NIO predicts a fall on Q2 deliveries

NIO stock is trading lower in US premarket price action today after it reported its earnings for the first quarter of 2023 and predicted upto 8.2% fall in its Q2 deliveries.

NIO reported revenues of $1.55 billion in the first quarter of 2023 which were 7.7% higher YoY. It had delivered 31,041 vehicles in the first quarter of 2023 which was 20.5% higher than the corresponding quarter last year.

However, its gross margin was a mere 1.5% in the quarter – down from 14.6% in Q1 2022 and 3.9% in Q4 2022. The company’s gross margin has fallen drastically over the last year amid rising input costs.

Other startup EV companies are also struggling with margins and Rivian expects to post positive gross margins only by the next year.

Tesla’s operating margins also fell to 11.4% in Q1 2023 as compared to 19.2% in the corresponding quarter last year after it lowered car prices multiple times in Q1 2023 and triggered an industry-wide price war with its action.

NIO gross margins

NIO however previously said that it won’t join the price war.

In his prepared remarks in the Q1 2023 earnings release NIO’s CFO Steven Wei Feng said “In the face of the changing market environment, we will observe and analyze the dynamics of the operating environment and competition landscape promptly, and continue to strengthen our competitive advantages in an agile and efficient manner.”

Feng added, “Meanwhile, we will stay focused on execution, optimize cost structure, and further improve our operating efficiency.”

NIO however has a strong balance sheet and held $5.5 billion on its balance sheet at the end of May. Investment firm Baillie Gifford is quite bullish on NIO stock and bought more NIO shares last year and is the biggest NIO shareholder with a 7.8% stake.

NIO Predicts Upto 8.2% Fall in Q2 Deliveries

NIO predicted deliveries between 23,000 and 25,000 in the second quarter of 2023. It delivered 6,658 and 6,155 cars respectively in April and May and its guidance implies a YoY fall of between 8.2% to 0.2% in the second quarter.

Notably, NIO’s deliveries sagged below 10,000 in both April and May. Rival Xpeng Motors’ deliveries were below 10,000 in all the months this year.

Monthly EV deliveries of Chinese EV companies
Based on data from NIO, Li Auto, and Xpeng Motors

 

Xpeng Motors however expects its monthly deliveries to average 15,000 in the third quarter and rise further to 20,000 in the fourth quarter. It is also working on a low-cost vehicle platform.

For the last many months, Li Auto’s deliveries have consistently surpassed NIO and Xpeng Motors.

Li Auto Has Impressed with its Monthly Deliveries

Li Auto delivered 28,277 vehicles in May which was 146% higher than the corresponding month last year.

It was the third consecutive month when Li Auto’s deliveries have surpassed 20,000 and its monthly sales in May were more than RMB10 million for the first time ever -which it said would help it reach the target of RMB100 billion in 2023.

Li Auto’s cumulative deliveries reached 363,876 at the end of May. In contrast, the metric stood at 333,410 and 283,893 respectively for NIO and Xpeng Motors.

At one point it looked that Xpeng would overtake NIO in terms of cumulative deliveries but after multiple months of sub-par deliveries, it now trails both NIO and Li Auto by a big margin.

NIO is meanwhile banking on new models to revive its sales. The company’s CEO William Bin Li said in his prepared remarks “With the volume ramp-up of our new models including the All-New ES6, our teams are well prepared for a solid growth in vehicle deliveries.”

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