NIO expects a rebound in performance in the second quarter, and the third brand will start deliveries in the first half of next year

Although NIO’s electric vehicle sales got off to a slow start in the first quarter due to product switching and the Lunar New Year, the all-electric vehicle company with strong momentum expects a strong rebound in the second quarter.

On June 6, NIO disclosed its first-quarter earnings data. In the first three months of this year, NIO’s quarterly revenue fell by 7.2% year-on-year to 9.91 billion yuan. The company attributed the decline in revenue to weak car sales, lower prices and seasonal effects.

The revenue of 9.90 billion yuan needs to cover expenses including 9.42 billion yuan of sales costs, 2.864 billion yuan of research and development expenses and 3 billion yuan of sales and administrative expenses. In the first three months of this year, NIO’s net loss reached 5.185 billion yuan, which narrowed 3.4% from the fourth quarter of last year.

NIO expects vehicle deliveries to more than double year-on-year to 5.4 to 56,000 in the second quarter, and revenue to rise to $16.587 billion to $17.135 billion, almost doubling from the same period last year.

After reducing battery leasing costs, NIO’s sales have been significantly boosted, rebounding to 20,000 units in May, setting a record high. According to NIO founder Li Bin revealed in the first quarter earnings call that order demand exceeded capacity in May, and double shift production has been arranged to increase production capacity.

In terms of gross margin performance, which measures the company’s operating performance, NIO’s gross margin in the first quarter of this year was 9.2%. This is mainly due to the decrease in average selling price due to increased discounts during product switching, and the dominance of sales of low-gross margin models such as ET5.

Li Bin said that the important task in the next stage is to optimize the gross profit margin under the premise of ensuring a steady increase in sales. Starting from June, NIO will focus on adjusting the product structure, increasing the investment ratio of first-line high-gross margin products, and narrowing the policy of short-term promotion. Vehicle gross profit margin is expected to return to double digits in the second quarter, and continue to improve in the third and fourth quarters.

According to the NIO plan, the NIO brand gross margin design target is more than 20%, and the sub-brand Ledao will pursue a gross margin of more than 15%. Although Ledao is in the more competitive mainstream market, Li Bin said that Ledao will not exchange low gross profit for sales. According to internal calculations, Ledao can achieve break-even by selling 2 to 30,000 vehicles per month.

The Lodao brand is building and improving its sales system. It is expected that when the first model L60 is delivered in September, Lodao will lay out about 100 stores. Li Bin said that from the perspective of capital expenditure, the construction of Lodao stores will not put pressure on the company’s operations. Considering the attributes of the Volkswagen brand, Lodao stores do not need to invest in large-scale construction like NIO brand stores, and their single-room store costs are between 100 and 2 million yuan.

A third brand, Firefly, will also be key to NIO’s profitability. The brand focuses on boutique cars in the price range of 10 to 200,000 yuan, and will share a sales network with the NIO brand.

According to 21 financial reports, the first new Firefly car is planned to be launched in China, or will be unveiled in China at the end of this year, and will be introduced to the European market in the first half of next year. Li Bin responded at a conference call that the specific release time of Firefly has not yet been determined, but deliveries will start early in the first half of next year.

The positioning of these three brands is obvious, and the common point is that they can all achieve power exchange. Among them, the Ledao brand will be compatible with the modified third-generation power exchange stations, while Firefly requires an independent power exchange network. At present, NIO has laid 2,472 power exchange stations, and will officially deploy the fourth-generation power exchange stations next week.

In response to questions from the outside world about the operational risks caused by the power station, Li Bin once again responded that because the NIO power station needs to establish a network first, there will be advanced investment, but the profitability is clear. A reference data is that a power station can achieve break-even with 60 orders per day. At present, the average single station order volume of the NIO power station network is 30 to 40 orders.

NIO Power has now carried out independent financing. On May 31, NIO Power received 1.50 billion yuan strategic investment from Wuhan Guangchuang Fund and other institutions. After completing the first financing, NIO still owns about 90% of NIO Power. Li Bin said that NIO Power will continue to open investment cooperation to investors and automobile companies in the future. As of now, a total of 7 automobile companies have joined the NIO power exchange system.