On June 3, NIO (NYSE: NIO; HKEX: 9866; SGX: NIO) officially released its financial report for the first quarter of 2025. The report highlights that the company delivered a cumulative total of 42,100 new vehicles during the quarter, marking a 40.1% year-on-year increase. According to the latest delivery projections, NIO anticipates delivering between 72,000 and 75,000 vehicles in the second quarter, representing a more than 70% increase from the previous quarter.

NIO's first quarter of 2025 was characterized by significant change amidst forward momentum. On one hand, the automotive market in 2025 continued to witness fierce competition, with frequent shifts in the market positioning of emerging players. On the other hand, internal organizational changes led to challenges and confusion across various brands and departments. However, the ET9 model's first-month sales surpassed those of the BMW 7 Series and Audi A8, the main sales model 5566 is expected to perform well, the Ledao brand reversed its declining trend, and the Firefly brand commenced deliveries. These changes, persevered through adversity, are beginning to bear fruit.

During the first-quarter 2025 financial report conference call, NIO's Chief Financial Officer Qu Yu noted that with the launch of new ES6, EC6, ET5, and ET5T models in the second quarter, new vehicle transaction prices have rebounded. Additionally, the installation of self-developed chips will result in a cost optimization of approximately RMB 10,000 per vehicle. Due to these factors, NIO expects its vehicle gross margin to return to 15% in the second quarter. Sales volume gradually returned to normal in April and May, directly improving the company's operating cash flow. Based on the second-quarter delivery guidance, the company's cash flow will significantly improve and gradually normalize. NIO's operating cash flow is expected to continue increasing, potentially achieving positive free cash flow within the year.

01. Mass Realization of Self-Developed Achievements, Consolidating NIO's Technological Moat

In 2025, NIO's founder, chairman, and CEO Li Bin introduced the concept of "new three major components" for smart electric vehicles: smart driving chips, a full-domain operating system, and an intelligent chassis. Li Bin believes these core technologies determine the upper limits of experience and safety for smart cars. Thanks to its forward-thinking technology and commitment to self-development, NIO is entering the harvest period of its technological research and development efforts.

On March 28, NIO's first globally mass-produced 5-nanometer smart driving chip, Shenji NX9031, officially went into production and was installed in vehicles. This full-stack self-developed 5-nanometer automotive-grade smart driving chip boasts computing power comparable to the industry's top chips, with a single chip possessing over 1,000 TOPS of computing power, setting a new benchmark for performance. The chip is currently installed in NIO's ET9, new ES6, EC6, ET5, and ET5T models, significantly enhancing the user experience. Additionally, the first version of the "NIO World Model (NWM)" was officially rolled out on May 30, with the first batch of models being the "Banyan" series, totaling over 400,000 units.

The mass production and installation of 5-nanometer smart driving chips represent a significant breakthrough in China's smart driving chip technology. The development of a full-domain operating system enables deeper hardware and software collaboration, while intelligent chassis technology provides new solutions for driving safety and comfort. These "new three major components" are firmly establishing NIO's "technological moat," raising the bar for smart electric vehicle experience and safety, controlling vehicle costs, and strengthening the company's supply chain influence, laying a solid foundation for NIO's profit target in the fourth quarter of this year.

02. Continuous Launch of Heavyweight New Products, Full-Scale Installation of Decade-Long R&D Achievements

NIO, amidst a critical period of "bottoming out and rebounding," kicked off the 2025 "Year of Products" with the launch of the ET9. NIO's decade-long technological R&D achievements have entered a new stage of full-scale installation in vehicles. As NIO's first new car launch of 2025, the ET9 has been well-received by innovation leaders since its March 29 delivery commencement.

Shortly thereafter, NIO officially launched its new ET5, ET5T, ES6, and EC6 models. These four core models, supporting NIO's sales volume, have completed product transitions with increased specifications at no additional cost, and deliveries commenced upon launch, making them highly competitive. During the first-quarter 2025 financial report conference call, Li Bin stated that in the fourth quarter of this year, the NIO brand has the potential to achieve a stable monthly sales volume of 25,000 units, about 20% higher than last year. Gross margin will also significantly improve, ensuring it exceeds 20% in the fourth quarter. The all-new ES8 will be delivered in the fourth quarter, expected to be a highly competitive product.

Benefiting from a decade of technological R&D achievements, NIO's new products have undergone comprehensive upgrades in intelligence, performance, design, and safety. The steady increase in sales volume proves that NIO's products fully meet consumers' expectations for high-quality smart electric vehicles.

Notably, the Ledao brand's new car, the intelligent large-space flagship SUV Ledao L90, debuted at the Shanghai Auto Show's Ledao booth and is scheduled for launch and delivery in the third quarter. The third product, L80, will be launched in the fourth quarter, further enriching the Ledao brand's product line. The smart electric premium compact car Firefly was launched on April 19 and commenced deliveries on April 29.

