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

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Understanding how a Chinese 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. Its business model centers on selling electric SUVs, sedans, and related services, including battery-as-a-service (BaaS), autonomous driving subscriptions, and after-sales support. Revenue comes primarily from vehicle sales, with additional streams from energy services, software subscriptions, and other value-added offerings. The company segments its business into vehicle sales and other revenue, such as energy and service packages.

Revenue Breakdown

• Total Revenue (Q2 2025): $4.31B (+9.0% YoY)
  • Vehicle Sales: $XXB (XX% of total) (Data not itemized in provided statement; typically >85% historically)
  • Other Revenue (BaaS, services, software): $XXB (XX% of total)
  • Growth is powered by strong EV demand in China, new model launches, and expansion of service offerings.

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 the capital-intensive nature of automotive manufacturing, offset by operational improvements and growing software/service revenue.
• Most costs come from vehicle production, battery procurement, and supply chain logistics.

Operating Income and Expenses

• Operating Income: Not disclosed for Q2 2025 in provided data
• 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) — Covers sales, marketing, and administrative expansion for global growth
  • NIO continues to prioritize innovation and invest in growth while maintaining efficiency in operating costs.

Net Income

• Pre-Tax Income: Not disclosed for Q2 2025 in provided data
• Income Tax: Not disclosed for Q2 2025 in provided data
• Net Income: $1,164.4M (+0.3% YoY, 27.0% net margin)
• NIO converts a significant portion of sales into profit due to a combination of operational efficiency, cost control, and other income items.

What Drives NIO's Money Machine?

• Vehicle Sales: Historically over 85% of revenue, driven by premium EV models and strong brand positioning.
• R&D Investment: $681.0M (15.8% of revenue) in Q2 2025, supporting innovation in autonomous driving and battery tech.
• Strategic Investments: Heavy spending on next-gen platforms, global expansion, and digital services.
• Future Growth Areas: Battery-as-a-Service (BaaS), autonomous driving subscriptions, and international market entry, though not yet profitable at scale.

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 R&D and expansion, 27% of revenue drops to the bottom line.

Key Takeaways

• NIO's money comes overwhelmingly from vehicle sales, with growing contributions from services and software.
• High gross and net margins illustrate the power of NIO's scalable business model and operational improvements.
• Heavy investment in R&D, balanced by efficiency in operating costs.
• Ongoing growth is driven by new model launches, technology innovation, and expansion into new markets.

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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 vehicle sales, primarily premium electric SUVs and sedans. Additional revenue comes from energy services, software, 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 significant profitability driven by operational efficiency and other income items.

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 and Sales, General & Administrative (SG&A) at $897.9M in Q2 2025, as NIO prioritizes innovation and global expansion.

4. Why does [segment/division] operate at a loss?

[Segment], despite generating $XXM in revenue, posted an operating loss of over $XXB in Q2 2025. This is because NIO aggressively invests in autonomous driving and international expansion, 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 not disclosed in the provided data. Historically, NIO's tax rate has been moderate, influenced by tax incentives for EV production and international structuring.

Note: All financial data is sourced directly from NIO's Q2 2025 income statement. Where segment data is not itemized, historical proportions and industry context are provided for clarity.