NIO Inc.'s uphill journey continues.

Recently, NIO Inc. delivered a second-quarter performance showing increased revenue and reduced losses. The financial report showed that NIO Inc.'s Q2 total revenue reached 19.009 billion yuan, up 9.0% year-over-year and 57.9% quarter-over-quarter. Under non-GAAP measures, adjusted net loss was 4.127 billion yuan, representing a 9.0% year-over-year improvement and 34.3% quarter-over-quarter improvement.

Despite the revenue growth and loss reduction, skepticism persists. With quarterly losses exceeding 4 billion yuan, what are the odds that NIO Inc. can achieve profitability in Q4 this year?

At a recent small-scale communication meeting, NIO Inc. founder, chairman, and CEO Li Bin broke down a profitability formula. To achieve Q4 profitability, several conditions must be met simultaneously:

- NIO Inc.'s average monthly deliveries in Q4 must exceed 50,000 units - Gross margin must reach 16%-17% - R&D expenses need to be controlled at around 2 billion yuan - Sales and administrative expenses need to be controlled at around 10%

"The challenge is enormous, but we have confidence," Li Bin said.

Nine months have passed this year, marking what could be called NIO Inc.'s "tempering period." Unlike the 2019 crisis when external rescue was needed, Li Bin says this time NIO Inc. must rely on its own capabilities to emerge from the valley.

Amid the complex external voices, Li Bin has also been cultivating himself. Whether called "the most miserable person" or "the most hardworking person," or even playful nicknames like "Golden Pool Elder" or "Langlang Mountain Little Pig Monster," he pays them no mind.

"What should NIO Inc. persist in? What should it change?" This philosophically meaningful question has been lingering in Li Bin's mind.

Reviewing the reasons why NIO Inc. has gradually emerged from the valley, he summarized two persistences and one listening approach.

Persistence in the pure electric technology route of chargeable, swappable, and upgradeable systems - this year pure electric reached an inflection point, and NIO Inc. saw the dawn; simultaneously persisting in multi-brand product planning, where the synergistic effects of three brands are now beginning to show.

And listening to advice: implementing user-suggested configurations like single motors and "refrigerator, TV, big sofa" features when appropriate. "NIO Inc. is not so stubborn anymore; we listen to advice when we should."

He also revealed that many people have left NIO Inc. over the years, sending him private messages upon departure. "They told me many things that particularly moved me, hoping the company can emerge from difficulties." "There are still many colleagues in the company who believe we can emerge from this - definitely more than 1% of people believe."

Li Bin often tells internal teams not to waste this opportunity to grow capabilities. Participating in the growth process from rock bottom is a rare opportunity in one's career, making it a very meaningful experience.

**"Proving NIO Inc. Can Be Profitable at the Right Time is Crucial"**

Since this year, NIO Inc. has continuously emphasized the goal of achieving profitability in Q4. Why is this target so important?

In Li Bin's view, as a listed company, NIO Inc.'s financial reports are transparent. After releasing recent financial reports, the outside world still talks about how much money was lost each quarter, which affects NIO Inc. in multiple ways - influencing user conversion efficiency, recruitment, and supply chain relationships across all aspects. Therefore, whether from operational needs or developmental stage considerations, proving NIO Inc. can be profitable at an appropriate time point is very important.

From Q2 financial reports, driven by sales volume and a series of reform measures, NIO Inc. achieved revenue growth and loss reduction.

In terms of sales volume, NIO Inc. delivered 72,056 vehicles, up 25.6% year-over-year and 71.2% quarter-over-quarter. Financially, Q2 revenue grew 9.0% year-over-year to 19.009 billion yuan, with adjusted net loss improving 9.0% year-over-year to 4.127 billion yuan. Li Bin believes that starting from Q2 this year, both sales volume and operational conditions have put NIO Inc. back on an upward trajectory.

Actually, with confidence from the hot-selling ONVO L90 and new NIO ES8 models, NIO Inc. has provided stronger growth guidance for Q3: deliveries between 87,000-91,000 units, representing year-over-year growth of approximately 40.7%-47.1%; total revenue reaching 21.812-22.876 billion yuan, representing year-over-year growth of approximately 16.8%-22.5%.

Regarding the Q4 profitability target, he admits "the challenge is enormous, but it's not impossible."

In terms of sales volume, NIO Inc. currently has four models in order-waiting-for-production status, including ONVO L90, ONVO L60, new NIO ES8, and Firefly.

He predicts that ONVO L90 delivered 10,575 units in its launch month, with September likely exceeding 10,000 units and October production capacity reaching 15,000 units. By December, new NIO ES8 production capacity will increase to 15,000 units. By December this year, both ONVO and NIO brands will each reach 25,000 units capacity, with Firefly reaching 6,000 units. With overall monthly production capacity reaching 56,000 units, NIO Inc.'s Q4 target is average monthly deliveries exceeding 50,000 units, meaning quarterly deliveries of 150,000 units.

