Finally 'understood life'! But can Nio really 'be reborn'?

After releasing a quarterly report on June 3rd showing continued significant losses, coupled with a precarious net cash level, $NIO(NIO.US) saw its stock price retreat to a historical low of just $3.4. For a detailed analysis of the quarterly report, please see "Nio: Painting a Picture is Useless, Surviving is the 'Future'".

However, since the quarterly report, Nio has successively launched two new cars, the L90 and the ES8 on a new platform, with "more features at the same price," and the stock price has doubled (up 100%) from its low in April. The core reason for the increase is the explosive success of the L90 and the strong pre-order volume for the Nio ES8, which, although still in the early booking stage and not officially launched, already has a strong order volume.

Behind the volume increase, at a critical juncture for Nio's cash flow, CEO William Li also realized that at the launch of the new ES8, he candidly stated, "It is difficult for Nio to compete in the market by maintaining high prices... Surviving is the most important thing for Nio!"

At this point, Dolphin Research's concerns about Nio are as follows:

1. Why are the order volumes for Nio's L90 and ES8 so strong?

2. What marginal changes have occurred in Nio's fundamentals?

3. Is it likely for Nio to achieve break-even in the fourth quarter?

4. Can Nio's cycle of blockbuster products continue?

I. Why are the order volumes for Nio's L90 and ES8 so strong?

a. The L90 product definition is more aligned with user needs:

The L90 is priced between 265,800 to 299,800 yuan, a decrease of 14,000 to 22,000 yuan compared to the pre-sale price of 279,900 to 320,000 yuan, making the L90's pricing highly competitive.

Dolphin Research believes the success of the L90 can be attributed to the following product aspects:

① The "size equality" approach precisely addresses consumers' pain points of "large space + high cost-effectiveness":

The pricing is sufficiently low (supported by Nio's high-end brand power), with the L90 starting at just 265,800 yuan, lower than the similarly sized Aito M9 electric version, and offering more space than the smaller Xiaomi YU7, making it more suitable for family needs, thus achieving differentiated competition;

② The "battery swap + 900V high-voltage fast charging" comprehensive energy replenishment facilities solve the energy consumption challenges of large electric SUVs;

③ Standardizing comfort features that users can directly perceive, such as "refrigerator, color TV, and large sofa";

④ Supported by Nio's brand power;

⑤ Using the BAAS model to lower car prices, reaching more consumers,

For more details, see "Nio (Minutes): A Surge of 8cm, Did the L90 Successfully Reverse Nio?"

From the delivery perspective, achieving launch and delivery:

Recalling the L60's brand descent, which locked in over 30,000 orders within 72 hours, but subsequent delivery disruptions, coupled with user concerns about the sustainability of the 2025 state subsidy plan in the fourth quarter, were ultimately due to insufficient supply chain preparation, missing the optimal sales window.

The L90 learned from the L60's failure, achieving launch and delivery simultaneously to prevent user order transfer risks.

b. Nio ES8 achieves significant upgrades and price reductions

The order volume for the Nio ES8 also exceeded expectations. According to interviews, the order volume for the Nio ES8 during the same period has already surpassed that of the L90 at its launch.

From actual data, within four days of the L90's pre-sale, small orders reached 30,000 to 35,000 units, while by the third day of the Nio ES8's pre-sale (as of August 23rd), small orders had already exceeded 30,000 units.

Dolphin Research believes the success of the Nio ES8 also follows the explosive product strategy of the L90:

① Highly attractive pricing:

Compared to the old Nio ES8 priced at 498,000 to 598,000 yuan, the new ES8 is priced at only 416,800 to 456,800 yuan, a reduction of 80,000 to 140,000 yuan; under the BAAS model, the price has dropped to 308,800 to 348,800 yuan; the pricing can reach a broader consumer base (300,000 to 500,000 yuan consumers).

② Also follows the large size:

The ES8 is larger compared to similarly priced electric SUVs (the ES8 is larger than the newly launched Aito M8).

③ Significant performance upgrades from the old ES8, switching from the NT2.0 platform to the NT3.0 platform

With the new ES8 switching from the NT2.0 platform to the NT3.0 platform, the NT3.0 platform upgrades high-voltage fast charging (from 800V to 900V), and the electronic and electrical architecture from distributed domain control to central computing architecture, while lightweight design significantly reduces energy consumption.

