TLDR:
- Nio’s Q3 revenue dropped 2% to $2.66 billion, with net loss widening to $721 million
- Vehicle margins improved to 13.1% in Q3 2024, up from 11% year-over-year
- Deliveries increased 35% year-to-date to 170,257 vehicles
- Company expects 51-53% delivery growth for full year 2024
- New affordable brands Onvo and Firefly planned to target broader market
Chinese electric vehicle maker NIO (NYSE: NIO) released its third-quarter earnings report for 2024, showing a complex mix of challenges and improvements. The company reported a 2% year-over-year revenue decline to 18.67 billion yuan ($2.66 billion), while simultaneously achieving higher delivery numbers and improved vehicle margins.
The company’s deliveries reached 61,855 vehicles during the third quarter, marking a 12% increase from the previous year. More notably, NIO’s year-to-date deliveries through October rose 35% to 170,257 vehicles, demonstrating sustained growth in its core market.
Vehicle margins, a key metric for automotive manufacturers, improved to 13.1% in the third quarter, up from 11% in the same period last year. This improvement came despite ongoing price competition in the Chinese EV market, suggesting effective cost management strategies.
NIO’s net loss widened to 5.06 billion yuan ($721 million) in the third quarter, or 2.14 yuan ($0.31) per American depositary receipt (ADR). This exceeded analyst expectations and represented an increase from the previous year’s loss of 3.95 billion yuan.
The company maintains a strong position in China’s premium EV segment. CEO William Bin Li reported that NIO holds more than 40% market share in China’s battery EV market for vehicles priced over 300,000 yuan ($41,400) during the first three quarters of 2024.
Looking forward, NIO projects fourth-quarter deliveries between 72,000 and 75,000 vehicles, which would represent a 44% to 50% increase over the same period last year. The company also expects revenue to grow between 15% and 19% in the fourth quarter.
NIO’s CFO Stanley Qu set an ambitious target for vehicle margins, aiming for 15% in the fourth quarter. This would serve as a baseline for 2025, supported by an increased focus on premium vehicle sales.
The company’s gross margin showed improvement, rising to 10.7% in the third quarter from 8% the previous year. However, this still trails behind domestic competitors XPeng and Li Auto, which reported gross margins of 15.3% and 21.5% respectively.
NIO’s stock price has declined approximately 50% this year, trading below its initial public offering price. Current market valuation places the company at less than one times next year’s sales, compared to Tesla’s multiple of nine.
The company continues to expand its product lineup. Its Onvo sub-brand targets the more affordable segment of the market, while the upcoming Firefly brand will introduce plug-in hybrid electric vehicles (PHEVs) for overseas markets in 2026.
NIO’s battery-swapping technology remains a key differentiator in the market. The company continues to invest in expanding its network of battery-swapping stations, though these investments contribute to ongoing operating losses.
European expansion plans face potential headwinds from rising tariffs on Chinese EVs in overseas markets. These tariffs could impact NIO’s international growth strategy and profit margins.
The company’s material costs have decreased, helping to offset some of the pricing pressures in the Chinese market. This factor, combined with ongoing cost control measures, has contributed to the improved vehicle margins.
NIO plans to unveil its new Firefly brand at NIO Day in late December 2024, targeting a broader customer base. This launch represents part of the company’s strategy to diversify its product offerings and reach new market segments.
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