Nio founder and CEO William Li told employees the EV maker must achieve profitability in the fourth quarter, describing it as a decisive “battle we must win.”
The company will report its August monthly delivery figures on early Monday and report its second-quarter earnings results on Tuesday before the US markets open.
In a 90-minute all-hands meeting held on Friday, the CEO recalled when the company nearly went bankrupt six years ago.
“In 2019 we got out of the trough by relying on users, but this time if we want to come out of the trough, we must rely on our own abilities,” Li stated.
Nio’s fortunes shifted in early July with the pre-launch of the Onvo L90, the second model its family-focused sub-brand Onvo.
The three-row six-seat SUV became the fastest-selling in Nio‘s history, surpassing 10,000 deliveries in less than a month.
“This week the L90 became the fastest model in Nio’s history to reach 10,000 deliveries,” Li told staff — as first reported by the local outlet LatePost.
After facing issues with production ramp-up with previous models, causing cancelled orders, Nio‘s chief executive highlighted the improvements made with the L90 launch.
“It should be one of the top achievements in terms of first-month deliveries of new models in so many years, proving that Nio can fully achieve ‘launch equals delivery, delivery equals scale-up.’”
“The launch battles of the L90 and the ES8 have made the industry see a different Nio,” Li added. “We are not only able to talk about long-termism but fail in short-term execution. Everyone has shown very good execution ability.”
The founder and CEO described the recent launches as proof that Nio’s decade-long commitment to pure-electric vehicles and battery swapping is bearing fruit.
“The golden age of range-extended three-row SUVs is passing, and the era of pure-electric three-row SUVs is arriving. This is the effect of our persistence in the correct technology path, accumulated step by step to today. Time is gradually proving our persistence is right,” he said.
Li continued pointing to the efficiency gains from Nio‘s battery swapping technology.
“The battery pack of the all-new ES8 weighs just over 500 kilograms, while that of the Onvo L90 weighs just over 400 kilograms, saving more than 200 kilograms. What does 200 kilograms mean? Compared with our cars, other cars are equivalent to always carrying three or four more people — that’s a huge difference,” he stated.
The company now operates 3,469 swap stations and 8,195 combined charging and swapping facilities in China, alongside a national network of more than 5 million public charging piles.
But Li told staff that cars alone will not bring profitability. He said Nio must emulate Toyota in discipline, efficiency and cost control.
“A company cannot succeed just by sticking to the right technology route,” Li noted.
“To succeed, it still has to rely on solid management, on operational efficiency, and cost-control ability. Why is Toyota the most worthy car company in the world to learn from? Because its operational efficiency is high, and its cost-control ability is strong,” he added.
Li pointed to Toyota’s profitability. “If you have 100 billion yuan in annual sales, improving efficiency by 1% is 1 billion, improving by 5% is 5 billion. Toyota compared with other companies can increase by 5% more, so its net profit margin is more than 10%,” Li said.
“Not a single cent should be spent on money that does not need to be spent. But necessary spending must be resolutely spent. These two are not contradictory,” he added.
Li reiterated the profitability target for the final quarter of the year saying it remains the company’s most important milestone.
“At the beginning of the year I proposed to achieve profitability in the fourth quarter this year. I estimate that fewer than 1% of people believed it,” he said. “
The fourth quarter is now just over a month away. Looking at it now, although the challenge is indeed very big, there is an opportunity.”
“Profit = Sales revenue × Gross margin – Expenses. The Onvo L90 and the all-new ES8 overall are both high-priced, reasonably high-margin products. Models like the L60, 5566, Firefly, and ET9 can maintain certain volumes. For sales revenue across the whole fourth quarter this year, I think it is secured, and gross margin also has a chance.”
Li said consumer trust depends on it.
“Among those who don’t buy our cars, at least 30%-40% do so because they worry whether Nio will collapse. If we are profitable, this rumor will collapse on its own, user confidence will increase, and many problems will be solved.”
In the Q&A session, employees raised questions on delivery performance, technology development, and the balance between user service and cost control.
Asked how Nio avoided the delivery issues that plagued past launches, Li said the L90 rollout was tightly managed.
“This time the overall rhythm has indeed been good. From presale to official launch the rhythm was quite compact,” he said.
“Today at the Chengdu Auto Show we just delivered the 10,000th Onvo L90. It should be one of the top achievements in terms of first-month deliveries of new models in so many years, proving that Nio can fully achieve ‘launch equals delivery, delivery equals scale-up.’”
On NWM (Nio World Model) assisted driving software and whether its performance met expectations, Li praised the autonomous driving team.
“I think our AD team is very remarkable. Everyone must not be led astray by incomplete evaluation standards. In fact, Nio’s intelligent driving has always been in a leading position in the industry. In intelligent safety we can say we are absolutely number one in the industry.”
“We were the first to apply end-to-end to parking, also the industry’s first. And it is indeed very useful, extremely useful. … After the recent new version was launched, I now drive the ET9 to commute, and it is quite good — often zero interventions,” he added.
When pressed on whether all 12 full-stack technologies were worth maintaining given the Q4 profitability challenge, Li drew a distinction between long-term and application-layer projects.
“Some are long-term R&D, pre-research, or longer-term projects. The ROI of these is actually not a problem. They come from the company’s long-term project resource pool. But some are at the application layer — those must definitely have the accounts calculated clearly,” he said.
On service operations, employees asked how Nio could remain user-first while controlling costs. Li rejected the idea of a tradeoff. “Putting user interests first and doing service cost well are not a contradiction. Doing service well is precisely putting user interests first. If users are happy, we are happy. … We are a commercial organization. Reasonable pricing, reasonable gross margin — most users will feel this is reasonable.”
Finally, on whether range-extended SUVs still had a place in the market, Li argued the tide had shifted.
“Recently range-extended carmakers have all been launching pure electric three-row SUVs. What does this show? It shows our competitors are very smart, accelerating their move to pure electric. It shows everyone is very clear that the inflection point of technology and experience has arrived,” he stated.
“We firmly believe that the chargeable, swappable, upgradeable technical route is the ultimate solution. This is very important. The good thing about the ultimate solution is that each day’s progress takes you closer to the final goal. It fits user interests and fits business essence. Time is gradually proving that our persistence is right.”
Li closed the meeting by urging staff not to mistake short-term success for long-term resilience.
“In 2019 we came out of the trough by relying on users, and there were also some elements of luck. But this time, if we want to come out of the trough, besides relying on users, we must also rely on our own abilities,” he said.
“Conversely, in the process of the company coming out of the trough, whether you as individuals have gained ability — that is a very important return for you personally,” he stated.
“Otherwise, if we muddle through and come out without relying on our own ability, then this time is wasted. In the future, if we really encounter another crisis, we will not have such immunity, we will not have such resistance, and we will repeat the same mistakes.
“We must prevent such mistakes from happening again,” Li concluded.
Late last week, Nio‘s president and co-founder Lihong Qin said the company will roll out its fifth-generation battery swap stations in China starting “early next year.”
Speaking at a media Q&A session during the opening day of the Chengdu Auto Show, Qin said the project “is proceeding smoothly,” with engineering units already built and undergoing verification.
