Citi Forecasts 17.3% Gross Margin for NIO by 1Q26
Following NIO's fourth-quarter 2025 results briefing, Citi Research projects the electric vehicle maker will achieve a composite average gross profit margin of 17.3% by the first quarter of 2026. This optimism stems from the company's successful product mix optimization, which involves increasing sales of high-end models that command gross margins between 20-25%. This strategy has already led to a 6% quarter-over-quarter increase in the average selling price per vehicle.
Cost control measures are also set to bolster profitability. Citi's analysis indicates that NIO's digestion of previous battery and memory inventories will stabilize its gross profit margin by approximately 2-3 percentage points quarter-over-quarter. The firm also anticipates further efficiency gains from the optimization of sales, general, and administrative expenses, alongside a more disciplined approach to R&D intensity.
Bank Projects 1Q25 Net Loss Will Not Exceed RMB900M
Citi believes NIO's strategic adjustments will yield immediate results, forecasting that the company's non-GAAP net loss in the first quarter of 2025 can be effectively contained within RMB900 million. This performance is particularly noteworthy as the first quarter is traditionally a low season for automobile sales, signaling underlying operational strength.
Based on this improved financial trajectory, Citi reiterated its 'Buy' rating on the stock. The bank set a target price of HK$47.3 for NIO's Hong Kong-listed shares (09866.HK), which jumped 16.15% on the news, and US$6.2 for its American depositary receipts (NIO.US). The strong analyst endorsement reinforces confidence in NIO's ability to navigate competitive pressures and improve its financial health.
