- Nio will spare no effort to achieve its fourth-quarter profitability target while embracing all possibilities, William Li said.
- "For a considerable period, we will remain focused on refining our automotive products."
Nio Inc (NYSE: NIO, HKG: 9866) is currently focused solely on vehicle sales and achieving its first quarterly profit in the fourth quarter, the company’s founder, chairman, and CEO William Li, said.
There's no "Plan B" for achieving fourth-quarter profitability and the company will spare no effort to meet the target and embrace all possibilities, Li said yesterday during a briefing with select domestic media at its Shanghai headquarters, according to a Q&A transcript released today by 21jingji.
Li made these remarks in response to a question: "If profitability targets aren't met on schedule, is there a Plan B?"
The day prior, on November 25 -- its 11th anniversary -- Nio released its third-quarter earnings report showing a net loss of RMB 3.48 billion ($490 million), the lowest since the third quarter 2022.
The adjusted net loss (non-GAAP) for the third quarter was RMB 2.74 billion, down 38.0 percent year-on-year and down 33.7 percent quarter-on-quarter.
During the subsequent analyst call, Nio management reiterated confidence in achieving its first quarterly profit in the fourth quarter, with the goal of reaching full-year breakeven in 2026.
Analysts are divided on this outlook, with some believing the target is achievable while others remain skeptical.
Analysts at CMB International said in a research note yesterday that Nio will likely miss its fourth-quarter breakeven target, citing challenges in controlling sales and administrative expenses.
The team projected Nio could still post a net loss of RMB 1.6 billion in the fourth quarter, with a non-GAAP adjusted net loss of RMB 700 million.
JP Morgan, however, believes Nio is poised to turn profitable in the fourth quarter and reach a profitability inflection point in 2026.
During yesterday's media briefing, Li once again addressed the impact of China's phased-out support policies on demand.
The abrupt withdrawal of trade-in subsidies has significantly impacted the market --something the industry hadn't anticipated -- leading to a sharp decline in new orders across the sector, Li said.
"Our strategy is to maintain price stability because we still have backlog orders for models like the all-new ES8, which performs well in its segment. This puts us in a relatively better position," Li said.
He noted that all other models except the Nio ES8, Firefly, and Nio ET9 have been affected.
Multiple Chinese provinces and cities have phased out vehicle trade-in subsidies over recent months. Additionally, starting next year, new energy vehicle (NEV) purchases will face a 5 percent tax -- half the standard 10 percent rate, unless last-minute adjustments occur.
The first quarter is traditionally challenging for the auto industry, but Nio still holds a backlog of ES8 orders, Li said.
"Next year's market shifts are indeed hard to predict, but we're confident in achieving our full-year profitability target," he said.
Nio's business philosophy has shifted, no longer solely pursuing sales volume but focusing more on operational quality, with the core goal being annual profitability, Li said.
He mentioned that in recent years, the company has invested heavily in foundational R&D, such as chips, operating systems, and the 900-volt high-voltage platform. This work is akin to laying a solid foundation, with subsequent efforts primarily involving upgrades and iterations that require less substantial investment.
He added that RMB 2 billion in quarterly R&D spending remains sufficient to maintain Nio's competitiveness.
Li further noted that through past exploration, Nio has recognized that with just over 1 percent market share in China's 30 million-unit annual vehicle market, the company lacks the standing to consider ventures beyond automobiles.
"For a considerable period, we will remain focused on refining our automotive products --working hard to build them and selling them."
($1 = RMB 7.0832)
