NIO has once again pushed back its timeline for profitability.

From 'expecting to achieve break-even for the NIO brand in the fourth quarter of 2023 and for the company as a whole in 2024' to withdrawing the Q4 2023 break-even forecast and pushing it back to 2024, and then to 'achieving quarterly profitability in Q4 2025 and full-year profitability in 2026,' NIO has once again missed its targets.

In 2024, NIO delivered 222,000 vehicles, up 38.7% year-on-year; revenue reached RMB 65.73 billion, up 18.2% year-on-year, setting a new high, but net losses also reached RMB 22.4 billion, up 8.1% year-on-year.

The repeated delays in profitability reflect NIO's inability to adapt to external changes in terms of product strategy and cost control.

In 2024, XPeng achieved a remarkable turnaround with the Mona M03, Li Auto reversed the setback of MEGA with the L6, Xiaomi Auto was fervently pursued, and AITO's strong performance in the high-end market drove Thalys to turn losses into profits. In 2024, many automakers also suspended operations or went bankrupt, and the shuffle in the new energy vehicle industry has become very severe.

Li Bin has also placed profit-making in a more important position, saying, 'We cannot simply focus on satisfying users. If you keep losing money, you can't really satisfy users. You can only truly satisfy users by making money and staying afloat.'

To achieve profitability, NIO needs to answer and address the following questions: Why has it taken so long for a hit model to emerge? Will cost control measures initiated in 2025 have a positive impact on hit models? What should be NIO's most precise label for users?

I. Li Bin Begins to Reflect on Costs and Products

While many peers are seeing the dawn of profitability, NIO not only continues to incur losses but is also running low on resources.

As of December 31, 2024, NIO's cash and cash equivalents, restricted cash, short-term investments, and long-term time deposits amounted to RMB 41.9 billion. Meanwhile, its current liabilities have reached RMB 62.31 billion, exceeding current assets by RMB 420 million.

This is despite NIO's good fortune in attracting investors - whether it's the continuous assistance from the Hefei Municipal Government and state-owned assets from 2020 to 2024, the RMB 15 billion financing from Middle Eastern investors, or the strategic cooperation announced with CATL on March 17, 2025, NIO has had one 'golden sponsor' after another.

But investors' patience is not infinite.

Being willing to spend money is NIO's impression on the outside world. In Li Bin's view, 'The fundamental change in the industry comes from the transformation of user experience. Redefining experience can redefine the industry.'

Providing emotional value is NIO's unique way to enhance the user experience, through mobile phones, Niu Houses, battery swaps, self-developed chips, and even peripheral products and community activities. Spending more money in these areas has indeed brought higher value recognition from car owners towards NIO.

This also determines that NIO can only firmly hold onto its high-end positioning, as only a high-end positioning can justify paying for these services through higher brand premiums.

High-end automotive brands should naturally have higher gross margins after mass production. However, due to a lack of focus on accounting, NIO's gross margin is not high, with a maximum of around 20%. In 2024, the automotive gross margin was 12.3%, and the overall gross margin was less than 10%.

A gross margin of 12.3% is not only lower than that of peers but also poses a problem for survival. At NIO's earnings call, Li Bin stated that an annual sales volume of 2 million vehicles, a gross margin of 20%, and a net profit margin of 7%-8% are the bottom lines for the long-term survival of smart electric vehicle companies.

After sustained losses, Li Bin admitted internally, 'In the past ten years, we have done well in terms of direction and vision, but in terms of down-to-earth actions, efficiency, cost control, and lean management, many people have done much better than us.'

Insufficient cost control capabilities may be a common problem for internet players entering the industrial sector and the most important reason for NIO's low gross margin.

When Wang Fengying, who once worked at Great Wall Motors, joined XPeng, she told He Xiaopeng that XPeng's steel procurement costs were problematic and much higher than others. It took XPeng nine months to figure out the issue. Li Auto has also taken action on its supply chain.

For the heavy asset industry of automobiles, which involves tens of thousands of components, the supply chain is a lifeline. He Xiaopeng also mentioned that the supply chain must be managed personally and with understanding; not managing it personally or not understanding it will not work. This advice was also given to Li Bin.

