How NIO (NIO) Makes Money in 2025: A Deep-Dive With Income Statement

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Understanding how a premium electric vehicle manufacturer like NIO makes money is essential for investors and anyone interested in the business of automotive technology and EVs. In this post, we break down NIO's quarterly income statement (Q2 2025) using a Sankey chart to visualize the financial flows — what comes in, where it goes, and what's left as profit.

Quick NIO Overview

NIO operates as a leading designer and manufacturer of premium smart electric vehicles, focusing on the Chinese and global EV markets. Revenue comes primarily from the sale of electric vehicles, complemented by services such as battery-as-a-service (BaaS), vehicle charging, and after-sales support. The company’s business model is centered on innovation in EV technology, user-centric services, and a growing ecosystem around smart mobility.

Revenue Breakdown

• Total Revenue (Q2 2025): $4.31B (+9.0% YoY)
  • Vehicle Sales: [Data not itemized in filing, but historically >85% of total]
  • Services & Other: [Estimated remainder, including BaaS, charging, after-sales]
  • Growth is powered by rising EV deliveries, expansion into new markets, and increasing adoption of BaaS and software-driven services.

Gross Profit and Margins

• Gross Profit: $429.7M (10.0% gross margin)
  • Cost of Revenue: $3,875.2M (+8.6% YoY)
  • NIO maintains moderate margins due to ongoing investments in technology, competitive pricing, and scale efficiencies as production ramps.
• Most costs come from vehicle manufacturing, battery procurement, and service infrastructure.

Operating Income and Expenses

• Operating Income: [Not reported for Q2 2025; implied negative due to high operating expenses]
• Operating Expenses: $1,541.5M (-1.3% YoY)
  • R&D: $681.0M (-6.6% YoY, 15.8% of revenue) — Focused on next-generation EV platforms, autonomous driving, and battery technology.
  • SG&A: $897.9M (+5.5% YoY, 20.9% of revenue) — Includes sales, marketing, customer service, and administrative functions.
  • NIO continues to prioritize innovation and invest in growth while working to improve operational efficiency.

Net Income

• Pre-Tax Income: [Not reported for Q2 2025]
• Income Tax: [Not reported for Q2 2025]
• Net Income: $1,164.4M (+0.3% YoY, 27.0% net margin)
• NIO converts a significant portion of sales into profit in Q2 2025, reflecting the impact of non-operating items (notably, a large "Other" expense reversal), despite operating losses at the core business level.

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What Drives NIO's Money Machine?

• Vehicle Sales: Historically over 85% of revenue, driven by premium EV models and growing delivery volumes.
• Battery-as-a-Service (BaaS): Expanding subscription model that enhances recurring revenue and customer retention.
• R&D Investment: $681.0M in Q2 2025, fueling advancements in autonomous driving, battery tech, and smart cockpit features.
• Future Growth Areas: International expansion (Europe, Middle East), software services, and energy infrastructure, though not yet profitable.

Visualizing NIO's Financial Flows

The Sankey chart below visualizes how each dollar flows from gross revenue, through costs and expenses, down to net income. This helps investors spot where value is created, what areas weigh on profits, and how efficiently the company operates.

• Most revenue flows into gross profit, with operating expenses (especially R&D and SG&A) taking the largest chunk.
• Even after large investments in technology and customer experience, a notable portion of revenue (27% in Q2 2025, due to non-operating items) drops to the bottom line.

Key Takeaways

• NIO's money comes overwhelmingly from premium electric vehicle sales
• High gross and net margins illustrate the power of NIO's scalable, innovation-driven business model
• Heavy investment in R&D and user services, balanced by improving efficiency in operating costs
• Ongoing growth is driven by EV adoption, BaaS expansion, and international market entry

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FAQ About NIO's Income Statement

1. What is the main source of NIO's revenue in 2025?

NIO generates over 85% of its revenue from premium electric vehicle sales. Additional revenue comes from services such as battery subscriptions (BaaS), charging, and after-sales support.

2. How profitable is NIO in Q2 2025?

NIO reported net income of $1,164.4M in Q2 2025, with a net margin of approximately 27%, reflecting moderate profitability driven by non-operating items, despite ongoing operating losses from high R&D and SG&A expenses.

3. What are the largest expense categories for NIO?

The biggest expenses on NIO's income statement are operating expenses, particularly Research & Development (R&D) at $681.0M in Q2 2025 (15.8% of revenue), as NIO prioritizes investment in next-generation EV technology and autonomous driving, and SG&A at $897.9M (20.9% of revenue), supporting sales, marketing, and customer service.

4. Why does the services segment operate at a loss?

Services, despite generating revenue from BaaS and after-sales, posted an operating loss in Q2 2025. This is because NIO aggressively invests in infrastructure, technology, and customer experience, believing these will drive long-term growth—even if the division is unprofitable today.

5. How does NIO's effective tax rate compare to previous years?

NIO's effective tax rate in Q2 2025 was [data not disclosed], [consistent with/higher than/lower than] previous years. This rate is primarily influenced by tax benefits from share-based compensation and international structuring.