To The Moon

Yo, people - $NIO Inc.(NIO)$ Q3 2025 earnings are out. Here’s the skinny.

Earnings are showing a notable improvement driven by (a) volume growth from its multi-brand strategy (NIO, ONVO, & FIREFLY) and (b) rigorous cost control - something management should have exercised ages ago.

Q3 Earnings.

Revenue :

• Was US$3,061.4 million vs Q3 2024’s US$2,661.0.

• That’s a +15% YoY growth.

• Over a 3-year assessment, rate of growth is +6.8%, indicating moderate expansion.

Loss per share:

• Was -$0.21 vs Q3 2024’s loss of -$0.35. That’s a +40% YoY improvement.

• This dramatic reduction demonstrates improved operating leverage.

• It has been viewed as a positive surprise, reflecting stronger-than-expected margin recovery.

Gross margins:

• Was 13.9% vs Q3 2024’s 10.7%, an improvement of +3.2% YoY. It also reflected (a) better production scale and (b) decreased material costs per unit.

• Vehicle margin (subset of gross margin) was 14.7% vs Q3 2024’s 13.1%.

• Both have surpassed expectations and reached the highest level in the past 3 years, demonstrating effective cost reduction efforts.

QoQ Comparisons.

While YoY earnings comparison look promising, what about QoQ ?

Comparatively speaking, quarter-over-quarter (QoQ) comparison also shows a strong acceleration toward profitability:

• Deliveries jumped by +20.8% to 87,071 units (Q3 2025) from 72,056 (Q2 2025).

• Gross Margin saw the most impressive sequential improvement, leaping to 13.9% from 10.0% (+390 basis points). This was largely attributed to vehicle margin improvement, that rose to 14.7% from 10.3%, driven by comprehensive cost reduction efforts.

• Net Loss decreased by -30.3% to US$488.91 million from US$701.62 (Q2 2025), showing effective control over operating expenses, relative to revenue growth.

Note:

While NIO’s headline numbers were largely positive, detailed reporting reveals a potential point of concern for long-term investors.

R&D expenses have decreased by -20.5% QoQ to US$355.81 million from US$422.39 million.

Management attributed this to decreased personnel costs in R&D functions, as a result of:

• Organizational optimization.

• Decreased design & development costs resulting from different stages of development for new products and technologies.

While cost-saving is positive, steep drop in R&D for a technology company in a highly competitive and fast-evolving market like EVs can signal a potential slowdown in future innovation or product refreshes.

This as NIO pushes its newer, lower-cost sub-brands — Onvo and Firefly.

Earnings’ Conference Call.

Below are details shared by NIO’s management during post earnings conference call.

(1) Financial Performance and Profitability Targets

• Q4 Breakeven: NIO remains confident in achieving quarterly breakeven in fourth quarter.

• Q4 Guidance: The company expects Q4 deliveries to reach 120,000 to 125,000 units, marking a YoY increase of +65.1% to +72%, setting a new quarterly record.

Margin Targets:

• NIO's vehicle margin is expected to reach about 18% in Q4.

• ES8’s vehicle margin is projected to exceed 20% in Q4, driven by significant delivery increase. Orders for high-margin models, eg. the all-new ES8, remain strong.

• Gross margin for NIO ET5, ET5 Touring, & Onvo L90 models ranged between 15% & 20% inQ3 2025.

• NIO aims to achieve a gross margin of around 20% in 2026. Management is confident, due to increasing contribution from large vehicle sales.

Long-Term Profitability: NIO aims to achieve full-year profitability on a non-GAAP basis in 2026.

Financial Efficiency:

• In Q3 2025, NIO achieved positive operating cash flow & free cash flow.

• NIO's operational efficiency improved further in Q3 across sales, general and administrative expenses, and R&D costs.

• With no major marketing campaigns planned for Q4 2025, expense control remains within plan.

R&D Commitment:

• NIO's quarterly R&D expenses will remain at about RMB 2 billion (US$280.94 million), with no plans for further reductions.

• The company will continue to optimize R&D efficiency.

(2) Multi-Brand Product Strategy & Market Segmentation.

NIO is leveraging its 3-brand (NIO, Onvo, Firefly) structure to target the largest segments of the Chinese market.

