With the disclosure of NIO's financial report for the third quarter of 2023 on December 5th, the leading new car making force "NIO Xiaoli" has all submitted their performance reports for the third quarter of 2023.
In the third quarter, key data such as delivery volume, revenue, and net profit of Ideal Automobile continued to grow. NIO Automobile and Xiaopeng Automobile gradually emerged from the low point in the first half of the year through internal adjustments.
In 2023, "Weixiaoli" will accelerate towards differentiation.
Ideal Automobile, which has achieved profitability for four consecutive quarters, is expected to usher in its first fully profitable year this year.
Behind the turnaround of Ideal Automobile, firstly, it benefits from its scale advantage, and secondly, it controls costs and efficiency.
Facing the still difficult problem of losses, "reducing costs and increasing efficiency" is a common keyword for NIO and Xiaopeng in 2023. The improvement of the financial statements in the third quarter can reflect the effectiveness of strategic adjustments and internal reforms.
However, in the ever-changing Chinese new energy vehicle market, challenges always arise.
In the past two months, both NIO and Ideal's sales have failed to meet expectations, and Xiaopeng Automobile's intelligent advantages are also facing huge challenges brought by Huawei.
Scale determines turning losses around
In the third quarter, Ideal Automobile delivered a total of 105108 new cars, a year-on-year increase of 296.3%, becoming the first new Chinese automaker to break through the 100000 mark in sales in a single quarter.
The delivery volumes of NIO Automobile and Xiaopeng Automobile in the third quarter were 55432 and 40008 respectively, and the sales of both car companies achieved double growth year-on-year and month on month.
However, the growth reasons behind the two companies are different. Xiaopeng Motors mainly benefited from the launch of the new model G6, while NIO underwent a price system adjustment in mid June, with a price reduction of 30000 yuan across the entire series.
From the situation in the past two months, NIO's monthly sales have declined from 20000 units in July and August to around 15000 to 16000 units, while Xiaopeng Motors exceeded 20000 units in both October and November. Although Ideal Motors delivered over 40000 units in both October and November, its month on month growth rate has significantly slowed down.
In the third quarter, the operating revenue of Ideal Automobile, NIO Automobile, and Xiaopeng Automobile were 34.68 billion yuan, 19.07 billion yuan, and 8.53 billion yuan, respectively.
Ideal Automobile achieved a net profit of 2.81 billion yuan in the third quarter and has been profitable for four consecutive quarters.
Looking at all Chinese listed car companies, Ideal Automobile's net profit in the third quarter exceeded that of established car companies such as Changan Automobile and GAC Group.
This indirectly proves that with the growth of scale, the profit potential of new forces in car manufacturing cannot be underestimated. However, NIO and Xiaopeng still have a long way to go before turning the tide.
NIO's net loss in the third quarter remained the highest among the three companies, reaching 4.56 billion yuan, but it has significantly narrowed compared to the loss of 6.056 billion yuan in the second quarter of this year. Xiaopeng's net loss in the third quarter reached 3.89 billion yuan, a significant increase year-on-year and month on month.
However, after excluding losses from changes in fair value, the company's losses in the third quarter remained largely unchanged compared to the previous quarter.
In terms of gross profit margin, Ideal Automobile maintains a healthy level, with a gross profit margin of 22.0% in the third quarter. NIO and Xiaopeng Motors are still in a difficult period of gross profit recovery.
Among them, NIO's gross profit margin for the third quarter of the year returned to double digits and reached 11.0%, while the company's gross profit margin was 8.0%, a significant increase from the 1.5% in Q1 and 1% in Q2 of this year.
Although the price reduction may lead to a decrease in bicycle profits, as the scale grows, NIO's gross profit margin gradually moves out of the low point.
Xiaopeng Automobile's gross profit margin in the third quarter of 2023 was -2.7%, a slight improvement from the previous quarter, and it is still in a continuous gross loss state. Starting from the first quarter of this year, Xiaopeng Motors has shown negative gross profit for three consecutive quarters.
Due to the fierce price war in the 200000 yuan level new energy vehicle market this year, it is even more difficult for Xiaopeng Motors to turn its gross profit margin into a regular one.
Of course, for new car manufacturers, the top priority is to sell more cars in order to obtain better financial data.
Ideal Automobile is accelerating the introduction of pure electric products and exploring new competitive tracks.
Xiaopeng Motors is accelerating its channel expansion to third - and fourth tier cities. Xiaopeng Motors CEO He Xiaopeng believes that the upgrading and expansion of channels will become one of the important driving forces for Xiaopeng's sales growth in 2024 and beyond.
