October 3, 2022

Nio's profits are mixed but the fundamental 'recovery' of rival Tesla China EV offsets mounting losses

Nio’s profits are mixed but the fundamental ‘recovery’ of rival Tesla China EV offsets mounting losses

Nio stock rose on Wednesday as New (NIO) is witnessing the return of electric vehicle shipments on the back of demand for new electric vehicles and expansion abroad.

but the Tesla (TSLA) The Chinese competitor led the third-quarter revenue decline after second-quarter losses came in worse than expected, reflecting cost pressures amid the Covid-19 shutdowns in April and May.


In a statement released early Wednesday, Nio CEO William Penn Lee described the second half of 2022 as a “critical period” for its electric vehicle startup. “Our shipments are starting to recover” after declining in the second quarter versus the first quarter, he added.

Nio has begun delivering its new SUV, the ES7, to customers “at large scale in August,” according to Wednesday’s release. The statement added that the new ET5 sedan is on track to begin production in late September.

In August, Nio also began shipping the ET7 luxury sedan to Europe. Nio began delivering ET7 shipments to China this spring.

Early Wednesday, Nio directed third-quarter deliveries of 31,000 to 33,000 electric vehicles, up 35% year over year. It would also be 24%-32% higher on a quarterly basis.

The Chinese startup had previously reported deliveries of 25,059 EVs in the second quarter and 25,768 EVs in the first quarter.

“Nio will attract a broader user base and embrace robust growth in the coming quarters,” Lee said on Wednesday, noting demand for inflows of new, affordable electric vehicles, as well as overseas expansion.

new earnings

For the second quarter, Nio lost 20 cents a share, while revenue rose 22% to $1.54 billion.

Analysts polled by FactSet expected a net loss of 16 cents per US filing share, expanding from 6 cents last year, on revenue of $1.415 billion.

Gross margin fell to 13% in the second quarter from 14.6% in the previous quarter, Nio said Wednesday. Nio Chief Financial Officer Steven Wei Feng said in the statement that it was negatively affected by “cost fluctuations” following the Covid-19 shutdown during the quarter.

For the current third quarter, Nio expects revenue of $1.918 billion – $2.03 billion, up 31%-39% from a year ago. Wall Street forecast $2.38 billion, an increase of 55%.

Nio expects to deliver between 31,000 and 33,000 electric vehicles in the current quarter. With 20,729 electric vehicles delivered in July and August already, that means September deliveries of 10,271-12,271.

Nio expects production to increase in the fourth quarter, with record deliveries each month in the quarter.

New Stock

Shares rose 2.2% to 17.48 in late morning trading on Thursday stock market today, trimming strong morning gains. Nio stock lost 3.5% on Tuesday, down for the third consecutive session. Nio’s stock encountered resistance at the 50-day moving average in late August and is still well below the 200-day average.

startup competitor Lee Otto (LI) And the Exping (XPEV) Wed mixed. On Tuesday, Li Auto stock fell to a three-month low while XPEV stock fell 5.1% to a record low.

CHINA GIANT EV BYD (BYDDF) rose 4.1% on Wednesday. It rebounded 0.8% on Tuesday, after a four-session drop as Warren Buffett sold a small amount of his large stake. Tesla stock is up 1.6% on Wednesday, after rebounding from its 50-day moving average on Tuesday.

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Nio EV Sales, Growth Strategies

Once he saw the red-hot Nio surging headwinds. These headwinds include new export restrictions on nvidia (NVDA), supplier of Nio chips. It also includes fierce new competition and new Covid-19 lockdowns in China.

Founded in November 2014, Nio targets the Chinese market for premium electric vehicles. As of August, nearly a quarter of a million electric vehicles have been produced and sold since its inception.

Nio’s electric vehicle sales doubled — and China in general — in 2021. But persistent chip shortages and other supply disruptions affected Nio production and electric vehicle sales earlier this year.

In July, a shortage of casting parts hurt production of Nio EVs, including the new ET7 electric sedan. But Nio began deliveries of the new ES7 SUV on August 28 and plans to launch the smaller ET5 sedan on September 30.

While developing its range of electric cars, Nio plans to expand abroad. It started shipping the new ET7 to Europe in August. Nio already sells older generation electric vehicles in Norway and aims to be in 25 countries by 2025.

Various reports suggest that Nio could launch a mass-market EV, challenging the likes of it Volkswagen (VWAGY) In China.

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