NIO (蔚来) warns of a “brutal” stretch even as deliveries and profits climb

NIO signals tougher times while reporting growth

NIO (蔚来) chairman William Li (李斌) told investors that the next year or two "will be relatively hard" for the auto industry, and that China's carmakers are entering the most brutal phase of the sector's competition. Yet the company reported a strong first quarter: about 83,500 vehicle deliveries (up 98.3% year‑on‑year), automobile sales of RMB 22.78 billion and total revenue of RMB 25.53 billion, with operating profit of RMB 66.8 million — its second consecutive quarter in the black after a profitable 2025 Q4. Li said NIO's sustained profitability "is not reliant on a single hit model or short‑term moves, but on eleven years of systems innovation beginning to pay off."

Market inflection: fuel cars down, EVs surging

The backdrop is stark. It has been reported that national passenger‑car retail sales from January to April fell about 18.5% year‑on‑year to roughly 5.604 million units, with declines spilling from traditional internal‑combustion models into range‑extended and plug‑in hybrid segments — and an accelerated shake‑out for smaller brands. At the same time, pure electric vehicles are hitting a key inflection point: April saw new‑energy vehicle (NEV) penetration at 61.4%, and it has been reported that penetration could exceed 70% later this year and perhaps reach 75% — a rapid shift that rewards companies fully committed to battery electric architectures.

Strategy: three‑brand architecture, deeper retail push, no blind price cuts

NIO is repositioning to meet this changing market. The company says it will run three brands — NIO (蔚来) at the high end, Ledao (乐道) targeting the mainstream RMB 150–300k segment, and Yinghuochong (萤火虫) focused on small cars — with a long‑term sales split of roughly 30:60:10. Channels will be expanded via "SKY" joint stores aimed at 210 prefecture‑level cities this year, prioritizing central and eastern provinces plus the southwest. Management reiterated a refusal to engage in indiscriminate price cuts: "we'd rather have reasonable volume and maintain high value‑for‑money than chase low prices."

What this means beyond China

For Western readers: China's passenger car market is undergoing rapid consolidation and electrification, reshaping global auto supply chains and competitive dynamics. If NEV penetration forecasts hold, legacy automakers and suppliers face accelerating pressure to adapt or exit. Geopolitical frictions — from export controls to semiconductor restrictions — add another layer of risk for firms with cross‑border ambitions. NIO's mixed message — caution about macro headwinds alongside concrete gains in deliveries and profit — encapsulates the paradox of an industry simultaneously contracting in volume and racing toward a new technological and brand frontier.