To The Moon

**NIO Narrows Losses, Aims for FY Profit —

But What Does This Mean for Li Auto?** 🤔📈🔥

NIO just delivered one of its most important quarters in years.

The headline?

📉 Q3 net loss: –3.48B RMB — still red, but a 30%+ improvement.

📈 Gross margin: 13.9% — highest in three years.

💰 Operating cash flow: positive.

💰 Free cash flow: positive.

🎯 Management: “We can turn Q4 profitable… and full-year profitable next year.”

And yet?

The stock dropped 4% yesterday.

Classic EV sentiment. 😅🌧️

So the real question for investors today is:

⭐ **Can NIO actually hit FY profitability?

And what does this set up for Li Auto’s earnings (and stock)?**

Diving deep into the electrified story underneath the headlines. ⚡🔋

⸻

1️⃣ NIO’s Profitability Goal: Ambitious… but Not Impossible 🚀💼

This isn’t the same NIO from 2021–2023.

This quarter revealed a new, more disciplined NIO:

🟦 1. Margins are finally rising — and strongly

13.9% gross margin is a breakout moment.

Battery supply stabilized, model mix improved, and cost discipline is finally showing dividends.

This is the foundation required for NIO to break into profitability for the first time in years.

🟦 2. Cash flow turning positive is the game-changer

Positive OCF + positive FCF =

👉 The business is starting to fund itself.

Investors underestimate how big this pivot is in the EV world.

🟦 3. Q4 guide suggests scale benefits will kick in

NIO is pushing:

• NT3 products

• Volume optimization

• Cost reduction through platform consolidation

This is NIO’s first real shot at a profitable quarter.

So can they hit FY2024 profit?

Realistically: Q4 yes, FY probably not — but FY2025 is very much in play.

NIO is guiding aggressively, but the math suggests:

👉 Break-even Q4

👉 Full-year profitability 2025 — achievable if margins hold above 15% and volumes rise

Q4 profitability = high probability

FY profitability = low-to-medium probability

(Unless deliveries smash expectations)

⸻

2️⃣ Why the Stock Still Fell 4% 📉🤨

Here’s the uncomfortable truth investors must understand:

NIO shows improvement, but expectations were even higher.

And the broader China EV sentiment remains fragile.

• Investors want sustained margin expansion

• Competitors slashing prices = pressure

• Market doesn’t yet believe NIO’s FY-profit narrative

• Fear of “one good quarter but not a trend”

NIO needs at least 2 more quarters of proof to shift valuation meaningfully.

⸻

**3️⃣ What Does This Mean for Li Auto?

Spoiler: Expectations Just Went Up** 📈🔥

If NIO — the EV player known for premium burn rates — can deliver:

• Margin expansion

• Cash flow positivity

• Profitability guidance

Then Li Auto, historically the margin king of Chinese EVs, now faces a higher bar.

Here’s the key guidance NIO’s results give for Li Auto:

🔶 1. Li Auto MUST defend its margin leadership

Investors will now scrutinize:

• L9 / L7 / L6 margin mix

• Price cuts impact

• BEV ramp dilution

If NIO’s margin is rising and Li Auto’s margin falls, the market will punish LI shares.

⸻

🔶 2. Profitability is expected — not optional

NIO aiming for profit puts pressure on Li Auto to deliver clean, consistent profits every quarter.

Li can no longer use:

“High investment period excuse.”

⸻

🔶 3. Li’s BEV strategy must show clarity

NIO’s improvement makes investors more critical of Li’s:

• BEV pipeline

• Manufacturing strategy

• Cost reduction roadmap

The EV market now rewards visibility and discipline, not just volume.

⸻

🔶 4. If NIO recovers sentiment, Li Auto could benefit from a sector rerate

NIO turning the corner lifts the entire China EV narrative:

👉 Premium EVs are not dead

👉 Margins can recover

👉 Scale economics still work

Li Auto may enjoy multiple expansion if NIO proves the sector can stabilize.

⸻

**4️⃣ The Real Investor Angle:

NIO is the turnaround story. Li Auto is the consistency trade. ⚔️🔋

NIO’s results tell us:

• The bleeding is slowing

• Margins are healing

• Cash flow is turning

• Profitability is within reach

This sets up a powerful story for 2025.

But it also raises expectations for Li Auto, the “straight-A student” of Chinese EVs.

For investors:

👉 NIO = high-reward turnaround

👉 Li Auto = high-confidence execution

Smart money might start positioning in both —

one for momentum, one for stability.

⸻

💬 Final Take

If NIO actually delivers a profitable Q4,

2025 becomes the year Wall Street finally rerates the stock.

And if that happens?

Li Auto’s earnings must shine even brighter —

because the sector’s new standard has just been reset. 📈⚡🚘