Can Cost-Cutting Save NIO?

After years of “burning cash without blinking,” NIO finally started to calculate every penny spent as it entered 2025. However, in the face of intense market competition, the company’s “self-blood” capability might soon be put to the real test, aside from cost-cutting and fundraising efforts. On March 11, NIO’s stock price surged after a long period of stagnation. Its Hong Kong-listed shares rose by more than 12% at one point, closing with a nearly 10% increase. However, the current stock price is less than a fifth of the peak it reached when it first went public on the Hong Kong stock market in 2022.From a news perspective, in February this year, the retail sales of the national passenger car market increased by 26% year-on-year, providing more market opportunities for new energy vehicle companies. What set NIO apart was its announcement of a deep organizational change led by its founder, Li Bin. According to 36Kr, this transformation began after an employee, who was about to leave the company, posted a long article in late February, proposing ten suggestions. He called for NIO to quickly shift from abstraction to pragmatism, to be market-driven, and to avoid fantasizing and excessive boasting, instead concentrating resources and facing reality head-on. Li Bin pinned the post and pushed it to all employees, replying, “Thank you for your suggestions. Improving management awareness, starting with myself.” Clearly, Li Bin realized the issues and seized this opportunity to make the company more aware that change could not wait any longer.By the end of 2024, NIO will have completed its tenth year since its founding. From the beginning, the company was on a path of burning cash, with its battery swapping model as one of its main features.

This system requires thousands of battery swap stations, which involves huge investment in infrastructure construction and operational costs. Li Bin once revealed that a single station only needs 60 orders per day to break even. According to NIO’s 2025 Chinese New Year charging report, during the Chinese New Year, the peak daily order number reached about 136,000, with more than 3,100 stations providing services. This means that during peak times, each station only served less than 44 customers on average. Additionally, the community concept and supporting services that NIO created with its high-end positioning also consumed a large amount of manpower and resources. Furthermore, Li Bin previously launched a mobile phone product, NIO Phone, without focusing on profitability, and invested hundreds of millions to build a car-to-phone ecosystem and defend against potential threats from Apple in the connected car sector. However, this forward-thinking concept was undermined by Apple’s decision to give up on manufacturing cars.As part of this “shift from abstraction to pragmatism,” it’s unclear how NIO internally defines “abstraction” and “pragmatism.” However, after the reform plan was announced, on March 11, it was reported that since December of the previous year, the mobile software team had been merged with the digital cockpit team, and redundant positions had been significantly reduced. On March 12, NIO was also reported to have laid off 10% of its workforce, with cuts not only in the sales team but also in the company’s highly valued service sector.NIO’s ability to reach its current position has largely relied on Li Bin’s “fundraising” skills. Over the years, he has successfully introduced multiple rounds of financing, which supported the advancement of his vision.

Whenever the company faced a crisis, Li Bin was able to secure timely funding. NIO has indeed achieved some success according to his vision—whether it’s the battery swapping ecosystem or the community services, both are unique in the Chinese new energy vehicle sector. However, the industry and technology are constantly evolving. As fast-charging technology has rapidly advanced, many car manufacturers have launched high-voltage fast charging systems, which are reducing the time required for energy replenishment and eroding the advantages of battery swapping. At the same time, NIO’s high-end market positioning is facing more competition. Traditional fuel car manufacturers have already completed their transformation, and local car companies are also grabbing more market segments in order to survive and maintain their advantage.Since last year, several car companies have launched high-end models. For example, Xiaomi’s second model, the YU7, is expected to be released between June and July this year. As Xiaomi’s first all-electric SUV, it will directly compete with some of NIO’s models. Lei Jun’s brand appeal has clearly outpaced NIO’s costly investment in its service system at this stage. In a recent internal meeting, Li Bin stated that NIO’s goal for 2025 is to achieve 440,000 vehicle deliveries and to achieve a quarterly profit by Q4 of 2025. However, in the first two months of this year, NIO’s total deliveries amounted to 27,055 units, still far from its annual target.Li Bin has repeatedly set a timeline for the company’s profitability, with the latest target being 2026. Previously, he had set it for 2024, but the company is still facing ongoing losses.

According to the financial report, NIO’s revenue for the first three quarters of 2024 was approximately ¥46.03 billion, an increase of 19.5% year-on-year. However, the net loss was around ¥15.53 billion, basically the same as the previous year. For NIO to truly get out of its predicament, “cost-cutting” is not enough. This will only slow down the burn rate, and more importantly, NIO needs to create popular models to boost sales. NIO once handed over the task of increasing sales to its sub-brand, Le Dao, which focuses on a price range of ¥200,000. The president of Le Dao, Ai Tiecheng, set a “military order” for sales: to deliver over 10,000 units by December 2024, 15,000 units from January to February 2025, and 30,000 units by March. If these targets were not met, he would resign. However, after successfully surpassing 10,000 units in December 2024, Le Dao’s sales plummeted at the beginning of 2025, with the combined sales for January and February failing to exceed 10,000 units.NIO’s third brand, Firefly, will be launched soon, positioning itself in the ¥100,000-level mass market. Competition at this price point will be fiercer, and whether Firefly can contribute to the company’s “self-blood” generation is still uncertain. Li Bin stated that 2025 would be a year of internationalization, with overseas markets becoming a new growth point for NIO, and plans to enter 25 countries and regions this year. However, as the “infrastructure builder” that NIO is, it will inevitably need to increase the density of its battery swap stations in more regions while expanding to more markets. On February 26, NIO’s first battery swap station in the UAE officially launched in Abu Dhabi. Previously, NIO received substantial investments from Middle Eastern institutions. Worldwide, NIO has set up 60 battery swap stations overseas, but this number still lags far behind its domestic efforts, and further investment will continue.