Regarding next year's product planning, Li Bin revealed three new models: NIO ES7, ES9, and ONVO L80. The 5566 model, EC7, and ET7 have no replacement plans for next year.

For the highly anticipated question of "whether ONVO will layout A-class or B-class sedans like XPeng," Li Bin revealed that ONVO will first complete its SUV lineup. The large three-row L90, L80, plus the large five-seat L60 can already support good sales volume.

In terms of gross margin, NIO Inc.'s vehicle gross margin returned to 10.3% in Q2 this year. With increased sales proportion of high-margin products like ONVO L90 and new NIO ES8, NIO Inc.'s vehicle gross margin is expected to rise to 16%-17% by Q4.

He also discussed personnel appointments, stating that when choosing leaders, there are important considerations. When ONVO faced difficulties with considerable negative reviews and low internal morale, choosing Shen Fei faced external skepticism about ONVO.

"Shen Fei is a colleague with very strong systematic capability-building skills in our company. I think he's doing very well. He won't waver and will resolutely execute current marketing paradigms with very detailed thinking. At least he's stabilized things now, but the road is long. ONVO definitely bears the largest volume responsibility in the long term, so the pressure on the entire ONVO team is actually very significant."

**"Industry Pressure Expected to be Severe in Q1 Next Year"**

Beyond sales growth, NIO Inc. is also reducing costs.

Cost control mainly includes R&D expenses and sales/administrative expenses. Starting from Q1 this year, NIO Inc. began implementing a CBU mechanism to improve R&D efficiency. NIO Inc. will basically maintain 2-2.5 billion yuan quarterly R&D investment next year, achieving the same output as previous 3+ billion yuan R&D investments.

He revealed that reduced R&D expenses mainly involve people and projects. For projects, it's mainly about prioritization - unprofitable projects are abandoned without affecting competitiveness. "For example, computing power - NIO Inc. used to buy many cards, but later realized that more cards don't necessarily mean better models, as DeepSeek proved. Sales and administrative expenses are also continuously improving efficiency - save where appropriate, spend where necessary, with the goal of controlling sales and administrative expenses to 10% in Q4."

"Everyone can actually calculate this - if our Q4 sales can reach 150,000 units, achieving Non-GAAP profitability is still possible."

Can NIO Inc. maintain sustained profitability after achieving Q4 profitability? Li Bin admits that typically, China's market enters a slow season in Q1, and with next year's purchase tax reduction, Q1 next year is expected to face enormous industry pressure, possibly only 60% or half of Q4 this year. "There's no particularly good solution for this - mainly depends on whether we're lucky enough this year to carry some orders into Q1 next year, which would be more fortunate."

He also revealed that "the company's major shareholder Abu Dhabi has acquired McLaren, and we actually export some technology to McLaren, which constitutes the main source of external technology service revenue. However, this revenue is currently unstable."

**"NIO Inc. Was First to Do Many Things, Others Later Followed"**

"Recently, I often ask myself what to persist in and what to change," Li Bin said. "You can't immediately change just because someone says something, but you also can't stubbornly refuse to change when someone gives advice."

Reviewing the hot sales of ONVO L90 and new NIO ES8, he summarized that NIO Inc. did two things right. He believes that while marketing capability is certainly important in automotive industry competition, long-term competitiveness still depends on products.

He categorizes competition into three levels: the bottom level is technology route, middle level is product planning, and top level is product definition.

In technology routes, NIO Inc. has consistently adhered to the pure electric route of chargeable, swappable, and upgradeable systems. The rise of range extenders in past years was related to infrastructure, battery costs, and user mindset. But this year, pure electric began reaching an inflection point where user experience benefits from pure electric technology began outweighing experience losses from charging inconvenience.

From user benefits perspective, ONVO L90 has a 240L front trunk plus rear trunk for 670L total storage space, while new NIO ES8 has 777L storage space - high-frequency, high-perception, high-benefit features for users.

"How much is one square meter worth in Shanghai or Beijing houses? This translates to very expensive housing, making space benefits enormous." The ability to achieve such large storage space represents pure electric technology's quantitative change leading to qualitative change - impossible for fuel, range extender, or plug-in hybrid vehicles.

As for other pure electric companies, some may lack technical capability, others may have issues with product understanding and user experience comprehension. "But Chinese peers are all excellent. I think our large front trunk will probably be industry-wide within one or two years - NIO Inc. was first to do many things, others later followed."

Regarding charging experience, he believes so-called range anxiety isn't actually about range but about charging or battery swapping. Most phones only last one day, rarely two days - why isn't anyone anxious? Because of power banks, which are equivalent to NIO Inc.'s battery swapping.

He revealed that NIO Inc. earned considerable money this year by helping several automotive companies maintain their charging stations. The industry now has 5 million public charging stations, and NIO Inc.'s charging/swapping network exceeds 8,000 stations. "Charging inconvenience experience loss is getting smaller - maybe a few long trips per year don't have great experience, but probably 95% of experiences are better than refueling."

