Nio reported its fourth-quarter and full-year earnings on March 22, and it said it expects to deliver only about 25,000-26,000 vehicles in the first quarter. The supply challenges facing Nio shouldn't come as a surprise, but here's the thing: If you didn't get a chance to look beyond that headline delivery number, you're missing something big.
Nio's Q4 earnings conference call revealed a lot about the company's moves and plans that should form a key part of your investing thesis in the Chinese electric vehicle stock. You must know about these seven things.
In the last few days, the price of its vehicles have been increased twice, due to the rising costs of raw material.
Nio still expects to generate vehicle gross margin of 18% to 20% in the next two years. Vehicle gross profit is an important metric for EV start-ups as it shows the difference between sales and the cost of manufacturing a vehicle.
Nio knows how to navigate supply challenges. It is working with partner CATL to boost battery supply and expects enough supply of high-end Semiconductor chips under contracts with Nvidia and Qualcomm to meet its production target, including new models this year.
The image is from Nio.
Nio confirmed that there will be three new EVs this year.
Nio plans to go global with these vehicles.
Nio will expand into Germany, Sweden, and the Netherlands in 2022, after entering Norway last year. This chart shows why Nio chose Europe as its first international market.
Nio entered Norway with the ES8 SUV and will roll out the sedan first in Germany. The company plans to sell its products in Europe later this year. Nio will launch into 25 countries and regions by the year 2025.
Nio has its plans in place and will need a lot of money to execute them.
Nio spent more on the design and development of new products in the year 2021, partly because of the 84.6% increase in R&D expenditure.
Nio expects its R&D expenditure to more than double and R&D headcount to increase significantly, as it invests in long-term core technologies and some fundamental technologies.
If executed well, more R&D should help Nio launch and deliver quality products this year, as well as put it on track to be a mass-market EV maker.
William Li, the CEO of Nio, has been dropping hints about his dream to build a mass-market brand and sell better cars than the competition. Nio said during its Q4 earnings call that it wants to increase volume and expand its user base, but it will follow a different strategy than that ofTesla.
Nio doesn't want to have big price gaps between its models when it launches a car for the mass market. The right price range for a mass-market brand is $30,000-$50,000 a car.
Nio said it will build a new brand to enter the mass market, taking a leaf out of Volkswagen and Toyota.
You could see a Nio phone in the future.
Nio was speculated to be planning a cellphone business.
At its Q4 conference call, Li said Nio is exploring possible connections between EV and smartphones, as he believes there are a lot of synergies between these two products in terms of technology, supply, and software. Nio launched augmented- and virtual-reality technologies with the ET5 and is now exploring more innovative applications for vehicles.
A Nio phone that can interact with Nio EV could soon be a reality. Nio is focused on profitability for now.
If the company's growth plans pan out as planned, it expects to break even in the fourth quarter of 2023 and make its first full year of profit in 2024.
Nio's stock price could go to highs not seen before if it ever gets close to profitability.
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