TMTPOST -- The American depositary receipts (ADRs) of Nio Corporation fell 4.5% after Tesla Inc.’s Chinese competitor reported greater losses for the previous quarter and still felt upbeat on sales and profitability.

Credit：Nio

Nio said revenue for the quarter ended December 31 rose 15.2% year-over-year (YoY) to RMB19.70 billion (US$2.70 billion). That reversed a 2.1% YoY decline three months earlier, but missed analysts’ expectation of RMB22.22 billion polled by Visible Alpha. Net loss widened 32.5% YoY to RMB7.11 billion, whereas analysts anticipated the net loss would be RMB4.63 billion. On non-GAAP basis, adjusted net loss excluding share-based compensation expenses was RMB6.62 billion, up 37.9% YoY. The company had booked net loss and non-GAAP loss that expanded 11.6% and 8.3% for the September quarter, respectively.

Nio broke its delivery quarterly record from October to December, though the vehicle business didn’t achieve as stellar growth as the delivery, weighed by the lower average selling price (ASP) as a result of new brand ONVO onboard that changes in product mix. The Chinese electric vehicle (EV) maker  delivered 72,689 vehicles, representing a YoY increase of 45.2%. Vehicle sales popped 13.2% YoY to RMB17.48 billion.

 For the full year, Nio reported net loss of RMB22.40 billion, 8.1% wider from the year 2023, while revenue gained18.2% YoY to RMB65.73 billion, and out of which RMB58.23 billion from vehicle sales with a 18.2% YoY increase.  

Gross margin is a bright spot for the fourth quarter. The gross profit jumped 80.5% YoY to RMB2.31 billion with a margin of 11.7%, compared with 7.5% of for the same period of 2023. The significant increase in margin was partially driven by vehicle margin of 13.1%, up 1.2 percentage points from a year ago. Nio also attributed it to the increase in sales from provision of technical research and development services as well as sales of parts, accessories and after-sales vehicle services, with relatively higher margins, and the reduction of gross loss rate from provision of power solutions due to the increasing users.

For the year 2024, Nio gross profit more than doubled to RMB RMB64.93 billion and gross margin stood at 9.9%, up from 5.5% for 2023. Vehicle margin for was 12.3%, compared with 9.5% for 2023.

Throughout the year 2024, Nio brand captured a 40% share in China’s battery-powered electric vehicle (BEV) market for vehicles priced over RMB300,000, and the market share of the ONVO L60 has been steadily increasing since its launch last September, securing a top-three position in China’s BEV SUV market priced between RMB200,000 and 300,000, according to Nio CEO Lin Bin, or William Li.

On an earnings call Friday, the CEO noted the vehicle margin for the fourth quarter has fulfilled the company’s anticipation thanks to cost reduction initiatives. Nio expected vehicle margin will continue to growth starting the second quarter given a comprehensive cost reduction initiative this year from multiple aspects, including supply chain, research and development (R&D) and service teams.  

“As we continue to strengthen our cost control and also expenses management in the second half of this year, together with improvements in the sales volume, in the vehicle margin, as well as in the expense control, we are confident that we are going to achieve our breakeven target in Q4,” Li said.

Besides a breakeven in the last quarter of this year, Nio also targets a margin of 20% under Nio brand and a 15% margin for ONVO brand, Chief Financial Officer Qu Yu, or Stanley Qu told analysts. Qu listed several actions Nio is going to take to meet these targets.

The first is to make automobiles more platform-based and improving the commonalities across different products and also across brands. For example, we have implemented a overall platform strategy for the seats, which enables Nio cut the total bill of material cost, or BOM, for the seat system by 10%. The second is to standardize the interfaces of most of the smart hardwares for vehicles. The third involves the in-house developed parts, including NX9031, the chip for smart driving that will soon be adopted in ET9 and also be available on the model year’25 for the 5 and 6 series product.  In that case, the piece price will be decreased by around RMB10,000.

As to the sales target, Li said Nio projected a YoY increase of 36% to 43% for the first quarter and double the annual sales volume from last year. He said the sales would benefit from nine launches under three brands as well as ET9, the new executive flagship sedan that is set to start delivery next week. The second key driver relies on improvement in the overall network of the ONVO brand -- sales network and service network, enhancing the maturity level of the team and strengthening its brand awareness, according to Li.