Strategy is for the 3 brands to collectively drive sales growth by catering to a broader range of customers across wider price segments.

NIO:

• ES8 aims to deliver 40,000 units this year, with the majority of deliveries expected in Q4 2025.

• Plans to have 5 large vehicles in 2026 from both flagship (NIO) and Onvo brands.

• Management is confident in its sales growth for next year.

• NIO still has the chance to achieve monthly deliveries of 50,000 units during H1 2026.

• NIO will launch 2 new models in Q2 2026 and 1 new model in Q3 2026.

Onvo :

• In China EV market, EVs priced between US$14,047 & US$42,141 holds an annual sales potential of 15 million units in China, making it the largest market segment.

• NIO Inc has every reason to introduce more products in this segment.

• High-spec version of Onvo L90 is priced near US$42,141, while Onvo L80 is set to expand the product lineup in 2026.

• At the same time, NIO is developing a vehicle platform priced below US$28,000 for Onvo, that will be launched at the appropriate time.

• In the long term, Onvo aims to offer a diverse range of products priced between US$14,047 & US$42,141 to serve a broader user base.

Firefly:

• Continues to lead the high-end electric compact car market in sales.

• The launch of Firefly : special edition models has further attracted users seeking quality and personalized expression.

(3) Global Expansion and Sales Network

NIO has begun to employ a multi-speed approach to global expansion, utilizing partnerships for its new brands.

• NIO: For the flagship brand, given its high price point, expanding in overseas markets will require time and patience.

• Firefly: Firefly will leverage on established sales partnerships to enter markets across Europe, Asia, Middle East, Americas, and South America.

• Onvo: Following Firefly, some Onvo models will also enter the global market via partnership.

Sales & Service Network:

• NIO has established sales partnerships in over a dozen countries and regions.

• Currently, NIO has opened 172 Nio Houses and 395 Nio Spaces.

• Onvo's store count has reached 422 locations.

• The service network includes 405 service centers and 70 delivery centers.

(4) Technology and Industry Dynamics.

NIO is evolving into a technology partner in the broader EV ecosystem, from originally an EV maker pure play.

Chip Strategy

• It aims to sell its own chips and certain chip R&D capabilities through partners.

• It maintains its own sales channels, and chip sales partnerships are non-exclusive.

• These chip partners possess mature experience and customer resources in the field, with their own chips complementing NIO's needs.

• It is working with partners to promote the opening of its chips to the entire EV industry and to more scenarios, including robotics.

Policy Impact:

• China's EV industry now relies far less on policy support than before.

• The tapering of stimulus policies may have a relatively minor impact on NIO, as 80% - 90% of its customers purchase vehicles under the Battery as a Service (BaaS ) plan, where battery costs are not subject to taxation.

• Onvo's sales is being impacted by tapering of stimulus policies in November 2025 and effect on overall gross profit remained within expectations.

Is NIO a Buy ?

Based on the latest (21 Nov 2025) readings, analysts give NIO an average recommendation of Hold from 12 firms (2 sell, 6 hold, 4 buy) with a consensus 12‑month target price of $7.03, although a few houses like $JPMorgan Chase(JPM)$ and $Citigroup(C)$ are more constructive with targets near US$8 – 8.60 range.

Based on NIO’s 26 Nov 2025 endday price of $5.46; this represents a +28.75% upside.

With a November 2025’s trailing P/E ratio at -3.4, NIO (over the past 12 months), is still experiencing negative earnings - mathematically.

This number should decrease over time as NIO endeavours to keep R&D costs under control, as confirmed by management.

As for NIO’s latest, price to sales (P/S) ratio that averages between 1.2 to 1.3, is suggesting that market values NIO at about 1.2x - 1.3x its annual revenue.

This valuation reflects both investors’ caution due to losses but some confidence in revenue growth potential.

Personally, I think the above metrics align with the overall:

• Mixed "Hold" consensus.

• View that NIO is a higher-risk growth stock, rather than an outright “Buy” at the moment

If NIO breakeven in Q4 2025 and register growth in Q1 2026, then the narrative should change from “Hold” to “Buy”. Agree ? Believe me when I say, I want NIO to thrive!

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