In addition, NIO's combined sales and administrative expenses increased by 22.2% in 2024, exceeding the growth rate of revenue.

Cost and expense control will undoubtedly be the theme for NIO in 2025.

A series of voices about cost reduction also emerged at the earnings call, such as promoting comprehensive cost reduction in R&D, supply chain, and sales services starting from the first quarter of 2025, large-scale implementation of basic business units, enhancing the operating awareness of all employees, and improving the return on investment. The goal is for the gross margin of NIO's main brand to reach 20% and that of Letao to reach 15% by the end of 2025.

Specifically, in terms of automobiles, this includes increasing the commonality rate of parts between NIO's main brand and Letao sub-brand, unifying data interfaces between different models, and reducing costs through self-development.

Li Bin will participate in negotiations on the supply prices of core components such as batteries. According to media reports, Li Bin also led a team to study Luxshare Precision, drawing on Luxshare's 'one million times cost thinking' and requiring all cost expenditures to be multiplied by one million times to consider whether they are reasonable.

NIO's reflection is not only reflected in its attitude towards spending but also in its revision of the 'high-end positioning', shifting from focusing only on the high-end market to a more affordable price range.

The sub-brand Letao is seen as NIO's volume brand. A more affordable price range naturally comes with a different high-end approach. Currently, NIO needs a hit model to prove its competitiveness and bring in more sufficient cash inflows.

II. NIO's 'Model 3 Moment' is Long Overdue

As a mass-market model that helped Tesla turn the tide, the advent of the Model 3 seemed to make people understand electric vehicles overnight in the era of fuel vehicles.

For the entire automotive industry, even if you don't buy a Tesla, you must understand the Model 3.

After experiencing the 'luxury' brought by the early Model S and Model X, which were priced at over RMB 700,000, the Model 3, priced at around RMB 250,000, suddenly entered the field of vision of a large number of middle-class car owners and ordinary families overnight.

Although the configurations and performance of the two models are incomparable, the core point - the in-car system and intelligence being directly transferred from the RMB 700,000 Model X to the Model 3 - became the most important reason for the Model 3's popularity.

For car owners, spending RMB 250,000 to enjoy configurations worth RMB 700,000, even if only partially, would make some people eager to try. Not to mention that this part is also a core function of a new energy vehicle.

As a result, in the following years, many automakers have taken 'encircling and suppressing Tesla' and 'benchmarking the Model 3' as famous slogans when launching new cars.

The advent of XPeng's Mona M03 at the end of 2024 showed some traces of replicating the Model 3 moment.

Starting from the second half of 2024, XPeng made 'increasing configurations and reducing prices' a major selling point. Specifically for the Mona M03, it meant configuring the originally high-end intelligent driving functions into this model priced at RMB 100,000-150,000, even being nicknamed 'buying intelligent driving and getting a car for free.'

XPeng's announcement showed that as of the end of 2024, the Mona M03 had delivered over 10,000 units for the fourth consecutive month since its launch. And it achieved the production milestone of the 50,000th vehicle in just four months, setting a new record for the fastest production launch by XPeng. This also drove XPeng to deliver a total of 91,507 smart electric vehicles in the fourth quarter of 2024, up 52% year-on-year.

In comparison, NIO's delivery volume also increased significantly in 2024, with a total of 221,900 new vehicles delivered throughout the year, surpassing XPeng's annual total of 190,000. Especially in the fourth quarter, the combined delivery volume of NIO and Letao remained above 20,000 units per month, exceeding 30,000 units in December. However, starting from 2025, NIO's deliveries once again declined, returning to the 10,000-unit range, while XPeng has consistently maintained deliveries of over 30,000 units.

For NIO, the concept of a hit model has not been frequently mentioned internally. Co-founder Qin Lihong once publicly stated that the high-end automotive market is not suitable for a hit model strategy.

However, when NIO transitions from its main brand to Letao, the lack of a hit model strategy becomes a constraint.

