On the evening of June 6th, NIO (NYSE: NIO; HKEX: 9866; SGX: NIO) released its Q1 2024 financial report. According to the financial report, NIO's total revenue in the first quarter of 2024 was 9.9086 billion yuan, a year-on-year decrease of 7.2%; The net loss for the first quarter was 5.1846 billion yuan, which was adjusted for a net loss of 4.9032 billion yuan, not in accordance with US GAAP; The gross profit margin of the entire vehicle is 9.2%.
In terms of vehicle delivery, NIO delivered 30053 vehicles in the first quarter of 2024, including 17809 high-end intelligent electric SUVs and 12244 high-end intelligent electric sedans.
Li Bin, founder, chairman, and CEO of NIO, said, "Despite the increasingly fierce market competition, NIO's high-end brand positioning, industry-leading technology, and 'rechargeable, interchangeable, and upgradeable' charging experience have gained market recognition. In recent months, delivery volume has steadily increased. In April, we released the 2024 ET7 executive version, further enhancing our competitiveness in the high-end sedan market. In May, our new intelligent electric vehicle brand ONVO Ledo and its first product L60 were officially released. With ONVO joining our brand lineup, we are ready to enter the broader mainstream mass market and embark on the next phase of high-quality growth."
Second quarter recovery
The financial report shows that in the first quarter of 2024, NIO's automobile sales amounted to 8.3813 billion yuan, a year-on-year decrease of 9.1% and a month on month decrease of 45.7%. The reason for the year-on-year decline is mainly due to NIO's adjustment of user rights since June 2023, resulting in a decrease in delivery volume and average selling price. Meanwhile, the month on month decline in automobile sales was mainly due to seasonal factors leading to a decrease in delivery volume.
In addition, NIO's other sales in the first quarter of 2024 were 1.5273 billion yuan, a year-on-year increase of 5.2% and a month on month decrease of 8.2%. The reason for the year-on-year increase in other sales revenue is due to the continuous increase in ownership, resulting in revenue from component sales and vehicle after-sales service, as well as an increase in revenue from providing energy solutions, partially offset by a decrease in revenue from used car sales and automotive financial services. The main reason for the month on month decline is the decrease in second-hand car sales revenue.
Although the performance in the first quarter was not good, based on NIO's current development, the second quarter may be an upward breakthrough season.
Data shows that in May, NIO delivered 20544 new cars, a year-on-year increase of 233.8% and a month on month increase of 31.5%, setting a new historical high. It is worth mentioning that since the product was launched, NIO has only sold over 20000 vehicles per month twice. The last time NIO announced a price reduction for the entire series, sales reached 20462 vehicles.
Regarding this, Li Bin stated that the reason why NIO was able to achieve sales growth in April and May is, on the one hand, that the facelift of the car model has improved product competitiveness. Secondly, the battery rental policy has been adjusted and operations have been optimized. The acceptance rate of Battery As a Service (BaaS) has increased to over 80%, and we have also offered some limited time promotions (paying 4 months of battery rent within 5 years and getting 1 month free). The last point is that the company has expanded its sales network, improving sales personnel and sales capabilities. Meanwhile, Li Bin also mentioned that the delivery volume in May is currently the maximum production capacity, and in June, with the increase of orders, double shifts will be launched to increase production capacity.
It is worth mentioning that the increase in sales has also given NIO confidence in its performance in the second quarter. NIO stated that the delivery guidelines for the second quarter of 2024 were 54000 to 56000 vehicles, an increase of approximately 129.6% to 138.1% compared to the same period in 2023; The revenue guidance is 16.59 billion to 17.14 billion yuan, an increase of approximately 89.1% to 95.3% compared to the same period in 2023.
In terms of gross profit margin, NIO stated that with the optimization of its product portfolio and the recovery of sales, it is expected that the vehicle gross profit margin will rebound to double digits in the second quarter and continue to improve in the third and fourth quarters. Considering the intensification of market competition, NIO will also maintain flexibility in sales policies to ensure its market position.
Gradually improving the product matrix
In addition to improving the products under the main brand, NIO is also introducing new variables to improve its business situation.
On May 15th, NIO launched a new brand called "ONVO Ledo Automobile". Unlike the main brand, Ledo focuses on the home market and seeks economies of scale.
In Li Bin's view, the launch of the Ledo brand will help NIO increase the efficiency of using its full system capabilities in product production system, technology, service, community, etc., and achieve cost reduction and efficiency improvement.
