NIO Turns Profitable for the First Time; Li Bin Details Three Key Shifts: Battery Swapping, In-House Chips, and Business Strategy

In April 2026, NIO achieved its first-ever quarterly profit. However, before founder William Li could celebrate, he immediately turned his focus to tackling the "late spring chill" gripping China's auto market. In Q1 2026, domestic vehicle sales dropped by 20.3% year-over-year, with passenger car and new energy vehicle (NEV) sales falling by 23.4% and 23.8%, respectively. Against this backdrop, NIO stood out as the only company among the “NIO, XPeng, and Li Auto” trio to participate in the 2026 High-Level Forum on Smart Electric Vehicle Development. NIO’s profitability did not stem from a single hit model but rather from the collective realization of its systemic capabilities, manifested in three key transformations: First, its battery swap model has shifted from a cost burden into a policy-driven moat. The Interim Measures for the Management of Recycling and Comprehensive Utilization of Waste Power Batteries from New Energy Vehicles, effective April 1, 2026, mandates that batteries must be scrapped simultaneously with conventional NEVs at end-of-life—but explicitly excludes battery-swap vehicles. This exemption recognizes that NIO’s swap system inherently enables unified, full-lifecycle battery management, effectively mitigating risks associated with informal recycling channels. NIO has already accumulated over 100 million battery swaps, building real-time monitoring models and a comprehensive battery health management system. Combined with regulatory tailwinds and network advantages, NIO’s swap-enabled vehicles now enjoy 5–8 percentage points higher one-year residual value. To date, NIO has deployed more than 28,000 charging piles and is actively opening its swap ecosystem to third parties. However, if future regulations require swap operators to assume physical battery disposal responsibilities, operating costs could rise. Second, in-house chip development has enabled cost substitution and opened external supply opportunities. Previously, NIO spent up to $300 million annually purchasing NVIDIA Orin-X chips. Its self-developed Shengu NX9031 intelligent driving chip and Yang Jian LiDAR controller chip have shipped over 550,000 units combined. The R&D cost per chip—equivalent to building approximately 1,500 battery swap stations (roughly RMB 3–4.5 billion)—now saves about RMB 10,000 per vehicle. The 2026 LeDao L90 will feature these chips, marking the first time flagship-grade intelligent driving chips enter the RMB 200,000–300,000 price segment. In June 2025, NIO spun off its chip business into Anhui Shengu Technology Co., Ltd., which completed a financing round exceeding RMB 2.2 billion in February 2026, achieving a valuation nearing RMB 10 billion. Its products are already being sold externally to Robotaxi and autonomous logistics vehicle sectors. Nevertheless, continuous iteration of automotive-grade chips still demands massive ongoing investment. Third, NIO’s operational philosophy has evolved from “investing at all costs” to “ROI-centric.” In Q4 2025, R&D expenses fell by 44.3% year-over-year, while sales and administrative expenses declined by 27.5%, even as revenue surged by 75.9%. Li emphasized that resources are now concentrated on user-perceivable value points, with internal精细化 management practices such as executives sharing offices and adhering to the same travel standards as regular employees. NIO has not cut back on major strategic investments—including its swap network, chip development, or its three-brand strategy—but has instead optimized low-ROI peripheral projects, inefficient sales channels, and redundant organizational layers. At the forum, Li called on the industry to standardize cell specifications and unify chip types, estimating such measures could reduce industry-wide costs by over RMB 100 billion annually—highlighting his transition from a corporate operator to an advocate for industry-wide rulemaking. The sustainability of NIO’s profitability hinges on the continued expansion of its battery swap network effects, progress in chip commercialization, and persistent gains in organizational efficiency. As the industry shifts from a “burn cash for scale” paradigm to an “efficiency for profit” cycle, NIO has already completed a critical phase of transformation.