On the evening of June 6th, NIO disclosed its financial performance for the first quarter of 2024. The financial report shows that NIO's total revenue for the first quarter of 2024 was 9.9086 billion yuan. The net loss in the first quarter was 5.18 billion yuan, a decrease of 3.4% compared to the previous quarter. In the first quarter, NIO delivered 30053 new cars with a gross profit margin of 9.2%.
With the release of NIO's quarterly report, the first quarter performance reports of the three companies, NIO and Xiaoli, have all been disclosed. Among them, Ideal Automobile delivered 80400 new cars in the first quarter, with a revenue of 25.6 billion yuan and a net profit of 591 million yuan for the quarter; Xiaopeng Motors delivered 21800 new cars, with a revenue of 6.55 billion yuan and a net loss of 1.37 billion yuan. Among the three car companies, NIO ranks second in terms of delivery volume and revenue, while its net loss ranks first.
Looking ahead to the second quarter, NIO has provided positive guidance that its scale is almost doubling. NIO expects its revenue to reach between 16.587 billion and 17.135 billion yuan in the second quarter, an increase of 89.1% -95.3% compared to the same period last year; The delivery volume of new cars will reach 54000-56000 units, a year-on-year increase of 129.6% to 138.1%.
Li Bin, founder, chairman, and CEO of NIO, stated in a subsequent financial report conference call, "Next, we hope to continuously improve the brand's performance in gross profit. Starting from June, we will make some optimizations in our product portfolio. Overall, optimizing gross profit margin while ensuring steady sales growth is one of our important tasks in the next stage."
As of the close of the US stock market on the 6th, NIO's stock price fell 6.926% to $4.905.
Boosting sales and improving gross profit with two pronged approaches
According to the financial report, NIO's total revenue for the first quarter of 2024 was 9.9086 billion yuan.
Car sales revenue remains the mainstay of NIO's revenue. In the first quarter, NIO's automobile sales amounted to approximately 8.381 billion yuan, a year-on-year decrease of 9.1% and a month on month decrease of 45.7%.
NIO explained that the year-on-year decline in car sales was mainly due to a decrease in average selling prices and delivery volume caused by user equity adjustments since June 2023. Car sales have decreased month on month, mainly due to seasonal factors, resulting in a decrease in delivery volume.
From the delivery data, NIO delivered 30053 new cars in the first quarter, a year-on-year decrease of 3.2% and a month on month decrease of 39.9%.
However, in the first two months of the second quarter, NIO's sales rebounded significantly, with deliveries of 15620 vehicles in April and 20544 vehicles in May.
Li Bin believes that the sales growth of NIO in April and May is a comprehensive result. He further explained, "Firstly, we have completed product switching and improved our product competitiveness. Secondly, NIO released its' Long Life Battery Strategy 'in March, while adjusting the price of monthly battery rentals. Currently, more than 80% of users are using battery rental methods. For BaaS, promotional measures such as' one free every four months' have been provided. Thirdly, sales network expansion and sales capability improvement have been achieved. In addition, the increase in battery swapping stations and recognition of battery swapping strategies have promoted NIO's sales growth."
Improving gross profit performance remains an important goal for NIO in the next stage.
In the first quarter, NIO's overall gross profit margin was 4.9%, compared to 1.5% in the first quarter of 2023 and 7.5% in the fourth quarter of 2023. In terms of car gross profit margin, NIO's car gross profit margin in the first quarter was 9.2%, an increase of 4.1 percentage points from 5.1% in the first quarter of last year, and a decrease of 2.7 percentage points from 11.9% in the fourth quarter of last year.
During the financial report conference call, NIO executives explained the reasons for the decline in gross profit margin: "Starting from March this year, we have gradually upgraded NIO NT2.0 platform models to the 2024 version. During the transition period of model iteration, we conducted a series of promotional activities for the old models, which also led to a decrease in our average sales price in the first quarter. In addition, in the first quarter, we sold more low profit models, such as NIO ET5 and ET5T. These factors have all led to a decline in our gross profit margin."
"Next, we hope to continuously improve the brand's performance in terms of gross profit." Li Bin also said, "We will deploy more requirements for frontline personnel, such as increasing the proportion of high gross profit margin products, etc. In other aspects, such as managing product promotions. In fact, in June, we have narrowed some short-term promotional policies. Overall, optimizing gross profit margin while ensuring steady sales growth is one of our important tasks in the next stage."
Betting on the second quarter
After handing over the first quarter performance report, NIO released quite positive guidance for the second quarter.
