Chinese electric vehicle giant Nio Inc. has initiated a substantial recall affecting nearly a quarter-million vehicles due to a software flaw that could lead to temporary blackouts of dashboard and central control screens. This recall, the largest by a domestic EV manufacturer, impacts several popular models produced between March 2018 and January 2023. Concurrently, Nio has achieved a significant financial milestone, reporting its first-ever profitable quarter, reflecting a strong operational turnaround despite the recall's implications.
The recall specifically targets 246,229 units across Nio’s ES8, ES6, and EC6 models. The identified software glitch may cause the instrument cluster and central control screens to briefly go dark, raising potential safety concerns for drivers. To rectify this, Nio plans to deploy remote software updates for the affected vehicles and, if necessary, provide in-person upgrades at its service centers. This move underscores the industry’s increasing reliance on sophisticated software systems in modern vehicles and the challenges associated with ensuring their seamless operation.
This recall by Nio surpasses a previous one issued by Xiaomi Corp in September, which involved over 115,000 SU7 electric sedans due to issues with their assisted driving features. Another Chinese EV brand, Zeekr, also announced a recall of 38,277 vehicles for power battery-related safety concerns, highlighting a broader trend of safety adjustments within the rapidly evolving Chinese electric vehicle market.
Despite the operational challenges presented by the recall, Nio's financial performance has shown remarkable improvement. The company's stock experienced a notable surge following a positive profit alert for the fourth quarter, indicating a strong rebound from previous losses. Nio anticipates an adjusted operational profit ranging from 0.7 billion to 1.2 billion Chinese yuan, a stark contrast to the 5.54 billion Chinese yuan loss reported in the same period last year. This financial recovery is partly attributed to a significant increase in vehicle deliveries, with January alone seeing a 96.1% year-over-year growth to 27,182 vehicles. The third-generation ES8 SUV has been a key driver of this success, accounting for nearly two-thirds of the total deliveries, pushing Nio past the one-million cumulative delivery mark.
Nio continues to prioritize innovation in smart EV technologies, with plans to launch the upgraded Nio WorldModel in January 2026. This new model is expected to introduce enhanced features in assisted driving, smart parking, and overall vehicle safety, further solidifying Nio's competitive edge in the market. The company is also actively expanding its battery swapping and charging infrastructure, a strategic move aimed at supporting its ambitious growth plans and enhancing user convenience, especially as some rivals like Li Auto Inc and XPeng Inc – ADR have faced declines in their delivery numbers.
In summary, Nio faces a significant vehicle recall due to a software issue, impacting a large portion of its installed base. However, the company is concurrently celebrating its first-ever profitable quarter, driven by strong delivery growth and a focus on advanced EV technologies. Nio's proactive approach to resolving the recall through software updates and its continued investment in infrastructure and innovation position it for sustained growth in the competitive electric vehicle landscape, even as its stock experiences some fluctuations in response to recent announcements.