NIO Inc. (NYSE: NIO)

NIO's first quarter 2025 results demonstrated strong top-line growth driven by significantly higher vehicle deliveries. Total revenue increased 21.5% year-over-year to RMB 12.03 billion, with vehicle sales contributing RMB 9.94 billion, up 18.6% from the prior year. The revenue growth was primarily driven by a 40.1% increase in vehicle deliveries to 42,094 units, though partially offset by a lower average selling price due to changes in product mix.

Vehicle margin showed notable improvement, reaching 10.2% in Q1 2025 compared to 9.2% in Q1 2024. This improvement was primarily attributable to decreased material cost per unit, though partially offset by the impact of changes in product mix. The company's focus on operational efficiency and cost optimization contributed to this margin expansion despite competitive pricing pressures.

Gross margin expanded significantly to 7.6% from 4.9% in the prior year period, representing an improvement of 270 basis points. This expansion was driven by increased vehicle margin, higher-margin sales from parts and after-sales services, and reduced gross loss rates from power solutions due to growing user adoption.

However, operating performance remained challenging, with loss from operations increasing 19.0% to RMB 6.42 billion. This increase was primarily due to higher research and development expenses (up 11.1% to RMB 3.18 billion) and selling, general, and administrative expenses (up 46.8% to RMB 4.40 billion), reflecting continued investments in product development and market expansion.

Net loss increased 30.2% to RMB 6.75 billion (US$930.2 million), though this was partially offset by improved operating efficiency. The company maintained a strong cash position of RMB 26.0 billion, providing adequate liquidity to support operations and strategic initiatives.

NIO Brand delivered 27,313 vehicles in Q1 2025, representing 65% of total deliveries. The premium brand continued to demonstrate strength in the high-end electric vehicle market, with the recent launch of the ET9 premium executive sedan securing notable market share in its segment. The brand benefits from NIO's advanced battery-swapping technology and comprehensive service ecosystem.

ONVO Brand contributed 14,781 deliveries, representing 35% of total volume. The family-oriented brand has shown strong initial traction with the L60 model, addressing the mass market segment with a focus on practical family transportation needs. Management noted rising demand for the L60, indicating positive momentum for the brand.

FIREFLY Brand officially launched in April 2025, marking NIO's entry into the small smart high-end electric car market. While deliveries began after Q1, the brand targets urban mobility needs and plans gradual expansion to global markets. This represents NIO's strategic move to capture the growing urban electric vehicle segment.

The multi-brand strategy allows NIO to address different market segments while leveraging shared technology platforms and infrastructure. The company's recent product upgrades, including the New ES6, EC6, ET5, and ET5T launched in May 2025, demonstrate continued innovation across the portfolio.

NIO's brand diversification strategy positions the company to capture market share across premium, mass market, and urban mobility segments, while building on its core competencies in smart electric vehicle technology and comprehensive charging infrastructure.

NIO continued to advance its technological leadership in 2025, focusing on smart electric vehicle experience and safety standards through proprietary innovations:

Key Technology Developments

• NIO World Model: The first version was gradually rolled out to vehicles based on the Banyan platform in late May, bringing significant upgrades in safety, driving, and parking assistance
• Proprietary Smart Driving Chips: Development of in-house silicon to enhance autonomous driving capabilities and reduce dependency on third-party suppliers
• Full-Domain Operating System: Comprehensive software platform providing integrated vehicle control and user experience
• Intelligent Chassis: Advanced chassis technology improving vehicle dynamics and safety performance
• Battery-as-a-Service (BaaS): Continued expansion of the innovative battery subscription model

The company's R&D expenses increased 11.1% to RMB 3.18 billion in Q1 2025, reflecting continued investment in next-generation technologies. These investments focus on enhancing the smart driving experience, improving safety standards, and developing technologies that differentiate NIO's offerings in the competitive EV market.

NIO's World Model represents a significant advancement in autonomous driving technology, providing users with safer and more effortless intelligent driving experiences across various scenarios. The gradual rollout demonstrates the company's measured approach to deploying advanced autonomous features while ensuring safety and reliability.

The company's integrated approach to technology development, combining hardware innovation with software capabilities and service ecosystems, positions NIO as a comprehensive smart mobility provider rather than just a vehicle manufacturer.