For the second quarter of this year, NIO expects car deliveries to range from 54000 to 56000 units, a year-on-year increase of 129.6% to 138.1%. The total revenue ranged from 16.587 billion yuan to 17.135 billion yuan, a year-on-year increase of approximately 89.1% to 95.3%.
The rebound in sales in the first two months of the second quarter, NIO Energy obtaining the first financing, and the launch of pre-sales for the second brand, Le Dao, may all be important factors for NIO's optimistic future performance.
On May 31st, NIO Energy Investment (Hubei) Co., Ltd. received a strategic investment of RMB 1.5 billion from Wuhan Guangchuang Emerging Technology Phase I Venture Capital Fund Partnership Enterprise (Limited Partnership) and other institutions.
Li Bin stated that we are very optimistic about the long-term operational sustainability of NIO Power. Of course, it is still in the investment stage and needs to establish a network. There are indeed some advanced investments among them, but overall its profitability is very clear.
It also revealed that a battery swapping station can basically achieve revenue balance by providing approximately 60 orders of services per day. NIO currently has over 2000 battery swapping stations, maintaining an average of over 30 orders per day.
In terms of the second brand, the LeDao L60 started pre-sales on May 15th, with a price of 219900 yuan. Compared to the main brand, LeDao targets the more mainstream home market. The second product of Ledao is also under planning. Li Bin revealed that the second car will be a mid to large SUV suitable for larger families and will be launched next year.
Li Bin believes that from the current pre-sale price, LeDao can achieve a very good gross profit margin. However, the price range of the Ledo brand is highly competitive. "We won't trade very low gross profit for sales. In the long run, the Ledo brand will pursue a gross profit margin target of over 15%. If the Ledo brand can achieve monthly sales of 20000 to 30000 vehicles, it can achieve breakeven."
As Li Bin said, the market competition in which LeDao enters is fierce, and it remains to be seen whether it can achieve steady monthly sales of 20000 to 30000 vehicles. Its main benchmark model, the Tesla Model Y, starts at a price 30000 yuan higher than the LeEco L60 and has maintained monthly sales of over 20000 units this year, ranking first in the domestic SUV market in April.
Faced with fierce price wars in the Chinese market, Tesla's gross profit margin is showing a downward trend. Tesla's gross profit margin in the first quarter of 2024 was 17.4%, lower than the same period last year's 19.3%.
"We are cautious about the sales of the LeDao L60," said Zhang Yi, Chief Analyst of iMedia Consulting, to Time Finance. "Although the LeDao L60 has a price advantage of 30000 yuan compared to the Model Y. Objectively speaking, the competition for pure electric SUVs for households in the domestic market is quite fierce. In addition to the fierce competition in the pure electric SUV category itself, according to consumer behavior surveys, the preferred choice for household users in the 200000 yuan market is still mostly gasoline powered cars, or electric cars will only be considered for additional purchases."
Li Bin once said that the multi brand strategy has been planned since the establishment of NIO, and it is not a temporary trend. Its implementation is a natural process.
Reflected in NIO's specific plan, the third brand Firefly will be delivered in the first half of next year. "Firefly's positioning in the Chinese market is more similar to that of an entry-level Boutique car (boutique car), and its positioning is also to serve household needs, especially the demand for a 'second car'. The price is about tens of thousands of yuan," said Li Bin.
While the multi brand strategy is being vigorously implemented, there are also rumors that NIO will further expand its production capacity.
Qin Lihong, co-founder and president of NIO, responded that NIO's third factory, located in the Xinqiao Intelligent Electric Vehicle Industrial Park in Hefei, has recently started construction with a single shift production capacity of 100000 units, which will be used for the production of NIO and Ledo brand products in the future.
NIO has informed Time Finance that due to the recent hot sales of NIO brand and our long-term strategy, NIO's two existing factories in Hefei have reached the designed single shift production capacity. With the launch of subsequent new products, the production capacity of existing factories is no longer able to meet market demand. NIO does not have overcapacity issues.
Li Bin also revealed during the financial report conference call that the demand for orders in May has actually exceeded production capacity, and the delivery volume in May is basically the maximum production capacity that can be produced that month.
Although NIO has released optimistic guidance for the second quarter, looking ahead to the future, in the face of increasingly fierce market competition, NIO still needs to answer questions such as whether LeDao can become a volume leader, when it will achieve profitability by switching circuit lines, and when its overall performance will turn losses into profits.