Farewell to the 'Grim Reaper': Is NIO back in the driver's seat?---

$NIO Inc(NIO.US) released its Q4 2025 results pre-market in the U.S. and after-market in Hong Kong on Mar 10, 2026 (Beijing time), marking its first-ever profit since listing and shedding its long-standing deep-loss label. Key takeaways:

1) Top line beat with strong YoY growth: Q4 revenue was RMB 34.7bn (+76% YoY), topping the Street’s RMB 33.6bn, driven mainly by a beat in vehicle sales.

Q4 vehicle sales were RMB 31.6bn vs. the Street’s RMB 30.6bn, largely on rapid ASP expansion. ASP rose from RMB 221k in Q3 to RMB 253k in Q4, helped by a blowout quarter for the high-priced, large SUV ES8. ES8’s mix in deliveries jumped 27ppt QoQ to 32%, lifting ASP.

2) Auto GPM continued to rise sharply QoQ: Q4 auto GPM reached 18.1%, up 340bps QoQ and in line with Nio’s prior guide of ~18%. The ongoing GPM improvement was mainly driven by: (i) higher ASP as ES8’s mix expanded; (ii) platform tech, supply-chain cost downs and scale effects that diluted per-unit costs.

3) Opex was slashed, cost-down outperformed: Q4 SG&A was only RMB 3.5bn, down RMB 650mn QoQ from Q3’s RMB 4.2bn (and below guidance of RMB 4.0bn), primarily from headcount reductions cutting payroll and tighter marketing spend.

R&D also fell QoQ by RMB 360mn to RMB 2.0bn (below the Street’s RMB 2.5bn), mainly due to headcount reductions, completion of NT3.0 platform development, and improved R&D efficiency.

4) Net profit turned positive, above guidance’s upper bound: With revenue and GPM beating, plus strong internal cost controls, profit finally broke through. Q4 net profit turned positive at RMB 120mn (vs. the Street at -RMB 600mn), and OP reached RMB 800mn, above the guided RMB 200mn–700mn.

Overall, despite pre-announcing, Q4 still came in strong, beating both the guidance upper bound and Street expectations. ES8’s high-price surge lifted both revenue and GPM, and combined with aggressive cost-down measures, delivered a broad-based beat.

On 2026 outlook, where the market is most focused:

① Q1 volume guide is light vs. expectations, but implied ASP continues to rise:

Q1 delivery guidance is 80k–83k, below the Street’s ~89k, implying Mar at 32k–35k. That said, vs. Jan/Feb at 27k/21k, a clear sequential recovery is visible. The softer total vs. expectations likely reflects: a) ES8 high-spec audio chips shortage deferring deliveries to Q2; b) ONVO L90 seasonality and pre-L80 launch wait-and-see; c) no new launches in Q1; d) pain from the partial rollback in purchase-tax incentives.

Revenue guidance, however, is RMB 24.5bn–25.2bn, above the Street’s RMB 24.5bn. Even with lighter volumes, revenue can still beat, in our view, as ES8’s mix likely rises further (from 32% in Q4 2025 to 55%–60% in Q1 2026), taking ASP from RMB 253k up to RMB 265k–270k.

On auto GPM, while pressured by promotions (low-interest financing and ONVO’s 5% purchase-tax subsidy) and higher raw materials (per-unit cost +RMB 4k–5k, a ~160–200bps GPM drag), we believe ES8 mix strength should offset much of the impact. Overall GPM downside looks manageable, with specifics to be confirmed on the call.

② For full-year 2026:

Management previously guided for 53% YoY delivery growth (~500k units), underpinned by a packed product year starting in Q2.

Nio ES9 (launch in May, deliveries in Jun): a new 5.4m flagship with ET9 tech trickle-down, expected to price at RMB 400k–450k under BaaS, potentially replicating ES8’s success.

ONVO L80 (launch in Apr, deliveries in May): the five-seat sibling of L90, targeting incremental demand at RMB 200k–250k.

Nio ES7 (Q3 launch): a five-seat variant of ES8, further consolidating the premium base.

Among existing models, ES8’s strong 2025 will contribute a full 12 months in 2026, and ONVO L60 and L90 will expand their variants.

This points to a strong 2026 pipeline and underpins management’s confidence in high delivery growth. Strategically, Nio is pivoting toward large SUVs and further premiumization.

Against a NEV market likely slowed by the purchase-tax step-down (sector growth only ~5%–15%), Nio’s BaaS has an edge: batteries excluded from the invoice lower the taxable base, reducing users’ purchase-tax burden vs. peers. This helps cushion the macro policy drag.

Guidance on margins is also upbeat:

Nio expects auto GPM to rise from 18% in Q4 2025 to ~20% in 2026, driven by ES9’s higher margin, scale-led cost reductions (new models like ONVO L80 and Nio ES7 amplify scale), and margin uplift from the refreshed ONVO L60 SUV.