Therefore, compared to the old ES8, the new ES8 has achieved significant upgrades in vehicle size, battery capacity, range, fast charging system, and various comfort and luxury configurations, achieving significant feature additions and price reductions.

The ES8 adopts a full-domain 900V architecture, standardizes a 102-degree battery, Nappa leather seats, and other hardware and software configurations, and introduces unique features such as a "mobile wardrobe."

From the delivery perspective, Nio ES8 has also prepared production capacity in advance, with mass production starting before the official launch in late September.

2. Has Nio's product "awakened"?

Dolphin Research believes that from the product perspective, Nio's changes include:

a. Clearer product positioning and stronger brand differentiation

In terms of brand positioning, the L90 targets families, serving "pragmatic large families," leaning towards household use, so the L90 sacrifices intelligent features in exchange for higher user perception of large space and maximized comfort configurations (standardizing refrigerator, color TV, and large sofa).

In Nio's product line, according to interviews, the main Nio brand targets the backbone of society, leaning towards business while considering family users, so in terms of product positioning:

1. Focus on business + family: ET9 + ES8 (business and large family) + ES7 (business and small family)

2. Serve users pursuing self-feeling and self-realization: ET5, ET5T, EC6, EC7

b. Focus on areas with the strongest user perception at lower costs, enhancing the ability to understand customer needs

For the L90 product definition: Thoroughly researched user needs, increasing the vehicle length by 10cm costs only 1,000 yuan, and the L90's design clearly sacrifices intelligence for large size and comfort configurations.

For the ES8 product definition: It is also evident that Nio, through platform upgrades, has improved hardware configurations, and is more focused on user needs, with significant improvements in luxury and comfort configurations compared to the old model, achieving standardization.

c. Platform iteration: Enhanced competitiveness of the NT3.0 platform

Comparing Li Auto and Nio, Li Auto has always enjoyed the benefits of exploring the blue ocean market, positioning "extended-range six-seat SUVs," with benefits from superior space and intelligent cockpit experience, refrigerator, color TV, and large sofa, enjoying sales and revenue growth over the past 2-3 years.

Nio's NT2.0 was deeply mired in product definition errors, with excessive material use on the NT2.0 platform, making cost reductions difficult (e.g., using four NVIDIA Orin-X chips, high-strength steel-aluminum hybrid body, while pure electric range and fast charging were far below competitors, hoping to "handle everything" with battery swapping).

In interviews, William Li also mentioned that the second-generation ES8's R&D and product definition, in hindsight, may have been a mistake, leading to high costs and causing a price gap between the ES6 and ES8.

The upgraded NT3.0 platform not only addresses core pain points in range and fast charging for pure electric vehicles but also standardizes "refrigerator, color TV, and large sofa" comfort configurations, significantly correcting the NT2.0 platform's product definition errors.

d. Pricing significantly better than market expectations

From the L90 pricing perspective, the market expected the L90 to be priced at the 300,000 yuan level, but the L90 is priced starting at only 265,800 yuan, significantly better than market expectations.

Similarly, for the old ES8's pricing, Nio mentioned in interviews that the old ES8's positioning was off, as the first-generation ES8, including subsidies and tax incentives, was "a 400,000 yuan product," but the second-generation ES8 soared to 500,000 yuan, causing Nio to miss the 400,000 yuan high-end market's main segment over the past two to three years.

The mission of the new ES8 is to correct this error, with the starting price reduced by 80,000 to 140,000 yuan to 416,800 to 456,800 yuan (400,000 level), and the BAAS model reaching consumers at the 300,000 level.

e. Early technical accumulation has achieved a certain technical lead:

Large front trunk and higher interior space utilization: Nio's lightweight and integrated technology currently leads competitors, and lightweight and integration leave more space, such as the L90 and Nio ES8, both pioneering large front trunks (240L/230L), mainly achieved through miniaturization of the electric drive system, integration of thermal management modules, and the battery swap model not requiring large battery packs, offering an advantage over extended-range models (extended-range models have space occupied by engines).

Lightweight design also helps reduce energy consumption: By extreme miniaturization and integration of components to reduce vehicle weight, thereby reducing energy consumption and extending range, also bringing a larger front trunk.

The rechargeable, swappable, and upgradeable battery technology roadmap allows the 85 kWh and 102 kWh battery packs to achieve the same range performance while being about 200 kg lighter than peer solutions, optimizing cost and user experience.