When Letao was launched, NIO's selling points focused on two points: one was being more suitable for family scenarios, and the other was NIO's consistent focus on battery swaps. The starting price of RMB 149,900 (without buying out the battery) also gave sufficient expectations for explosive sales.

To explain the 'family scenario,' the Letao L60 launch event unusually lasted for two hours, attempting to convey every detail of the cabin, energy replenishment, systems, and more to potential users.

But explosive sales never came.

First, the concept of a family car scenario is relatively vague, and the understanding of each sub-concept varies. Just from the concept of 'household use,' NIO has not achieved the precise transfer of core configurations as Tesla did when the Model series 'descended in dimension.' Moreover, there are too many options on the market. Among the 'NIO, XPeng, Li Auto' trio alone, there are two SUVs, the XPeng G6 and Li Auto L6, that compete with the Letao L60 at the same price point.

Second, judging from NIO's cooperation with CATL, the expectation for battery swap stations is not limited to its own brand but hopes that it can become a service for the entire new energy vehicle market, which to some extent eliminates the unique 'moat' of Letao.

Third, when the first two points fail to establish a unique advantage for Letao, the originally reasonable differences in service configurations and capacity constraints will be amplified.

The official website shows that as of March 20, 2025, NIO had 3,182 available battery swap stations, and Letao had 1,830. Many car owners have also reported that the available battery swap stations for Letao are only a small part of NIO's battery swap network. Coupled with the inability to enjoy the rights and interests of NIO's main brand car owners such as 'Niu Houses,' some voices on the internet suggest that Letao car owners feel somewhat 'inferior.'

At the same time, the delivery delays caused by insufficient capacity after Letao's launch have continuously eroded the enthusiasm of users who had accumulated it. The envisioned hit model was only a flash in the pan.

III. What Kind of Hit Model Does NIO Need?

A hit model is a science. Regardless of the path taken, for consumers, the ultimate goal is to find a sense of 'spending a little money to accomplish a lot.'

Over the years, new energy vehicles, from the early Model 3 to the AITO M9 and Xiaomi SU7, have demonstrated hit phenomena from multiple dimensions such as channels, brands, and technology. While eroding the original territories of BBA, they are also constantly shaping new marketing logics among new forces.

Whether consumers believe the narrative of 'lower prices, unchanged quality' determines the success of a brand's descent or cost-effective products.

In terms of quality and high-end positioning, NIO still has stories to tell.

On March 20, NIO announced that the intelligent electric executive flagship ET9 officially opened for user test drives. This sedan, priced from RMB 788,000, is equipped with NIO's self-developed Shenji chip. In 2025, NIO also plans to upgrade the 'World Model' released last year, and the end-to-end urban intelligent driving based on this model will be equipped in new NIO vehicles. In this regard, NIO has caught up with the trend of 2025.

The annual report shows that throughout 2024, the NIO brand ranked first in China's pure electric vehicle market above RMB 300,000, accounting for 40% of the market share.

However, as the concept of 'intelligent driving equality' has been continuously brought to the masses along with new vehicles from automakers such as Xiaomi, Zeekr, and XPeng, how to once again unblock the hit model bottleneck and achieve scale has become an urgent issue for NIO to consider.

This also gives NIO another opportunity to bring its core technologies to the mass market. From NIO to Letao, this path of 'reducing prices without compromising quality' is still of vital importance to the 'elimination game' among automakers. For users, the main reason they are willing to choose Letao and Firefly is that they are willing to join NIO's matrix and enjoy the important labels that NIO has placed on its various brands.

From this perspective, NIO's hit model needs to meet at least three conditions.

First, stop blindly 'expanding' and instead build a precise 'moat.' Whether it's hardware experience, intelligent driving systems, or services, at least tell a story that best fits the personas of mass consumers.

Second, truly connect the ecosystem, whether it's the commonality rate of internal parts or the connection of external battery swap networks, so that users feel a sense of familiarity with NIO's persona.

Third, prioritize users. Owners of different brands may have more or fewer service contents and rights, but in terms of quality, don't make consumers feel discriminated against.

Cost reduction is only a short-term solution. Before NIO achieves its own 'Model 3 moment,' such exploration may never end.