On opex, Nio continues to tighten: 2026 full-year R&D is expected to be flat vs. Q4 2025 annualized levels, and SG&A ratio to revenue to fall to ~10%. With volume growth, higher auto GPM, and strict control of R&D and SG&A, Nio aims to achieve full-year profitability in 2026.

In sum, Dolphin Research sees evidence of effective cost-down and efficiency gains in this print, translating into improved profitability and organizational efficiency, with Nio entering a relatively strong product cycle in 2026. Q1 volume is still seasonally pressured, but mix-driven ASP and margin resilience are already visible.

For 2026 volumes, while BaaS cushions the purchase-tax step-down and the pipeline is robust, with the NEV market expected to grow only ~5%–15% YoY, management’s >50% YoY growth to 500k looks optimistic. Dolphin Research will reassess as the year progresses.

Under a more conservative assumption of 20%–30% YoY volume growth to 390k–430k units, Dolphin Research estimates 2026 revenue at RMB 110bn–119bn (+25%–36% YoY). Applying a neutral 1x P/S (vs. the 1.4x–1.5x P/S peak in 2025 on ES8 scale-up) implies a target market cap of RMB 110bn–120bn, ~30%–40% upside vs. Nio’s current HK market cap of RMB 83bn.

With sector demand likely to recover in Q2 as policies take effect, and Nio’s ES9 and L80 launches plus ES8 capacity bottlenecks easing, a QoQ inflection in deliveries looks probable. At this juncture, left-side positioning merits attention.

I. Auto GPM continued to rise sharply QoQ

As the most critical metric every print, we first look at Nio’s vehicle profitability:

Nio guided that, with ES8’s high-price mix rising sharply in Q4 (ES8 GPM >20%) and scale effects releasing (deliveries +43% QoQ to 125k units), auto GPM could reach ~18% in Q4, and the market expected ~18.1%.

Actual Q4 auto GPM was 18.1%, in line with guidance and consensus, and up 340bps QoQ. The core driver was ASP’s sharp QoQ increase.

1) ASP: Q4 ASP rose significantly on higher ES8 mix

Q4 ASP was RMB 253k, up RMB 32k QoQ from RMB 221k, mainly due to the surge in the high-priced ES8 SUV. ES8’s mix rose 27ppt QoQ to 32%, lifting overall ASP.

2) Per-unit cost: rose ~RMB 19k QoQ, primarily due to higher ES8 build costs

Q4 per-unit cost was RMB 207k, up ~RMB 19k QoQ, largely because ES8 carries higher production costs. That said, Nio’s cost-down strategy again proved effective as GPM rose sharply QoQ.

① Platformization + supply-chain cost-down: the NT3.0 platform uses 900V high-voltage architecture and zone controllers, achieving high hardware integration and reducing BOM and manufacturing costs.

Nio also drove cost-down via supply-chain and in-house tech (replacing Nvidia Orin-X with self-developed NX9031, cutting per-unit cost by ~RMB 10k), taking ES8 GPM above 20% and ONVO L90 (priced below peers) to ~15%–20%.

② Scale effects continued to release: Q4 deliveries reached 125k units (+43% QoQ), further unlocking scale and lowering per-unit overhead.

3) Per-unit GP: up RMB 14k QoQ to RMB 46k

Q4 per-unit GP was RMB 46k, up RMB 14k QoQ from RMB 32k, while auto GPM hit 18.1%, up 340bps QoQ. ES8’s strong quarter plus scale and cost control jointly lifted auto GPM.

II. Volume guide is soft, but revenue guide is solid

1) Q1 delivery guide at 80k–83k, below the Street’s ~89k

Despite seasonal Q1 softness and purchase-tax step-down pressure on the market, Nio leveraged ES8 backlog from Q4 to offset part of the headwinds.

Nio’s latest Q1 delivery guide is 80k–83k (+90%–97% YoY). While this implies a 34%–36% QoQ decline, the drop is far milder than last year’s 42% QoQ decline.

With Jan/Feb deliveries at 27k and 21k, implied Mar is ~32k–35k. Mar should rebound vs. Feb’s trough (holiday effects plus policy step-down), but the Q1 total still trails the Street’s ~89k.

We see several reasons for the softer guide:

1. ES8 supply-chain disruption: the overall ES8 delivery cycle shortened from 22–23 weeks in Q4 2025 to 4–7 weeks, but some high-spec versions faced a short-term shortage of audio-signal processing chips, adding 4–6 weeks to lead times. This pushed part of Q1 deliveries into Q2.

2. ONVO L90 faced temporary pressure: after peaking at ~12k in Oct, L90 dropped to ~1.5k in Jan amid a policy air pocket, seasonal weakness, and competition. Wait-and-see on the five-seat sibling L80 likely weighed on near-term L90 demand.

3. Product launch gap: no new models for Nio or ONVO in Q1, limiting traffic catalysts.

4. Macro and market adjustment: the step-down in purchase-tax benefits and lagging local stimulus created a temporary drag on the market.

Looking to Q2, deliveries should inflect with two new models:

① ONVO L80: launch in Apr, deliveries in May. As the five-seat L90 sibling at a lower price point, it should activate incremental demand in the RMB 200k–250k band and complement L90.