Behind the lower price + higher configuration to create a blockbuster, Dolphin Research also sees that Nio's fundamentals are indeed improving marginally:

① Delivery rhythm adjustment, organizational structure capability enhancement

Previously, the L60's chaotic delivery led to a short-lived blockbuster cycle, but this time, the L90 achieved launch and delivery on the same day, with improved organizational structure capabilities, helping to extend the new model's blockbuster cycle through:

a. Communicating with supplier partners in advance;

b. Making user essentials standard, reducing complex options, so pre-produced vehicles can be directly delivered;

c. Tightening the entire chain of sales, delivery, and operations, making the process from showroom entry to test drive allocation and delivery arrangements more compact and efficient

② Reducing BOM costs:

a. Design and R&D: Focusing on areas with the strongest user perception + removing blind material use from the NT2.0 platform

In design, reducing aluminum content: According to research, the aluminum content is indeed lower than the previous ES8, but still maintains good strength and safety.

Self-developed chips reduce costs: Nio's self-developed NX9031 chip is the biggest cost reduction area, with the NT2.0 using four NVIDIA Orin-X chips, reducing the cost per vehicle by 10,000 yuan,

Lightweight design reduces energy consumption: By extreme miniaturization and integration of components to reduce vehicle weight, thereby reducing energy consumption and extending range, also bringing a larger front trunk.

b. Scale cost reduction:

Shared supply chain between L90 and Nio's main brand: The L90 and Nio ES8 are both based on the NT3.0 platform, allowing for reuse of the electric drive/motor system, while reducing SKUs to achieve platform-based scale cost reduction.

c. Supply chain cost reduction: Can it replicate XPeng's turnaround playbook?

Referring to previous XPeng interviews, organizational reshuffling and supply chain reform were the main levers for XPeng's turnaround in the last round. After the initial failure of the XPeng G9 launch in 2023, Volkswagen, as a shareholder, analyzed the XPeng G9 and found that the parts procurement price was 20% higher than peers, making it difficult to reduce prices, but not reducing prices would lead to more losses.

He Xiaopeng also urgently realized the problem, starting a reform plan in early 2023, with a major reshuffle of executives, completing the replacement of core department heads in 2023-2024, especially bringing in Wang Fengying, who is skilled in cost control and marketing, as an executive to address supply chain corruption issues. In January 2023, Wang Fengying joined XPeng, while founders such as Xia Heng, He Tao, and Yang Chunlei gradually withdrew from core management.

Subsequently, the P7+ and Mona M03 were launched, offering great value compared to peers, capturing the market with high cost-effectiveness, high aesthetics, long range, and intelligent advantages, successfully creating blockbusters, and the company's strong product cycle from 2024 to 2026 led to a strong reversal in XPeng's fundamentals, driving XPeng's stock price from a low of $7 to a peak of $26 in January 2025, a 276% increase.

From XPeng's financial statements, it can also be seen that after the launch of the Mona and P7+ in the third quarter, although the average selling price of cars continued to decline (due to price reductions and the increased proportion of the low-priced Mona M03), the gross profit margin of car sales continued to rise, with the core being the direct reflection of supply chain anti-corruption efforts on the financial statements, laying the foundation for XPeng to continue creating blockbusters with high cost-effectiveness advantages.

Although Nio's organizational adjustments are not as pronounced as XPeng's, efforts have been made in supply chain and product iteration. For example, reducing external high-cost procurement through self-development, increasing integration, simplifying supplier pricing, and establishing a cost control center, with anything exceeding the alert line requiring presidential approval.

From Nio's guidance in the recent conference call, Nio expects the ES8 to begin delivery in the fourth quarter, with the group's vehicle gross margin expected to increase to around 16% to 17%, and the fourth-quarter gross margin target for the L90 and ES8 is 20%, aiming to achieve break-even.

Dolphin Research estimates that to achieve such a vehicle gross margin level, Nio's main brand vehicle gross margin needs to increase to 18%, the L90's vehicle gross margin to 14%, and the Firefly brand's gross margin to around 10%.

If this can be achieved with pricing significantly better than market expectations, in addition to cost reductions from technical improvements on the NT3.0 platform, it would also largely indicate a significant improvement in Nio's supply chain procurement cost control. However, given Nio's history of significant discounts, despite the positive guidance, the company's final execution remains to be seen.

