NIO just reversed four consecutive quarters of widening losses, posting its smallest quarterly deficit since 2022 as record vehicle deliveries and aggressive cost-cutting show the Chinese EV maker may finally be finding its footing in an industry where most competitors are hemorrhaging cash.

The Shanghai-based automaker reported a Q3 net loss of RMB 3.48 billion ($490 million), down 31% from a year earlier, according to its unaudited earnings release. That beat analyst estimates of RMB 3.71 billion and marks a critical inflection point for a company that has burned through billions pursuing profitability.

For NIO investors and EV watchers, this quarter answers a crucial question: Can premium Chinese EV makers survive without endless government bailouts? The numbers suggest NIO is learning to walk on its own, though the path remains treacherous.

Record Deliveries Drive Revenue Growth

NIO delivered 87,071 vehicles in Q3, up 41% year-over-year and 21% quarter-over-quarter. The company’s three-brand strategy is finally gaining traction.

The premium NIO brand contributed 36,928 units. The family-oriented ONVO sub-brand added 37,656 vehicles. And the compact Firefly brand, launched earlier this year, delivered 12,487 units.

October continued the momentum with 40,397 deliveries, marking the third consecutive monthly record and the first time NIO crossed the 40,000-unit threshold.

Revenue hit a record RMB 21.79 billion ($3.06 billion), up 17% year-over-year. Vehicle sales specifically reached RMB 19.2 billion, climbing 15% from the prior year.

CEO William Bin Li struck an optimistic tone: “The strong momentum was driven by the all-around competitiveness of our NIO, ONVO, and FIREFLY brand offerings, which continue to resonate with users across their respective market segments.”

Margins Hit Three-Year High

The real story lies in NIO’s margin recovery.

Gross margin reached 13.9%, the highest since Q2 2022 and a significant improvement from 10.7% a year ago. Vehicle margin climbed to 14.7%, up from 13.1% in Q3 2024 and 10.3% in Q2 2025.

CFO Stanley Yu Qu emphasized the progress: “Through continuous cost optimization and a greater contribution from higher-margin vehicle deliveries, our vehicle gross margin sequentially improved to 14.7% in Q3 2025, and the overall gross margin reached the highest level in the past three years.”

Lower material costs per unit drove the improvement, reflecting NIO’s comprehensive cost reduction initiatives across its supply chain.

R&D Cuts Raise Questions

NIO slashed research and development spending by 28% year-over-year to RMB 2.39 billion, the lowest since Q3 2022.

The company attributed the reduction to organizational optimization that reduced personnel costs and decreased design expenses as products moved through development stages.

Sales, general, and administrative expenses held nearly flat, rising just 1.8% year-over-year to RMB 4.18 billion. That represents the lowest annual growth rate on record.

The cost discipline paid off. NIO generated positive operating cash flow for the first time in 2025 and reduced non-GAAP operating losses by over 30% quarter-over-quarter.

“Our continued efforts on operational efficiency improvement across R&D, sales and service also drove a quarter-on-quarter reduction of over 30% in non-GAAP operating losses,” Yu added.

Q4 Guidance Falls Short of Earlier Targets

NIO expects to deliver between 120,000 and 125,000 vehicles in Q4, representing 65% to 72% year-over-year growth.

However, this guidance falls below the 150,000-unit target management mentioned during September’s earnings call. The revision implies November and December combined deliveries of roughly 80,000 to 85,000 vehicles.

Revenue guidance of RMB 32.76 billion to RMB 34.04 billion ($4.6 billion to $4.78 billion) still represents robust 66% to 73% year-over-year growth.

The company raised $1.16 billion through an equity offering in September, bolstering its cash position to RMB 36.7 billion as of quarter-end.

Battery Swap Network Remains Key Differentiator

NIO continues betting on battery swapping as its competitive moat against rivals focused on traditional charging infrastructure.

The company operates the world’s largest battery swap network, allowing drivers to exchange depleted batteries for fully charged ones in minutes rather than waiting at charging stations.

This infrastructure investment requires higher upfront costs than charging networks but creates customer lock-in and addresses range anxiety more directly than any competitor.

NIO’s partnership with CATL, the world’s largest battery manufacturer, aims to expand this network further while sharing costs across the industry.

EVXL’s Take

NIO’s Q3 results tell a story of survival through sacrifice. The 31% reduction in net losses sounds impressive until you examine the mechanism: slashing R&D by 28% while the competition continues investing aggressively in next-generation technology.

This is the brutal calculus facing Chinese EV makers right now. As we reported earlier this month, only 15 of China’s current 129 EV brands will survive by 2030 according to AlixPartners analysis. That means 114 brands face extinction in the next five years.

NIO is clearly fighting to be among the survivors, but its path contrasts sharply with competitors. Just last week, we covered how Xiaomi reached EV profitability in just 19 months by leveraging its existing tech ecosystem and manufacturing expertise. NIO has been at this for nearly a decade and still loses half a billion dollars quarterly.

The context matters. When we documented China’s fake sales scandal two weeks ago, NIO was specifically mentioned as a company that continues hemorrhaging cash despite a 2020 government rescue. The city of Hefei saved NIO from bankruptcy, but public money cannot subsidize losses forever.

The reduced Q4 delivery guidance also deserves scrutiny. Dropping from 150,000 to 120,000-125,000 units suggests management overestimated demand or faces production constraints. Either explanation raises questions about NIO’s execution capabilities as it pursues its first profitable quarter.

We have been tracking NIO’s struggles in China’s price war for over a year now. The company’s premium positioning should theoretically insulate it from the discount bloodbath crushing lower-tier brands. Yet NIO launched ONVO specifically to compete in the mass market where margins are thinnest.

De Firefly brand launch in April added another layer of complexity. Operating three distinct brands requires substantial overhead that contradicts the cost-cutting narrative.

What happens next depends on whether NIO’s past R&D investments can carry the company while current spending drops. Battery swap technology and autonomous driving capabilities represent genuine differentiation, but competitors are not standing still.

Als Foxconn’s chairman predicted just days ago, China’s EV industry is cannibalizing itself. The survivors will be those who can scale profitably while maintaining technological relevance.

NIO has bought itself time with this quarter’s results. Whether that time translates into sustainable profitability remains the $490 million question.