With the continuous launch of heavyweight new products and the full-scale installation of decade-long R&D achievements, Li Bin is gradually fulfilling his statement made at the beginning of the year: launching 9 new cars in 2025, with significant new products every quarter.

03. Sales Volume Rebounds from the Bottom, Persisting in Change to See Dawn

Under the influence of multiple factors, NIO experienced its lowest point since the 2019 life-or-death crisis in the first quarter of 2025. Constrained by factors such as the traditional automotive sales off-season during the Spring Festival, high R&D investment, new brand resource expansion, and main sales model generational shifts, NIO's sales volume faced severe challenges in Q1.

Fortunately, since the beginning of the year, NIO has proactively adjusted and continuously optimized operational efficiency, accelerated technology implementation, and taken steady tactical actions to navigate challenges with a pragmatic approach. In April 2025, NIO's sales volume began to recover, and May's sales volume continued to maintain year-on-year growth. NIO's sales volume returned to the top five among emerging players in April and May. More importantly, expenses began to decrease significantly.

The Ledao brand delivered 6,281 new vehicles in May. During the first-quarter 2025 financial report conference call, Li Bin mentioned that adjustments were made to the Ledao sales and core management team in April. Starting from the latter half of April, Ledao's order volume steadily increased, with May deliveries exceeding April's by more than 40%. In the pure electric vehicle market priced between RMB 200,000 and RMB 300,000 from January to April 2025, Ledao L60 consistently ranked among the top 3, with an expected higher ranking in May and June. L60 is confident in returning to a stable monthly sales volume of 10,000 units. L90 will alter the existing market landscape of three-row SUVs, and L80 will be launched and delivered in the fourth quarter. With the combined sales of Ledao's three products this year, it is hoped that the Ledao brand can achieve a monthly sales target of 25,000 units in the fourth quarter. In May, with only one model and a significant reduction of 40% in frontline personnel, Ledao's sales volume increased by 42.8% month-on-month. Additionally, the Firefly brand delivered 3,680 new vehicles in its first full month of deliveries, surpassing market expectations, and the sub-brands' sales assistance capability began to emerge.

To some extent, NIO has already overcome its most difficult moments in recent years. This journey has never been smooth: like an airplane changing its engine while in flight, NIO must continuously adapt. The "learning by doing" in adverse situations has gradually shown phased results, evidenced by the sales volume rebound from the bottom. If NIO was half a foot out of the cliff in the first quarter, it is now rapidly returning to the right track of selling cars. However, within NIO, there is still a clear understanding: "The challenges are still severe, and there is no room for complacency."

04. Accelerating Organizational Change, Letting Go of Obsessions and Racing Against Time

Under the strategic framework of long-termism, NIO has established unique competitiveness through continuous capital support in multiple dimensions such as technology, products, services, and communities, with advanced investments. Questions about when long-termism will yield commercial returns peaked in early 2025.

Against this backdrop, NIO accelerated the promotion of company-wide organizational changes at the beginning of this year. Through the CBU (Basic Business Unit) operating mechanism, NIO divided various business modules into 12 core business units, covering key areas like R&D, marketing, and production. Each business unit has clear operating objectives and quantifiable return on investment to ensure optimal resource allocation and maximize the input-output ratio.

Currently, NIO has established operating models for CBUs such as individual vehicles, fellows, stores, and marketing activities within the company. The core responsible persons of each CBU promotion team report the mechanism's progress to Li Bin every two weeks and jointly discuss the strategic direction and implementation of key actions.

In R&D and manufacturing, NIO internally established the horizontal organization "Model Product Line" from April to May 2025, spanning clusters such as product design and R&D, industrialization, user and service experience. Under this new organizational structure, the general manager of the model product line is responsible for the complete operating results of a vehicle from R&D, production, sales to after-sales throughout its entire lifecycle. Additionally, with an end-to-end organizational form from product to market, it optimizes horizontal collaboration efficiency and realizes a business closed loop.

In terms of management coordination between horizontal organizations, NIO has established an individual vehicle operating model with individual vehicles as CBUs. Each model and vehicle can generate an individual vehicle operating report, closing the loop of related R&D, production, sales, and other businesses into "one account book." Different organizations aim to maximize the company's overall ROI, driving two-way collaboration between production and sales through meticulous accounting. This improves decision-making efficiency while significantly reducing cost losses.

According to NIO insiders, after implementing the CBU mechanism, out of the more than 500 projects submitted by the product research and development department at the beginning of 2025, only about half have been successfully approved so far. Projects without significant ROI will be cut. All tasks and projects must clearly obtain project codes before proceeding.

Many view NIO as a company with deep obsessions, and it is now evident that NIO is letting go of those obsessions. Many emerging players have fought this battle, with varying outcomes. What NIO can do is to put in more effort than its competitors, race against itself, race against time, and strive for another opportunity to move towards the future.

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