TLDR
- NIO and CATL announced a strategic partnership to build China’s largest battery swapping network
- CATL is investing RMB 2.5 billion (~$346 million) in NIO Power
- NIO delivered a record 72,689 vehicles in Q4 2024, up 45.2% year over year
- NIO’s vehicle margin has been improving steadily, reaching 13.1% in Q3 2024 with a target of 15% for Q4
- NIO will report Q4 2024 results on March 21, 2025, with analysts expecting a loss of $0.42 per share on $2.85 billion revenue
NIO Inc, the Chinese electric vehicle maker, has formed a significant partnership with Contemporary Amperex Technology Co., Ltd. (CATL) to develop China’s largest battery swapping network. The announcement was made on Monday during a signing ceremony attended by both companies’ top executives.
William Li, founder and CEO of NIO, and Dr. Robin Zeng, chairman and CEO of CATL, were present at the event that marked the beginning of this strategic venture.
The partnership aims to establish a comprehensive battery swapping network for passenger vehicles. It will focus on optimizing industry standards and providing efficient recharging solutions.
NIO has already built an extensive network of charging and battery swapping stations across China. The company has surpassed 3,000 Power Swap Stations to date.
The company plans to expand this network substantially by 2025. This expansion will reach additional cities and county-level areas throughout China.
CATL’s investment of up to RMB 2.5 billion (approximately $346 million) in NIO Power will strengthen the partnership. This funding will help NIO enhance its battery-swapping infrastructure.
The companies will also work together to establish national standards for battery-swapping technology in China. These standards will improve compatibility among various brands in the EV market.
“The strategic cooperation between NIO and CATL marks a pivotal moment, propelling battery swapping into a brand-new phase,” said Li in a statement about the partnership.
Dr. Zeng noted that the collaboration would leverage CATL’s Choco-Swap technology alongside NIO’s network.
“This will enable every battery to deliver greater value throughout its lifecycle, and allow us to provide global users with safer, more efficient, and more sustainable electric mobility solutions,” he said.
This partnership comes at an important time for NIO. The company is scheduled to report its fourth quarter results for 2024 on Friday, March 21, before U.S. markets open.
Analysts expect NIO to report a loss of 42 cents per share on revenues of $2.85 billion for Q4. While still operating at a loss, this would represent an improvement from the 45-cent loss reported in the same period last year.
Strong delivery numbers
The company’s delivery numbers for the fourth quarter were strong. NIO delivered 72,689 vehicles in Q4 2024, up 45.2% year over year.
This figure also shows growth from the 61,855 units delivered in the third quarter of 2024. The fourth-quarter deliveries set a new quarterly record for the company.
NIO has been expanding beyond its luxury lineup. In September, the company began deliveries of the L60, the first product from its more affordable ONVO brand.
In the fourth quarter of 2024, NIO sold 19,929 L60 units. The L60 is priced lower than Tesla’s Model Y in China, creating strong competition in the market.
The company’s vehicle margins have been improving steadily. The metric grew from 9.2% in Q1 2024 to 12.2% in Q2 and 13.1% in Q3.
NIO has set a target vehicle margin of around 15% for the fourth quarter of 2024. This would mark a substantial improvement in the company’s profitability metrics.
NIO faces challenges
Despite these positive developments, NIO faces some challenges. The company has been struggling with operational inefficiencies for several quarters.
In the last reported quarter, NIO’s selling, general, and administrative (SG&A) expenses rose 13.8% year over year. This trend may have continued due to higher personnel costs and increased spending on sales and marketing.
High operating expenses could pressure profit margins. Investments in battery swapping stations and store expansion might further strain cash flow.
The company’s cash reserves are shrinking, from RMB 32.9 billion in December 2023 to RMB 23.7 billion in September 2024. This raises concerns about financial flexibility going forward.
NIO expects its vehicle sales in 2025 to double from 2024 levels. However, the company has yet to achieve a full-year profit due to high research and development and expansion costs.
The stock has declined 12.4% year-to-date, outperforming its industry but underperforming some of its close peers like Li Auto and XPeng.
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