NIO’s Tech Moats and Efficiency Revolution Revealed in Earnings Report

Amid a fiercely competitive electric vehicle market in 2025, NIO has not only survived but begun to thrive through strategic transformation. The first quarter of the year saw the auto industry locked in intense rivalry, with frequent reshuffling among new-energy car manufacturers. Internally, NIO pursued structural reforms across its brands and operations—navigating challenges and uncertainties—yet emerged with encouraging results. The ET9 outsold the BMW 7 Series and Audi A8 in its first month, core models like the 5566 met optimistic expectations, the Lotus brand regained momentum, and the Firefly brand officially began deliveries. It’s clear: NIO’s persistent changes are paying off.

On the Q1 2025 earnings call, CFO Yu Qu highlighted that with the launch of the new ES6, EC6, ET5, and ET5T, transaction prices have recovered. The adoption of in-house developed chips is expected to reduce vehicle costs by approximately ¥10,000 per car. Combined with these factors, the gross margin for NIO-branded vehicles is projected to return to 15% in Q2. Meanwhile, sales in April and May have gradually normalized. This rebound is directly improving operating cash flow. Based on Q2 delivery guidance, the company anticipates a significant cash flow improvement, aiming to achieve positive free cash flow within the year.

1. Scaling Up In-Hive R&D: Strengthening NIO’s Technical Moats

In 2025, William Li, Founder, Chairman, and CEO of NIO, introduced the “New Three Core Technologies” for smart electric vehicles: autonomous driving chips, a full-domain operating system, and intelligent chassis. These technologies, Li stated, define the upper limits of intelligence and safety in modern cars. Thanks to persistent in-house innovation and forward-looking R&D, NIO is now reaping the rewards.

On March 28, NIO began production and installation of its self-developed 5nm AD chip—the Shenji NX9031. As the world’s first mass-produced 5nm chip for autonomous driving, it delivers industry-leading performance with a single-chip capacity exceeding 1000 TOPS. Already deployed in models including the ET9, new ES6, EC6, ET5, and ET5T, the chip noticeably elevates the user experience. In addition, the company rolled out the initial version of its World Model (NWM) on May 30 to over 400,000 vehicles equipped with the Banyan platform.

The mass production of a 5nm autonomous driving chip marks a technological breakthrough for China’s auto sector. The integrated operating system allows deeper hardware-software synergy, while the smart chassis enhances both safety and comfort. Together, these three pillars form a robust tech moat for NIO—raising the bar for performance and safety in the battery car segment, controlling costs, strengthening supply chain control, and laying a foundation for profitability by the fourth quarter.

2. A Wave of New Models: A Decade of R&D Comes to Fruition

At a critical turning point, NIO is launching one flagship product after another. The ET9 kicked off what the company describes as a “product avalanche” for 2025, embodying ten years of R&D investment. Since deliveries began on March 29, the ET9 has won recognition among tech-forward consumers. It was quickly followed by the new ET5, ET5T, ES6, and EC6—all upgraded with greater value and immediate availability.

During the earnings call, William Li shared that NIO is aiming for a steady monthly sales rate of 25,000 units by Q4, a 20% increase year-over-year, with gross margin expected to exceed 20%. The all-new ES8, set for delivery in the same quarter, will further strengthen the lineup.

With a decade of R&D behind them, NIO’s new automobile generations offer comprehensive upgrades in intelligence, performance, design, and safety. Climbing sales confirm that the brand meets rising consumer expectations for high-quality new energy cars.

Meanwhile, the Lotus brand unveiled its flagship smart SUV, the L90, at the Shanghai Auto Show. It is scheduled to launch and begin deliveries in Q3, followed by the L80 in Q4. On April 19, the Firefly brand launched its compact intelligent electric vehicle, with deliveries starting on April 29.

This product blitz reflects William Li’s commitment from earlier this year: NIO will launch nine new models in 2025, with major releases every quarter.