Nio’s CEO, William Li, got straight to the point during a recent earnings call, revealing that negative public sentiment has hammered sales of the company’s Onvo sub-brand. The damage is significant, cutting potential sales by a staggering 30-40%. It is a rare moment of frankness from a chief executive, and it paints a clear picture of the challenges Nio faces in China’s hyper-competitive EV market.
Despite the setback with its more affordable offshoot, Nio is doubling down on its plan to hit profitability by the fourth quarter of 2025. The strategy rests on a combination of aggressive cost reductions and a major operational shuffle.
What’s Slowing Down Onvo?
Li didn’t mince words. “Recent market competition and negative public opinion have adversely affected Onvo’s sales performance,” he stated. He pointed to a few key areas holding the brand back. For one, Onvo simply doesn’t have the brand recognition of its rivals. This was compounded by sales staff who lacked experience and initial constraints on battery supply that couldn’t keep up with demand.
To get back on track, Nio is refining its branding and channel strategy while investing in better training for its teams. The company is also creating synergies by sharing after-sales service, its signature battery swapping infrastructure, and management support between the Nio and Onvo brands. The sales networks, however, will stay separate. There’s still reason for optimism, as Li noted that Onvo has already outsold the main Nio brand in 12 regions, proving the dual-brand approach has potential.
The Path to Profitability
While revenue hit a record 65.7 billion yuan ($9.1 billion) in 2024, the company’s net loss also widened to 22.4 billion yuan. To turn this around, Nio has launched a major efficiency drive. It introduced a “Core Business Unit” system, breaking the company into 12 focused units to improve accountability and return on investment.
Margin improvement is the name of the game. Nio is targeting a 20% margin for its main brand and 15% for Onvo by the end of 2025. It’s already making progress, having cut its vehicle Bill of Materials cost by 10% last year. A key technology helping this push is its self-developed Shenji 9031 chip, which is expected to slash per-vehicle costs by another 10,000 yuan ($1,400).
A Packed Product Pipeline
Nio is forecasting strong momentum for the start of 2025, with expected deliveries of 41,000 to 43,000 vehicles in the first quarter. That would represent a year-over-year jump of around 40%.
The company is also loading up its product portfolio. The 2025 lineup will feature the flagship ET9 sedan, updated versions of existing models, Onvo’s second model, the L90, and the debut vehicle from its new global-focused brand, Firefly.
With a healthy cash reserve of about 42 billion yuan and a clear turnaround strategy, Nio is signaling it has the resources and the resolve to navigate the headwinds. The challenges facing Onvo are real, but so is the company’s determination to build a profitable, multi-brand powerhouse that can rival global players like Tesla.
