NIO Inc. (NIO) released its third-quarter financial results on the evening of November 25. As the year-end approaches, the market is keenly focused on how close the company is to achieving profitability.

**Revenue and Deliveries Grow** In Q3, NIO's total revenue reached RMB 21.794 billion, up 16.7% year-over-year (YoY). Vehicle sales accounted for RMB 19.202 billion, a 15% YoY increase, while other sales rose 31.2% to RMB 2.592 billion. The growth was primarily driven by higher deliveries.

The company set a new quarterly delivery record of 87,000 vehicles, marking a 40.8% YoY increase from 61,800 units and a 20.8% sequential rise from 72,000 in Q2. Key contributors included strong demand for the Ledao L90 and the new NIO ES8.

However, despite higher deliveries and revenue, NIO’s average revenue per vehicle declined to approximately RMB 220,700 in Q3, down from RMB 223,900 in Q2. This shift reflects changes in the sales mix.

Breaking down deliveries, the premium NIO brand accounted for 36,900 units (42.3% of total sales), while the mid-to-low-end Ledao and Firefly brands contributed 37,700 and 12,500 units, respectively. Combined, Ledao and Firefly now represent 57.7% of total deliveries, indicating their growing importance in NIO’s sales strategy.

**Margin Improvement Amid Challenges** Despite lower average selling prices, NIO’s vehicle gross margin improved by 1.6 percentage points YoY to 14.7%, with overall gross margin reaching 13.9%. CFO Qu Yu attributed this to higher-margin product contributions and cost optimization.

Chairman William Li noted that accelerated deliveries of the new ES8 in Q4 could further boost per-unit margins. Qu added that the ES6 and EC6 already achieved margins of 25% or higher in Q3, while the ET5, ET5T, and Ledao L90 ranged between 15%–20%. The third-gen ES8 also hit a 20% margin.

Cost controls also played a role. Q3 SG&A expenses rose modestly to RMB 4.185 billion (up 1.8% YoY), while R&D spending fell 28% YoY to RMB 2.391 billion. Li emphasized tighter control over marketing expenses in Q4.

These measures helped narrow NIO’s net loss to RMB 3.4805 billion for the quarter. Still, cumulative losses for 2025 exceed RMB 15 billion.

**Q4 Outlook and Liquidity Concerns** NIO guided for Q4 deliveries of 120,000–125,000 vehicles and revenue of RMB 32.758–34.039 billion, though this represents a nearly 20% reduction from prior targets.

While Q3 saw positive operating and free cash flow, liquidity remains a concern. Restricted cash, short-term investments, and long-term deposits make up 75% of the RMB 36.7 billion in total cash reserves, leaving only RMB 9.271 billion in readily available funds.

Analysts noted that a USD 1.16 billion equity raise in September bolstered cash reserves, masking weaker operational cash flow. Rising payables (up 13.15% to RMB 39.548 billion) and a current ratio of 0.94 further highlight liquidity risks.

**Profitability Uncertainties** CMB International cautioned that NIO’s Q4 guidance suggests continued net losses, with competitive pressures and internal sales cannibalization posing risks to 2026 profitability assumptions.

NIO’s multi-brand strategy has expanded its market reach but also introduced challenges in balancing scale, brand value, and per-unit profitability. As the EV sector shifts from growth to maturity, financial health and sustainable earnings are becoming critical benchmarks for long-term success.