③ Signs of strict cost control were already visible in the second quarter, and further significant reductions are expected in the future

From the second-quarter financial statements, significant cost control signs were already visible for the first time, mainly achieved through merging sales channels of the L90 and Nio, layoffs, and strict cost control through the CBU mechanism. For details, see the second-quarter financial report analysis "Completely Abandon 'Price' to Survive, Is Nio's Turnaround 'Tasty' Enough?".

In terms of fourth-quarter guidance, Nio continues to guide for significant reductions in the three expense areas:

① R&D expenses: The non-GAAP R&D expense target for Q3 and Q4 this year is 2 billion yuan per quarter. Assuming R&D expenses attributable to SBC are around 300 million yuan, Nio's R&D expenses for the third and fourth quarters can continue to decline by 600-700 million yuan from this quarter's 3 billion yuan to around 2.3-2.4 billion yuan.

At the same time, the non-GAAP R&D expense guidance for 2026 is expected to be around 2-2.5 billion yuan (GAAP around 2.3-2.8 billion yuan), and such a level of R&D investment guidance has returned to a relatively normal level, mainly because the basic R&D expenses in the early stage have been completed.

② In terms of SG&A expenses:

Nio guides that due to new product launches in the third quarter, the decline in marketing expenses is difficult, but by the fourth quarter, the non-GAAP SG&A expense target is controlled within 10% of sales revenue. Dolphin Research estimates that according to the guidance, fourth-quarter sales expenses will continue to decline by 500-600 million yuan from the second quarter's 4 billion yuan to 3.4-3.5 billion yuan. Although still higher than Li Auto and XPeng's sales and management expenses, Nio mainly uses high-end services + luxurious Nio houses to create a high-end brand feel, leaving little room for further reduction in these expenses.

3. Is it likely for Nio to achieve break-even in the fourth quarter?

Dolphin Research believes that whether Nio can achieve break-even in the fourth quarter largely depends on whether the ES8 can once again achieve explosive sales (monthly sales of 10,000 units or more).

In the conference call, Nio guided that current production capacity is prioritized for the L90 and ES8, delaying the delivery of the L80 to next year. ONVO brand production capacity is expected to recover to about 25,000 units per month in October, and Nio brand production capacity is also expected to reach 25,000 units per month in the fourth quarter, with a Q4 delivery target of 150,000 units.

Given the positive market feedback for the ES8, and for Nio, which has a net cash level of only 11.9 billion yuan and has not yet exited the ICU, sales remain the top priority, making the ES8 a "life-and-death battle" for Nio.

Therefore, Nio is expected to further reduce the pre-sale price of the ES8, continuing the L90's strategy of winning with high cost-effectiveness. With the current positive small order volume and the expected further reduction in the pre-sale price, the probability of this car becoming a blockbuster is relatively high.

If the ES8 contributes an average monthly sales of 10,000 units in the fourth quarter, with a total sales volume of 124,000 units in the fourth quarter (an average of 41,000 units per month), assuming the vehicle gross margin level can rebound to 15.4% after the delivery of the high-priced ES8, Dolphin Research estimates that Nio's operating profit/net profit in the fourth quarter will be around -800 million/-1 billion yuan. Although it is still difficult to achieve break-even, the trend of reducing losses is very certain and is higher than the market's current expectation of a net loss of -1.9 billion yuan for Nio in the fourth quarter.

4. Can Nio's cycle of blockbuster products continue?

This question is the most important for Nio's current investment. For most car companies, truly significant opportunities arise after sorting out issues related to products, technology, and organization, using a new platform to drive a long-term new car cycle. A new cycle is not driven by a single car's explosive volume but by a matrix of models under a new platform, as seen with XPeng and Li Auto.

From the perspective of 2026, in Nio's own new product cycle, next year will see the launch of the ES9, the five-seat SUV ES7, and the L80, with the main volume tasks expected to be carried by the ES7 and L80.

However, Nio's "5566" (ET5, ET5T, ES6, and EC6), which has been upgraded to the 2025 models based on the NT2.5 platform (including interior, exterior, intelligent systems, and standard 100-degree battery), as Nio's top models, do not have major upgrades or redesign plans based on the new NT3.0 platform next year. Therefore, with only two new volume models launching in 2026, this new product cycle is not considered strong.

