our SUV lineup with the L90, L80 large three-row, plus the large five-seater and the mid-sized SUV. We believe it can already support a good volume.