After experiencing layoffs and being questioned for facing bankruptcy, NIO urgently needs positive news to stabilize investors and enhance market confidence.
On December 5th, NIO's 2023 third quarter report arrived late: In the third quarter of this year, NIO's operating revenue reached 19.067 billion yuan, a year-on-year increase of 46.6% and a month on month increase of 117.4%; The delivery volume in a single quarter was 55400 vehicles, with both revenue and new car delivery reaching new highs.
Benefiting from the increase in the proportion of high priced models, a decrease in component costs, and an increase in delivery volume, NIO's gross profit margin ended three consecutive quarters of decline in the third quarter, reaching 11%. The overall gross profit margin also increased from 1.0% in the second quarter to 8.0%.
However, NIO has not yet achieved profitability in the third quarter, with a net loss of 4.557 billion yuan, which is still the highest among the three "NIO Xiaoli" companies. The loss amount has slightly expanded compared to the same period last year, but has significantly narrowed compared to the net loss of 6.056 billion yuan in the second quarter of this year.
NIO suffered a net loss. Cartography/Beijing News Shell Finance Reporter Zhang Bing
In November of this year, NIO initiated organizational adjustments. Li Bin issued a letter to all employees, stating that NIO will carry out adjustments related to organizational and resource investment directions, reduce positions by about 10%, and accelerate resource efficiency. In the future, NIO will postpone and reduce projects that do not improve financial performance within three years to ensure the company's long-term competitiveness.
At the financial report conference call, Li Bin revealed that the battery self-made project was evaluated as unable to improve gross profit margin within three years, so adjustments have been made. NIO will continue to research and develop battery cells, battery materials, and packs, but manufacture batteries through commissioned production to reduce costs.
As of September 30, 2023, NIO's cash and cash equivalents, restricted cash, short-term investments, and long-term fixed deposits amounted to RMB 45.2 billion in cash reserves, an increase of RMB 13.7 billion compared to the previous quarter. This is mainly due to the delivery of $740 million in equity investment funds from Abu Dhabi in the third quarter, as well as the completion of $575 million in convertible preferred bond issuance in September, with a total delivery amount of nearly RMB 10 billion for the two investments.
The gross profit margin of the car is 11%, and a new flagship model will be released in December
In the third quarter, NIO's sales revenue was 17.409 billion yuan, a year-on-year increase of 45.9% and a month on month increase of 142.3%, accounting for 91% of the total operating revenue.
NIO's operating revenue and car sales revenue. Cartography/Beijing News Shell Finance Reporter Zhang Bing
Benefiting from adjustments to the rights and interests of battery swapping users, NIO's delivery volume exceeded the 20000 vehicle threshold in July this year. However, it failed to maintain a monthly sales momentum of 20000 vehicles and dropped to 19300 vehicles in August. In September, NIO completed the intergenerational switching of its entire product line based on the second-generation platform, with sales of approximately 16000 vehicles.
However, in terms of quarterly sales, NIO delivered a total of 55400 new cars in the third quarter, including 37600 SUVs and 17800 sedans, an increase of 75.4% year-on-year and 135.7% month on month, reaching a new high in quarterly delivery.
Li Bin stated that in the fourth quarter, the price competition in the smart electric vehicle market further intensified, and NIO improved its sales ability and operational efficiency while maintaining price stability. He emphasized that "maintaining stable prices and continuously increasing gross profit margins will not be used to reduce gross profit margins in exchange for sales." In terms of product planning, NIO will release a new flagship model on December 23 this year at NIO Day. Next year, the second-generation platform products will have minor modifications, but there will be no major changes to the new model. The first car of the second brand has recently completed the trial production of a VB car (development verification trial production prototype).
NIO's quarterly new car delivery volume. Cartography/Beijing News Shell Finance Reporter Zhang Bing
Benefiting from the increase in the proportion of high priced models, a decrease in component costs, and an increase in delivery volume, NIO's gross profit margin ended three consecutive quarters of decline in the third quarter, returning to double digits from 6.2% in the second quarter to 11%. The overall gross profit margin also increased from 1.0% in the second quarter to 8.0%.
NIO's gross profit margin and gross profit margin. Cartography/Beijing News Shell Finance Reporter Zhang Bing
NIO CFO Feng Wei stated that it is expected that the gross profit margin for the fourth quarter of this year will continue to increase, and the gross profit target for the fourth quarter will remain at 15%. By 2024, with organizational adjustments and the cancellation or delay of a certain project, NIO is expected to save a total cost of 2 billion yuan.
In terms of battery swapping business, Li Bin revealed during the financial report conference call that NIO plans to open up a battery swapping system for the second brand, codenamed "Alps". NIO will open up its second brand battery packs and battery swapping stations to its partners. At present, NIO's charging business has basically reached a breakeven point, and some investors are interested in independent financing for NIO Power (NIO Energy System). There are also some initial contacts, and NIO Power's independent financing is not ruled out in the future.
"If manufactured independently, manufacturing costs will decrease by 10%"
On the day of the release of its third quarter report, NIO stated that it had signed a definitive agreement with Anhui Jianghuai Automobile Group Co., Ltd. (referred to as "Jianghuai") to acquire certain production equipment and assets. According to the agreement, NIO will acquire the production equipment and assets of the first and second advanced manufacturing bases from Jianghuai, with a total price of approximately RMB 3.16 billion excluding taxes.
NIO established a cooperative relationship with Jianghuai Automobile to produce cars, which began in 2016.
From the first ES8 mass-produced car to the end of 2022 in May 2018, it took 4 years and 7 months for Jianghuai Automobile to contract over 300000 mass-produced cars for NIO. With the increase in delivery volume, NIO's OEM fees paid to Jianghuai Automobile continue to grow. According to NIO's financial report data, from 2018 to 2022, NIO paid approximately 223 million yuan, 441 million yuan, 532 million yuan, 715 million yuan, and 1.127 billion yuan to Jianghuai Automobile for automobile production expenses, which were included in the cost of sales. Over the past 5 years, NIO has cumulatively paid approximately 3.038 billion yuan to JAC Motor.
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. This means that NIO is seeking independent car manufacturing or further development.
In the financial report conference call, Li Bin did not directly respond to the issue of car manufacturing qualifications, but he mentioned that "from a manufacturing perspective, if we were to manufacture entirely independently, manufacturing costs would decrease by 10%."