Chinese electric vehicle (EV) manufacturer Nio (NIO) reported third-quarter earnings earnings on Wednesday, Nov. 20, that revealed mixed financial indicators. It delivered 61,855 vehicles, marking a notable 11.6% increase in production year over year. However, Q3 revenue fell 2.1% to RMB18.67 billion ($2.66 billion). Gross margin rose to 10.7% from 8% in Q3 2023, but the net loss per American depositary share widened to RMB2.50, more than the analyst consensus estimate of RMB1.93.
Although Nio showed operational progress in the quarter, its balance sheet remains under pressure.
| Metric | Q3 2024 | Analyst Estimate | Q3 2023 | Change (YOY) |
|---|---|---|---|---|
| Vehicle deliveries | 61,855 | N/A | 55,432 | 11.6% |
| Vehicle sales | RMB16.7 billion | N/A | RMB17.4 billion | (4.1%) |
| Revenue | RMB18.67 billion | RMB19.1 billion | RMB19.07 billion | (2.1%) |
| Gross margin | 10.7% | N/A | 8.0% | 2.7 pps |
| Net income (loss) per ADS | (RMB2.50) | (RMB1.93) | (RMB2.67) | N/A |
Source: Nio. Note: Analyst consensus estimates for the quarter provided by FactSet. YOY = Year over year. RMB = Renminbi (Chinese yuan). ADS = American depositary share. pps = percentage points.
About Nio and Its Business
Nio is a major player in the electric vehicle industry, particularly in China. It produces smart electric SUVs and sedans, offering innovative battery and charging solutions such as its Power Swap service. This technology provides a competitive edge by reducing charging downtime, a crucial factor in the EV segment. Nio's focus areas set it apart in a rapidly developing market.
Throughout its operations, Nio has prioritized expanding its product lines, technological advancements, and its customer service ecosystem. The launch of the family-oriented ONVO brand represents Nio's recent strategic expansion. It is investing heavily in capacity, seeking to grow production and reach new markets.
Quarterly Highlights and Performance
The quarter showed record-breaking vehicle deliveries of 61,855 units (up 7.8% from the previous quarter), indicating improved operations and additional models in production. The ONVO brand contributed with its launch, furthering Nio's portfolio. The company's strategic expansion into family vehicles with the ONVO L60 also reflects its broader market ambitions.
Total revenue, however, decreased by 2.1% year over year, caused in part by a 4.1% drop in vehicle sales. Although delivery volumes rose, revenue decline was attributed to competitive pricing pressures and market dynamics. Despite this, gross margin improved to 10.7% from 8% in the same quarter last year. This was largely due to cost optimization efforts, which also saw vehicle margins increase from 11% to 13.1% year over year.
Net losses widened, with an 11% year-over-year increase to RMB5.06 billion ($721 million). Nio's high research and development (R&D) and selling, general, and administrative (SG&A) expenses reflect its strategic investments but remain a significant cost burden. R&D expenses rose 9.2% to RMB3.32 billion, showcasing the company's commitment to innovation.
From a financial health standpoint, Nio maintained a robust cash position of RMB42.2 billion ($6 billion) at the end of September 2024. While this supports its ambitious growth plans, operational losses and market competition pose considerable challenges to future profitability.
Looking Ahead
Nio management provided an optimistic outlook for Q4 2024, forecasting deliveries between 72,000 and 75,000 units, representing an increase of 43.9% to 49.9% from a year ago. This expected growth aligns with its ongoing investments in product lines and technological innovations. The company's focus on expanding the Power Swap network and infrastructure development will likely play a key role in meeting delivery targets. Management expects Q4 revenue to rise 15% to 19.2% to between RMB19.68 billion ($2.8 billion) and RMB20.38 billion ($2.9 billion).
Further guidance highlights anticipated vehicle margins, with targets to reach 15% by the end of 2024 and aiming for 25% in the long term. Investors should watch market conditions, competitive pressures, and cost management closely as Nio continues its strategic growth and positioning within the global EV market.
