Chinese electric vehicle startup Nio has turned a quarterly profit for the first time, after a decade spent burning through billions of dollars to survive cutthroat competition in the world's largest auto market.
The New York-listed company posted $179 million in adjusted operating profit for the fourth quarter of 2025, beating a previous guidance of up to $172 million, while its full-year loss totaled $2 billion. Nio's quarterly revenue jumped 76% to $5 billion on a multibrand strategy that attracted orders for both its premium and mass-market car models.
Nio's stock opened 6% higher in New York on Tuesday.
The company's management attributed the turnaround to an improved product mix and cost reductions.
"Our in-house developed EV technologies continued ... delivering meaningful cost efficiencies," CEO William Li said in a regulatory filing on Tuesday, adding that three brands -- Nio, Onvo and Firefly -- have helped the group target a variety of market segments.
Li projected in a recent social media livestream that the company would break even on an annual basis in 2026.
"This combination of higher sales volume, enhanced gross margins, and disciplined cost control [are] expected to be the catalyst for Nio achieving full-year profitability in 2026," Bin Wang, an auto analyst at Deutsche Bank, wrote in a research note this month.
Nio is among a group of Chinese EV upstarts built on a fast-growth, cash-burning model, but pressure has been mounting for carmakers to make a profit amid an intensifying price war.
Rival Leapmotor recorded positive net income for three consecutive quarters last year, while the founder of Xpeng said at a press briefing in November that the company was "99.999%" likely to become profitable in the fourth quarter.
Founded by serial entrepreneur Li slightly more than a decade ago, Shanghai-based Nio has distinguished itself from local peers with premium services including battery swaps, free repairs and regular community activities.
But with years of losses straining the group's balance sheet, Nio recently has embarked on a cost-cutting campaign that includes replacing Nvidia chips with self-designed ones and shutting shared office spaces it once allowed customers to use for free.
Investors question whether consumers will be willing to pay for Nio's expensive battery swapping services, which let users exchange a drained EV battery for a fully charged one in three minutes, after rivals such as BYD touted technological breakthroughs that could make charging as fast as gasoline refueling.
A slowdown in China's once-buoyant EV demand also has raised concerns over whether Nio's profitability is sustainable.
China's sales of pure battery-powered vehicles and plug-in hybrids are expected to have dropped 26% year-on-year in the first two months of 2026, Citi analysts wrote in a research note.
"Whilst we believe the fourth-quarter earnings breakthrough should be read as positive by the market, the real challenge could be the second-quarter sales performance," they said, while cutting Nio's revenue forecast for 2026 by 11%.
In November, rival Li Auto ended a nearly three-year profitability streak on the heels of a sales slump and product recalls, representing a cautionary tale for the industry.