Chinese electric-vehicle maker Nio (NIO 4.06%) will report its second-quarter earnings results after the U.S. markets close on Wednesday, Aug. 11. What should we expect?

What Wall Street expects

Wall Street analysts polled by Thomson Reuters expect Nio to report a loss of $0.11 per American depositary share, on average, on revenue of $1.28 billion. 

That would be a significant improvement from a year ago. In what was a better-than-expected result at the time, Nio lost $0.16 per share on revenue of $526.4 million in the second quarter of 2020.

One key analyst thinks Nio could do a bit better. Edison Yu of Deutsche Bank, who has covered Nio closely, said in a note ahead of earnings that he expects Nio's results to come in a bit ahead of Wall Street's consensus. Specifically, Yu and his team expect Nio to report a loss of about 0.44 Chinese yuan per share (about $0.07) on revenue of 8.57 billion yuan ($1.32 billion) for the second quarter.

Yu also expects Nio to share details about its plans for a lower-cost sub-brand during the earnings call. Nio last month hired a former WeWork executive, Ai Tiecheng, who is expected to take charge of that effort.

A NIO ES8, an upscale three-row electric SUV.

Nio's second-quarter deliveries came in near the high end of its guidance, despite the ongoing effects of a global chip shortage. Image source: Nio.

Highlights of Nio's second quarter

  • Nio delivered 21,896 vehicles in the second quarter, a 112% increase from the year-ago period and near the high end of its guidance range. 
  • The sales gain came amid a global shortage of semiconductors that has constrained the manufacturing output of many automakers, including Nio.
  • Nio's monthly deliveries hit an all-time high in June, when it delivered just over 8,000 vehicles for the first time. 
  • In May, Nio announced that it has extended its contract with its current manufacturing partner for another three years, and that the partner, state-owned automaker Jianghuai Automobile Group (JAC), has agreed to double its factory's capacity to roughly 20,000 Nios per month.

Note that while the chip shortage has held Nio's production down to some extent, JAC's factory has the capacity to build 10,000 Nios per month now, following a series of upgrades that were completed earlier this year.

What was Nio's guidance for the second quarter?

Back in May, Nio said that auto investors should expect the following for the second quarter, taking the effects of the chip shortage into account:

  • Deliveries of between 21,000 and 22,000 vehicles, roughly double its Q2 2020 total.
  • Total revenue between 8.15 billion Chinese yuan ($1.24 billion) and 8.5 billion yuan ($1.3 billion), up from 3.72 billion yuan in Q2 2020.

What should we expect when Nio reports earnings?

On the one hand, Nio has struggled a bit with supply line issues in recent months, not only from the chip shortage but also from a shortage of shock absorbers that hurt its output over the last couple of months. (Not only was Nio's July deliveries total down from June, it was beaten -- for the first time -- by both of its local electric-vehicle rivals, Xpeng (XPEV 1.73%) and Li Auto (LI -0.75%)). 

On the other hand, CEO William Bin Li and his team have executed quite well over the past year, and that inspires some confidence -- as did the company's success in hitting the higher end of its guidance range for deliveries. 

I'm inclined to think that Nio probably did a good job of keeping costs under control, and that its loss will be somewhat narrower than Wall Street's consensus expectation -- perhaps roughly in line with Edison Yu's upbeat forecast. 

But that said, I also think that investors will be watching Nio's guidance for the rest of 2021 closely, and that guidance may drive the stock price more than the earnings results themselves. We'll find out on Wednesday afternoon.