NIO CEO Li Bin said during the financial report conference call, "We will maintain some patience and will not use reducing gross profit margins or prices to exchange for sales. We believe that this is unhealthy in the long run." He hopes to achieve an increase in sales through comprehensive improvements in products, sales, channels, infrastructure, and other aspects.
Reduce costs and increase efficiency
For new forces in the automotive industry, in order to make money, in addition to market share and scale, internal adjustments must also be made as the scale grows.
The improvement of NIO and Xiaopeng's performance in the third quarter is inseparable from internal adjustments and changes. Regarding internal reforms, it was also one of the most talked about topics by investors during the earnings conference calls of the two companies.
In fact, Ideal Automobile took action earlier. As early as December last year, Li Xiang, CEO of Ideal Automobile, announced that the company would upgrade to a matrix organization.
Li Xiang said that the reform is because the company has entered a new stage and "needs to prepare for revenue of billions or trillions of yuan.". He stated that the biggest characteristic of a matrix organization is to ensure the quality of management throughout the entire process. Horizontal teams plan, repair, and operate roads, while vertical teams manufacture, drive, and operate vehicles. High quality roads, combined with high-level fleets, continuously deliver continuously created value to consumers and achieve commercial success, creating a virtuous cycle.
Due to factors such as stagnant sales growth and errors in the listing strategy of Xiaopeng G9, at the beginning of this year, Xiaopeng Automobile's executive team, organizational structure, marketing channels, and other aspects all underwent drastic reforms, including reducing direct stores and expanding distributors, reducing product costs, and anti-corruption in the supply chain. Under the promotion of multiple cost reduction projects, Xiaopeng's research and development, sales, and administrative expenses have all been reduced.
In addition, in the third quarter financial report communication, He Xiaopeng also emphasized the "Jupiter Plan" currently being promoted by Xiaopeng in terms of channels - reducing direct stores and increasing authorized distributors.
According to its disclosure, Xiaopeng eliminated nearly a hundred dealers in the third quarter and is expected to add 500 new sales networks within next year. Under the implementation of the Jupiter Plan, it is expected that sales expenses will continue to be lowered in the future.
NIO announced a plan to lay off around 10% of its workforce in early November. During a conference call, Li Bin responded to the issue of layoffs by stating that after several years of development, NIO's internal organization has indeed experienced some inefficiencies and redundant construction. This time, the main focus is to merge departments and positions that have undergone redundant construction, reform inefficient internal workflow processes and division of labor, and cancel inefficient positions.
He revealed that the basic principle of internal organizational adjustment is that some projects that cannot increase the company's gross profit within three years will be reduced or postponed.
NIO will continue to adhere to its three high priority tasks in the coming years, including long-term investment in core key technologies, construction of sales and service networks, and ensuring the timely launch of nine products from three brands.
According to NIO CFO Feng Wei, NIO is expected to save a total cost of 2 billion yuan by 2024, accompanied by organizational adjustments and the cancellation or delay of a certain project.
The cost reduction in manufacturing comes from the acquisition of factories and the acquisition of vehicle manufacturing qualifications.
On December 4th, NIO Automotive Technology (Anhui) Co., Ltd. appeared in the "Vehicle Production Enterprise Credit Information Management System" of the Ministry of Industry and Information Technology, with its production address displayed as No. 299 Baita Road, Hefei Economic and Technological Development Zone, Anhui Province (the location of NIO's second advanced manufacturing base).
This means that NIO, which has been producing cars for ten years, has finally obtained the qualification for independent car manufacturing.
On December 5th, NIO announced that it will acquire production equipment and assets from the first and second advanced manufacturing bases in Jianghuai, with a total price of approximately RMB 3.16 billion excluding taxes.
In addition, NIO's heavily invested battery swapping network aims to reduce costs and increase efficiency by opening up its social circle.
At the end of November, NIO announced its cooperation in battery swapping business with Changan Automobile and Geely Holding Group. In addition, four or five car companies are also discussing battery swapping cooperation with NIO.
Li Bin said that in the long run, the company's battery swapping business can also be profitable, and the fact of profitability has already been seen in some regions.
NIO insists that all electric vehicles support battery swapping and has successively released three generations of battery swapping stations, but battery swapping is still in a loss making state. One of the important factors that constrain the profitability of the battery swapping model when the utilization rate is not high. With the opening of NIO's battery swapping network, its profitability may be improved.