Release Date: November 20, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- NIO Inc (NIO, Financial) achieved a new quarterly record with 61,855 vehicle deliveries in Q3 2024.
- The company maintained its position as the top-selling brand in China's EV segment priced above RMB300,000, with a market share of 48%.
- NIO Inc (NIO) reported a vehicle margin improvement to 13.1% in Q3, up from 11% in the same period of 2023.
- The ONVO brand successfully launched its first model, L60, targeting the mainstream family market.
- NIO Inc (NIO) achieved positive operating cash flow and free cash flow in Q3 2024.
Negative Points
- Total revenues decreased by 2.1% year over year, primarily due to a lower average selling price.
- The company experienced a net loss of RMB5.1 billion, an increase of 11% year over year.
- R&D expenses increased by 9.2% year over year, driven by higher personnel costs.
- SG&A expenses rose by 13.8% year over year, attributed to increased sales and marketing activities.
- The production ramp-up of the ONVO L60 has been slower than expected, impacting delivery timelines.
Q & A Highlights
Q: Should we be worried about potential cannibalization between NIO and ONVO brands?
A: Bin Li, CEO, explained that the decrease in NIO brand deliveries was an active adjustment to improve vehicle margins by reducing promotional costs. The strategy of using multiple brands targets different user groups effectively, with minimal overlap between NIO and ONVO. The majority of ONVO users come from competitors like Model 3, and the combined growth of both brands surpasses any loss in NIO brand sales.
Q: What is the reason for the slow production ramp-up of the L60, and how will it impact order backlogs?
A: Bin Li, CEO, noted that the L60's advanced technology, including a 900-volt architecture, requires time for production ramp-up. The company aims for 10,000 units per month by December and 20,000 by March. Some users may miss subsidies due to late deliveries, but the company is preparing launch stocks more actively for future models like ET9 and Firefly.
Q: How does NIO balance profitability and volume, and what are the vehicle margin targets?
A: Stanley Qu, CFO, stated that NIO focuses on enhancing its premium brand and improving profitability. The vehicle margin target for Q4 is 15%, with a long-term goal of 20% by 2025. The company aims to balance volume and profitability by optimizing marketing strategies and supply chain efficiencies.
Q: How will the EU tariff increase affect NIO's pricing strategy and demand in Europe?
A: Stanley Qu, CFO, acknowledged that tariffs have increased prices in Europe, but NIO maintains a long-term strategy focusing on improving sales and service networks. The company aims to understand local user needs and enhance satisfaction, with Norway remaining unaffected by tariffs.
Q: What are the key milestones for NIO's autonomous driving in the next 6 to 12 months?
A: Bin Li, CEO, highlighted the NIO World Model and end-to-end solutions, with ongoing releases and user testing. The focus is on improving safety and usability, aiming for a safety level 10 times higher than human driving alone. The company is confident in its roadmap and the benefits of its R&D investments.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
