Chinese EV giant Nio Inc. (NYSE: NIO) has delivered its strongest financial report to date, signaling progress toward its ambitious profitability goals. Despite posting a net loss of ¥22.4 billion in 2024, the company reported record-breaking annual revenue of ¥65.7 billion, marking a ¥10 billion increase year-over-year. Its gross profit margin improved by 4.4 percentage points to 9.9%, with automotive gross margins reaching 12.8%, reflecting a 2.8 percentage point improvement.
🚀 Q4 2024: Nio’s Best Quarter Yet
Nio closed the year with a stellar fourth quarter, generating ¥19.7 billion in revenue—the highest in its history. Its overall gross margin climbed to 11.7%, up 1 percentage point from Q3, highlighting improved profitability in after-sales services.
Although Nio’s net losses remain substantial, the rate of loss expansion has significantly narrowed. The 2024 loss growth rate was just 8.1%, a major improvement from 43.5% in 2023, signaling better cost control and efficiency gains.
💡 Multi-Brand Expansion and Future Growth
In 2024, Nio aggressively expanded its brand portfolio and infrastructure:
✅ New brands: The company introduced the Aito and Firefly sub-brands, adding more models to its lineup.
✅ Battery swapping stations: Nio accelerated the deployment of its battery swapping infrastructure, aiming for county-wide coverage in China by 2025.
✅ International expansion: Nio plans to enter 25 global markets by next year, reinforcing its international ambitions.
Despite the upfront costs of expansion, Chairman Li Bin remains confident in the company’s trajectory. During the earnings call, he reiterated Nio’s goal of doubling sales by 2025 and achieving profitability in Q4 2025. His confidence is rooted in what he calls the “Four Big Years” plan:
- Product Big Year: Launch of nine new vehicles across Nio, Aito, and Firefly.
- Technology Big Year: Introduction of the SkyOS Tian Shu operating system and in-house AI driving chips.
- Battery Swapping Big Year: Expansion of battery swap stations for increased convenience and customer retention.
- Internationalization Big Year: Entry into 25 new markets, boosting Nio’s global presence.
🚗 New Models and Market Challenges
Nio is doubling down on its product lineup to drive volume sales:
- ET9 deliveries begin next week.
- The 2025 versions of the ET5, ET5T, ES6, and EC6 will be released in Q2.
- The Aito L90 will debut in Q2, with deliveries starting in Q3.
- The Firefly brand will introduce its first model in April.
However, competition is heating up. The Leida L60, a key model from Nio’s sub-brand, faced disappointing sales due to low brand recognition and intense competition from the Tesla Model Y and XPeng G6/G9. To counter this, Nio has ramped up brand marketing with ads in high-speed train stations and residential areas, expanded sales networks, and optimized battery swap station compatibility—now exceeding 1,500 stations.
💰 Cost-Cutting and Profitability Roadmap
Nio is aggressively pursuing cost reductions and operational efficiency to reach profitability:
✅ Cost-sharing across brands: Nio and Leida now share a seat frame platform, reducing costs by 10%.
✅ Smart hardware standardization: Common hardware interfaces have halved costs, saving ¥1,000 per vehicle.
✅ In-house AI chips: Nio’s self-developed Shenqi smart driving chips cut costs by ¥10,000 per vehicle compared to using four Orin chips.
✅ Supply chain renegotiations: Li Bin is directly overseeing price negotiations with key suppliers, aiming to streamline expenses.
Additionally, Nio has introduced a Cost Settlement Center (CBU) system, holding each department accountable for its profit and loss performance. This marks the end of Nio’s previous “big pot rice” budgeting style, enforcing ROI targets and performance-based incentives.
📈 Path to Profitability
Nio CFO Qu Yu revealed that by Q4 2025, the company aims for:
- 20% gross margin for Nio’s core brand.
- 15% gross margin for the Leida brand.
- Achieving overall profitability in Q4.
These cost-cutting and efficiency measures are expected to be reflected in Q2 financials, marking a turning point for Nio.
🔎 Investor Outlook
Nio’s record-breaking revenue and narrowing losses showcase its growth momentum, but the company’s ability to turn its investments into profitability remains the key question. With nine new vehicles, an expanding battery swap network, and international market entry on the horizon, Nio’s bold turnaround strategy is in motion.
For investors, Nio’s progress toward profitability and cost-efficiency makes it a high-risk, high-reward play. If Li Bin’s vision materializes, Nio’s stock could be positioned for significant upside, but its execution will be critical.
