Since March, NIO has sequentially reduced the BaaS battery rental service fee, launched a 1 billion yuan subsidy for replacing gasoline vehicles, and introduced optional funds and battery swap coupons. These measures, which effectively lowered prices, significantly boosted sales, leading to May’s delivery volume surpassing 20,000 vehicles.
NIO expects second-quarter deliveries to be between 54,000 and 56,000 vehicles, representing an approximately 80% increase compared to the first quarter. Revenue is also projected to grow significantly compared to the first quarter, ranging between 16.587 billion and 17.135 billion yuan.
Behind the price cuts for higher sales is the fact that NIO’s first-quarter new car deliveries fell below the lower end of the guidance before the adjustment, with February sales not exceeding 10,000. Total revenue was also about 4.7% lower than the guidance’s lower limit. For NIO, which sells nine models and has been established for over 10 years, this cannot be easily explained by the disruptions caused by the Spring Festival.
- In the first quarter, NIO sold approximately 30,000 new cars, a 3% year-on-year decrease; automotive sales revenue decreased by 9% year-on-year to 8.38 billion yuan.
- The gross profit from complete vehicles was 768 million yuan, with a gross margin of 9.16%. Management attributed this partly to selling more low-margin models, such as the ET5 and ET5 Touring.
- Operating losses narrowed quarter-on-quarter but widened year-on-year to 5.394 billion yuan.
As of the end of March, NIO’s cash, short-term investments, and long-term deposits totaled about 40.4 billion yuan, while its short- and long-term loans and accounts payable amounted to about 46.8 billion yuan, indicating significant pressure. Especially notable is the nearly 10 billion yuan decrease in cash positions quarter-on-quarter.
Both the operation of the NIO main brand and the second brand, Alps, require financial support. This partly explains the series of aggressive sales strategies NIO has adopted since the second half of last year, such as abolishing the NPE (product experts who only talked about cars without selling them) positions and recruiting over 3,000 sales personnel.
At the earnings conference, NIO’s Senior Vice President Qu Yu said they are further optimizing the product portfolio and negotiating with supply chain partners to improve efficiency in the coming months. They expect the automotive gross margin to return to double digits in the second quarter and continue to improve in the third and fourth quarters. Li Bin set a gross margin target of around 20% for the third-generation products.
“Considering the intensifying market competition, we will also be more flexible in our sales policies to ensure our market position remains solid,” Qu Yu said.
Regarding the progress of the second brand, Alps, which both internal and external parties are concerned about, Li Bin stated at the earnings conference that the Alps product line would not be extensive, but each product must occupy a high share in its segment. Following the release of the first model, the L60, another medium-to-large SUV will not be released until next year. The long-term gross margin target is 15%, and achieving monthly sales of 20,000 to 30,000 vehicles will enable break-even.
Since the release of the Alps L60, specific order quantities have not been disclosed. During the earnings conference, Li Bin reiterated Alps President Ai Tiecheng’s previous statement to the media that the orders “far exceeded expectations, surpassing expectations by 2-3 times.”
Compared to the higher-than-expected orders, production and delivery are the critical areas where NIO cannot afford to make mistakes next. Li Bin stated that NIO’s delivery volume in May was already the maximum output the company could handle for that month. For subsequent production of the Alps, NIO has been training workers and plans to increase capacity by operating two shifts.
The day before the financial report was released, NIO announced it had received approval to build a third factory domestically, with a capacity of 600,000 vehicles, primarily to meet Alps production. The factory is already under construction, with a single-shift capacity of 100,000 vehicles, but the timeline for mass production is still unknown. Including the third new factory, NIO’s total approved capacity will reach 1 million vehicles. Currently, the Alps L60 is being produced on the same line as the main brand at NIO’s F2 factory.
For NIO at this stage, nothing is more critical than listing and delivering products on time, as the cash flow behind it is vital to maintaining the current system and expanding the new brand. Reviewing NIO’s previous product delivery cycles, only the ET5 Touring was delivered immediately upon listing, while other models had an average interval of about six months. The new car ET9, released at the end of last year, will not be delivered until the first quarter of 2025 at the earliest.
According to the previous plan, the Alps L60 will begin deliveries in September at the earliest, four months after its release. However, the market competition is far more intense than in the past two years. Besides the current price war, competitors are also preparing new products. The Alps L60 is positioned as a family pure electric SUV with a pre-sale price of 219,900 yuan, a highly competitive price range. In addition to more new energy vehicles entering the market, joint venture car companies are also bringing their previously advantageous products below the 200,000 yuan mark.
According to our incomplete statistics, over 300 passenger cars have received new car approval from the Ministry of Industry and Information Technology this year.
At the earnings conference, NIO also disclosed the progress of the third brand, Firefly. This brand targets boutique small cars priced at around 100,000 yuan and will share the sales network with NIO. Firefly’s first product is planned for delivery early next year, but the release date has not yet been determined.
Credit: LatePost Auto