However, Dolphin Research questions whether, when a new platform is launched, especially when the first battle of the new platform is successful (such as the L60 being a successful new product), it usually leads to a full series redesign, driving a sustained long-term new product/refresh cycle.

But this time, in Nio's model structure, the most volume-driven "5566" did not switch to the NT3.0 platform when the new platform was launched, and the L60, as the first car of the new platform, performed well, yet the newly redesigned "5566" still uses the old platform, with the new model launch speed significantly slower.

More unusually, Nio also stated that due to the current full order volumes for the ES8 and L90, the L80 will be delayed until next year, unlike other car companies that, when the new platform's momentum is strong, push new models quickly. This raises doubts for Dolphin Research about whether Nio's supply chain management capabilities have not effectively caught up, and whether execution capabilities have not significantly improved in the fiercely competitive stage.

Nio, firmly betting on the rechargeable, swappable, and upgradeable technology route, repeatedly mentioned in interviews that "the golden age of extended-range large three-row SUVs is passing, and the golden age of pure electric large three-row SUVs is coming."

However, with the current insufficient pure electric range of extended-range models, major car companies are expected to face a "large battery + small fuel tank" route optimization in 2026, addressing urban vehicle usage pain points, continuing as a transitional solution. Dolphin Research expects competition to return to the route battle between large extended-range and pure electric, and whether the sales momentum of the Nio ES8 and L90 can continue remains in doubt.

But for Nio, with a net cash level of only 11.9 billion yuan, there are not many opportunities for trial and error, especially since the battery swap + high-end service + NIO House model remains unchanged, leaving limited room for further reduction in the three expenses.

Therefore, Dolphin Research leans towards viewing Nio's investment value as more of a short-term new car cycle gamble, especially with the ES8 currently being an important model for Nio's "life-and-death battle," Nio will certainly continue to prioritize sales, making the probability of this car becoming a blockbuster relatively high.

Once the ES8 can once again achieve explosive sales as a 400,000 yuan-level car (sales of 10,000 units or more), and with the high gross margin of the ES8 accelerating Nio's significant loss reduction in the fourth quarter, referencing the rapid increase in the P/S multiple to 1.5 times during the successful initial launch of the L60, Dolphin Research estimates Nio's target market value at 130 billion yuan+, with an upward potential of about 30% compared to the current stock price.

But if Nio continues with the current plan—slow new platform transition, short-lived new car cycle, weak new car matrix next year—even if Nio has upward potential, it is essential to provide enough safety margin before making a bet on the opportunity under the ES8's volume increase.

For more in-depth research and tracking commentary on Nio by Dolphin Research, click:

Financial Reports:

September 9, 2025, Financial Report Interpretation "Completely Abandon 'Price' to Survive, Is Nio's Turnaround 'Tasty' Enough?"

June 3, 2025, Financial Report Interpretation "Nio: Painting a Picture is Useless, Surviving is the 'Future'"

November 20, 2024, Financial Report Interpretation "Deflated Again! Can the L90 Support the 'Fractured' Nio?"

September 5, 2024, Financial Report Interpretation "Nio: Rarely Didn't Collapse, Can the L90 Support the Future?"

September 6, 2024, Conference Call Minutes "Expected L60 December Delivery Volume to Exceed 10,000, Q1 Vehicle Gross Margin to Reach 15%"

June 7, 2024, Financial Report Interpretation "Sales Recovered, Stock Price Still Fell, What Can Nio Rely on to Save Itself?"

June 7, 2024, Conference Call Minutes "Expected Q1 Vehicle Gross Margin to Return to Double Digits"

March 15, 2024, Financial Report Interpretation "Another Huge Loss! Can Nio Only Rely on Middle Eastern Investors to Survive?"

March 6, 2024, Conference Call Minutes "Still Maintaining a 15%-18% Gross Margin for the Year, Hoping Monthly Deliveries Quickly Return to 20,000 Units"

Research

June 13, 2023, Nio Hotspot "Nio: Finally Doing Subtraction"

December 21, 2021, Nio NIO DAY Research "'Blockbuster' ET5 Debuts, Nio Wants to Reignite the 'Future'"

In-depth

September 25, 2024, In-depth "Under the Luxurious Exterior, Are There Still 'Lice'? Is Nio Still Worth Loving?"

Risk Disclosure and Statement of This Article:Dolphin Research Disclaimer and General Disclosure