② Nio ES9: launch in May, deliveries in Jun. As a flagship SUV positioned above ES8 (5.4m length, ET9 tech trickle-down, RMB 400k–450k under BaaS), it could partially replicate ES8’s success and create another hit above RMB 400k.

With sector beta improving in Q2 (new subsidies rolling out locally and post-holiday demand release), plus Nio’s two launches and ES8 capacity continuing to ease, Q2 deliveries should turn up.

2) Q1 revenue guide at RMB 24.5bn–25.2bn; ASP still rising QoQ

Q1 total revenue guidance of RMB 24.5bn–25.2bn is slightly above the Street’s RMB 24.5bn. We think the revenue beat despite lighter deliveries stems from continued mix optimization.

ES8’s share in Q1 deliveries is set to jump (from 32% in Q4 2025 to 55%–60%), taking ASP from RMB 253k up to RMB 265k–270k.

On auto GPM, there are still headwinds from subsidies and raw materials:

① Nio rolled out a new 7-year low-interest financing program in Q1 across three brands, covering Nio’s ET5/ET5T/ES6/EC6, plus ONVO and Firefly, and introduced a new ONVO subsidy fully covering the 5% NEV purchase tax.

② Raw materials: batteries, memory and aluminum prices are up; management expects per-unit costs to rise by RMB 4k–5k on average in 2026 (a ~160–200bps GPM drag).

Dolphin Research expects Q1 auto GPM to decline QoQ but remain manageable with ES8 mix strength as offset. We await management’s detailed guidance on the call.

From the broader company view:

III. Revenue and GPM both beat

Q4 total revenue was RMB 34.7bn (+76% YoY), beating the Street’s RMB 33.6bn, driven primarily by vehicle sales:

① Vehicle revenue was RMB 31.6bn, above the Street’s RMB 30.6bn, mainly due to the large QoQ improvement in ASP.

The ES8 surge drove a 43% QoQ increase in total deliveries to 125k, and improved model mix further lifted ASP by RMB 32k QoQ to RMB 253k.

② Other revenue also rose sharply QoQ:

Other revenue reached RMB 3.04bn, up RMB 450mn QoQ, driven by: a) higher tech R&D services revenue; b) rising parts, accessories and after-sales revenue as the installed base grew.

On margins, total GPM was 17.5%, up 370bps QoQ and above the Street’s 17.1%, mainly on a beat in other-business margins:

Other-business GPM was 12% in Q4, up 400bps QoQ, likely driven by higher-margin tech R&D services and faster loss reduction in the battery-swap network. Auto GPM was 18.1%, in line with prior guidance.

IV. Aggressive cost-down drove profit release

Nio had historically spent heavily to build a luxury brand, but since Q2 2025 it enacted sweeping reforms. This print again shows cost-down exceeded expectations and unlocked profits:

1) SG&A: headcount cuts and fewer marketing activities drove a sharp decline

Nio’s past spending on Nio House, comprehensive service systems, and dual-channel operations for ONVO and Nio kept SG&A elevated.

Now, ONVO’s separate channels are integrated into Nio, consolidating distribution, and Nio has reduced sales/service headcount and marketing spend. Q4 SG&A was only RMB 3.54bn, down RMB 650mn QoQ and far below the prior RMB 4.0bn guide.

SG&A ratio fell to ~10% on volume leverage, roughly in line with Li Auto and XPeng, addressing a long-standing investor concern.

2) R&D: expenses also fell sharply, down RMB 360mn QoQ

Q4 R&D was RMB 2.0bn, down from RMB 2.4bn in Q3 and below the Street’s RMB 2.5bn.

R&D has normalized as foundational work is largely complete (NT3.0 upfront development), alongside headcount cuts and lower compensation.

R&D efficiency also improved visibly:

① AD model upgrade: Nio launched Nio World Model (NWM) 2.0, built on a fusion of world models and closed-loop reinforcement learning. Through three core links (large-scale imitation learning -> long-horizon reasoning/decision-making in a digital world -> high-frequency closed-loop RL optimization), it delivers an end-to-end loop from base tech to user experience, materially improving AD performance across highway/city pilot, parking and active safety.

② In-house chip unit secured external funding

Weirui Tech, which leads Nio’s in-house NX9031 AD chip, will raise RMB 2.257bn via new-share issuance. The chip delivers >1,000 TOPS on 5nm, comparable to four Nvidia Orin-X. The financing boosts Nio’s cash and suggests NX9031 could evolve from internal use to external supply, opening monetization optionality.

V. Net profit turned positive, finally shedding the deep-loss label

Nio had pre-announced profits (GAAP OP RMB 200mn–700mn; OP ex-SBC RMB 700mn–1.2bn), but the final print still beat: Q4 net profit turned positive at RMB 120mn (vs. the Street at -RMB 600mn), and OP reached RMB 800mn, above the upper end of guidance.

The core drivers were revenue and GPM beats, plus strong internal cost controls, which collectively unlocked profit.