NIO implemented comprehensive cost control measures in Q1 2025, focusing on structural improvements to achieve better operational efficiency:

Key cost management initiatives included:

• Organizational Restructuring: Streamlining operations to improve decision-making speed and reduce overhead costs
• Cross-Brand Integration: Leveraging synergies between NIO, ONVO, and FIREFLY brands to optimize resource utilization
• R&D Efficiency Improvements: Optimizing research and development processes to reduce time-to-market and development costs
• Supply Chain Optimization: Enhancing supplier relationships and procurement processes to reduce material costs
• Sales and Service Efficiency: Improving operational efficiency across sales and service networks

Despite higher absolute operating expenses, the company achieved meaningful improvements in unit economics. Vehicle margin improved to 10.2% from 9.2% in Q1 2024, demonstrating successful cost management at the product level. This improvement came primarily from decreased material cost per unit, showing progress in procurement and manufacturing efficiency.

The company's gross margin expansion to 7.6% from 4.9% in the prior year period reflects not only higher vehicle margins but also improved performance in other business segments, including parts and after-sales services with relatively higher margins and reduced losses in power solutions.

Starting from Q2 2025, management expects to achieve structural improvements in overall cost efficiency, with continued progress in operational performance. This indicates that the cost control measures implemented in Q1 are expected to deliver more significant benefits in subsequent quarters.

The focus on operational efficiency while maintaining investment in strategic growth areas demonstrates NIO's balanced approach to managing near-term profitability pressures while positioning for long-term market leadership.

NIO provided optimistic guidance for the second quarter of 2025, reflecting confidence in its product portfolio and market positioning:

• Vehicle deliveries expected between 72,000 and 75,000 vehicles, representing year-over-year growth of 25.5% to 30.7%
• Total revenues expected between RMB 19.51 billion and RMB 20.07 billion, representing year-over-year growth of 11.8% to 15.0%
• Strong pipeline of new product launches and upgrades expected to drive demand
• Continued momentum in ONVO L60 and new FIREFLY deliveries

The guidance reflects several positive catalysts for Q2 performance. The company has already seen steady increases in monthly delivery volume since the beginning of Q2, with April and May deliveries of 23,900 and 23,231 vehicles respectively, bringing year-to-date deliveries to 89,225 vehicles.

New product launches are expected to drive significant growth, including the ET9 in the premium executive market and the Firefly in the high-end small electric car segment. The late May launch of upgraded ES6, EC6, ET5, and ET5T models with comprehensive improvements should also contribute to delivery growth.

Management's confidence in Q2 outlook is supported by rising demand for the ONVO L60 and the successful market reception of new products. The 25.5% to 30.7% year-over-year delivery growth guidance demonstrates the company's ability to scale production and meet market demand.

The revenue guidance of 11.8% to 15.0% growth, which is lower than delivery growth, suggests a continued focus on competitive pricing and market share capture, particularly in the mass market segment through the ONVO brand.

NIO's strategic initiatives for 2025 focus on product diversification, technological advancement, and global expansion:

Product Portfolio Expansion

• Multi-Brand Strategy: Successful launch of ONVO for families and FIREFLY for urban mobility, complementing the premium NIO brand
• Product Upgrades: Comprehensive refreshes of ES6, EC6, ET5, and ET5T models with enhanced features and performance
• New Segment Entry: ET9 targeting the premium executive market and Firefly addressing urban small car needs

Technology Leadership

• Rollout of NIO World Model for enhanced autonomous driving capabilities
• Development of proprietary smart driving chips and full-domain operating systems
• Advancement of intelligent chassis and battery technology
• Expansion of Battery-as-a-Service offerings

Infrastructure Development

• Continued expansion of battery-swapping network
• Enhancement of charging infrastructure and power solutions
• Improvement of service network and customer experience

The completion of the HK$4.03 billion equity placement in April 2025 provides additional financial resources to support these strategic initiatives. The funding strengthens NIO's balance sheet and provides flexibility for continued investment in technology development and market expansion.

NIO's focus on 2025 as a "pivotal year for product launch and technological innovation" reflects the company's strategic priority of maintaining technological leadership while expanding market reach through diverse product offerings.