He cited data showing that in July, pure electric grew 24.5% year-over-year while range extenders declined 11.4% year-over-year. Range extender manufacturers are also launching pure electric large three-row SUVs, indicating the golden age of range extender large three-row SUVs is passing while the era of pure electric large three-row SUVs is arriving. NIO Inc. has weathered pure electric's valley and finally sees dawn.

In product planning, NIO Inc. has persisted with multi-brand layout, serving broader users while sharing technological innovation and infrastructure.

He believes a basic automotive industry rule is that each brand can serve limited price ranges and target user groups. NIO Inc. had early attempts like Changan NIO, but later realized joint venture efficiency was low, so after 2020 decided to do it independently, leading to ONVO and Firefly brands.

Currently, synergistic advantages among NIO Inc.'s three brands are emerging. For example, one team supports three brands for motors, drives, and batteries; NIO Inc.'s design team also designs Firefly, with highly reusable internal foundational capabilities. Firefly added only 31 people to nationwide sales teams yet sold thousands of cars with very high efficiency.

He confidently stated: "NIO Inc. already has the R&D system and capability to support multiple brands, platforms, and even multiple countries and regions."

**"NIO Inc. is Not So Stubborn - Listen to Advice When Appropriate, Don't Be a Coward"**

Beyond two persistences, Li Bin also summarized one listening approach: keeping pace with times in product definition.

He frankly admitted that NIO Inc. previously buried meat in rice, spending much money on invisible implicit value while paying insufficient attention to explicit value. "NIO Inc. thoroughly learned this lesson with the third-generation ES8."

For example, single motors with longer range, and "refrigerator, TV, big sofa" configurations recognized by users and excellent peers - NIO Inc. should broadly listen to user opinions. "NIO Inc. is not so stubborn - listen to advice when appropriate. User preference and choice are most important."

He gave an example: previously, product colleagues influenced by him thought letting children watch rear screens in cars wasn't good. "I used to fight with kids at home daily, not letting them watch screens. Now they're older and I understand - you can't control rear screens for kids." So NIO Inc. made more eye-protecting rear screens.

Also refrigerators - previously NIO Inc. internally questioned whether demand was that large, but later discovered user demand was indeed significant, so they made it and made it better.

Li Bin admits these were "things learned from past user interactions."

In user interactions, NIO Inc. is also keeping pace with times.

NIO Inc. has always had a user-oriented enterprise label, but since starting transformation, NIO Inc. has continuously changed pricing models, NIO House operational models, and other aspects.

Li Bin stated that starting from user interests and communicating honestly with users - these values definitely cannot change. But regarding commercial decisions like price increases or decreases, how rights should be adjusted - these definitely must consider operational goals at different stages and cannot remain unchanged, otherwise it ultimately harms most users' interests.

He gave an example: when NIO Inc. recently announced standard 100kWh battery packs across all models, they held face-to-face user communication. "Definitely can't be a coward. If users have different opinions, we don't think there's any problem, but it doesn't mean everything cannot change."

**"Departing Colleagues All Hope the Company Can Emerge - I'm Very Moved"**

Current NIO Inc. is emerging from the valley. Reviewing past crises, Li Bin has different feelings.

As early as 2019, NIO Inc. faced a funding crisis. But Li Bin believes previous valleys had user support and Hefei's help in dire times - NIO Inc. had some luck. This time is different - this "pit" is big and long, NIO Inc. must rely on growing its own capabilities to emerge, requiring clearer understanding of organizational issues and necessary capabilities.

Adjustment is painful for teams, especially involving organizational restructuring and workforce optimization. Li Bin revealed many colleagues left the company voluntarily or involuntarily. "Because we use Feishu internally, many colleagues never added my WeChat. When leaving, they say 'Brother Bin, let's add WeChat.' Many leaving colleagues said things that particularly moved me, hoping the company can emerge and we can work together again in the future."

"There are still many colleagues in the company who believe we can emerge - definitely more than 1% believe." Li Bin often tells internal teams not to waste this capability-growing opportunity. Participating in growth from rock bottom is rare in one's career - a very meaningful experience for teams.

As NIO Inc. continuously encounters and emerges from valleys, the outside world has given Li Bin many labels like "most miserable person" and "most hardworking person."

"No matter what they call me outside, I don't care that much. Last year they called me Golden Pool Elder, this year Langlang Mountain Little Pig Monster - all fine. I'm also practicing cultivation - whatever they say is fine," Li Bin said, not wanting to create a special persona but just being authentic.

He also revealed that when NIO Inc. went public, he transferred one-third of his shares to a user trust, pursuing letting users own part of the enterprise - this differentiates NIO Inc. from other companies.

"Fifty million shares were worth tens of billions of dollars at peak - I wouldn't have much use for that money anyway. Everyone has different pursuits and thoughts, no right or wrong - this is my wealth philosophy."

"We continue working harder with long-term commitment - this is NIO Inc.'s current mindset, only working steadily and putting in honest effort."

When saying this, Li Bin's eyes were full of confidence. He believes NIO Inc., emerging from the valley, can do better!