According to Li Bin, when the first model of LeDao Motors, LeDao L60, is delivered in September, more than 100 offline stores nationwide will be put into operation. "It is expected that the investment in each Ledao sales store will be between 1 million and 2 million yuan, which will not put too much pressure on the company," said Li Bin.
In addition to the L60, LeDao will launch its second model next year, positioned as a mid to large SUV. However, Li Bin revealed that LeDao Motors will not launch too many products, but hopes that each product on sale can achieve a relatively high market share in the segmented market.
Regarding the battery swapping network layout of the Ledo brand, Li Bin stated that the deployment of fourth generation battery swapping stations will be launched, which can be directly compatible with the NIO and Ledo brands. At the same time, the third-generation station can also be used by the Ledao brand after renovation, and the renovation work will not be very large. However, not all third-generation stations will be renovated. In addition, Li Bin emphasized that by the end of this year, the Ledao brand will have more than 1000 usable battery swapping stations.
It is worth mentioning that the first model of NIO's third brand Firefly (internal code name "Firefly") will also be officially delivered in the first half of next year, with a price range of 100000 to 200000 yuan.
"Firefly is positioned as a boutique small car in China and will share its sales network with NIO, similar to BMW and MINI." Li Bin said that NIO's three brand positioning is very clear, with NIO positioned in the high-end market, targeting business and family users; Ledo Automobile targets mainstream household market users; Firefly is positioned as a boutique small car, serving the needs of the second car in the family. The price ranges for the three are over 300000 yuan, over 200000 yuan, and over 100000 yuan, respectively.
Strengthen energy layout
In addition to products, energy layout remains NIO's focus.
With the promotion of national policies, the battery swapping mode has gradually come to the forefront. Since 2020, the General Office of the State Council, the Ministry of Industry and Information Technology, the Ministry of Finance, and the State Administration of Taxation have successively issued a series of policy documents to strengthen the construction of battery swapping infrastructure and encourage the promotion of battery swapping models.
Specifically, the National Energy Administration, together with the Ministry of Industry and Information Technology, has issued the Implementation Opinions on Further Enhancing the Service Guarantee Capacity of Charging and Swapping Infrastructure, the Ministry of Industry and Information Technology has issued the Notice on Launching the Pilot Work of New Energy Vehicle Swapping Mode Application, and the State Council Office has issued the Guiding Opinions on Further Building a High Quality Charging Infrastructure System. These documents are all promoting the construction of charging and swapping networks and encouraging the promotion and application of swapping modes.
At the same time, the battery swapping mode has also been highly recognized by multiple industry institutions. For example, institutions such as CITIC Securities, CICC, and McKinsey believe that the battery swapping mode can not only provide an efficient energy replenishment experience, but also effectively alleviate the load pressure on the power grid.
The unanimous recognition in the industry has made NIO Energy's layout a coveted opportunity. According to data, as of May 30, 2024, NIO has deployed a total of 2427 battery swapping stations and 3863 charging stations nationwide. Among them, there are 802 high-speed power exchange stations, and a high-speed power exchange network of "7 vertical, 6 horizontal, and 11 major urban clusters" has been built.
According to NIO, it plans to further expand its high-speed battery swapping network to the "9 vertical, 9 horizontal, and 19 major urban clusters" by 2025. At the same time, NIO also plans to explore new business models, cooperate with more car companies, jointly promote battery swapping models, and further increase market share.
The reporter learned that as of now, car companies such as Changan, Geely, Jianghuai, Chery, Lotus, GAC, and FAW have cooperated with NIO to jointly promote the battery swapping mode. Changan Automobile Chairman Zhu Huarong believes that the implementation of NIO's battery swapping model is of milestone significance and will promote the high-quality development of the new energy vehicle industry. Feng Xingya, General Manager of GAC Group, also believes that battery swapping will bring new growth points and development opportunities to the new energy vehicle industry.
Multiple car companies have chosen to cooperate with NIO to build a battery swapping network, which also demonstrates their recognition of the battery swapping model. In addition, NIO has recently received a strategic investment of 1.5 billion yuan from Wuhan Guangchuang Fund, which also provides important financial support for the development of NIO Energy.
For future development, NIO has revealed that NIO Energy has an independent financing plan and will continue to open up investment in the future. Li Bin stated that NIO Energy is currently in the investment stage and needs to establish a nationwide network first. Although there are indeed some advanced investments involved, overall the profitability of NIO Energy is very clear.