NIO’s recent quarterly earnings report has stirred mixed reactions among investors. While the company reported a loss per share wider than expected, its operating loss was slightly better than anticipated. Despite this, the uncertainty surrounding demand and pricing in the electric vehicle (EV) market is still causing concern among investors.
In the fourth quarter, NIO reported a loss of 39 cents per share on sales of $2.4 billion, which fell short of Wall Street expectations of a loss of 34 cents per share. However, the company’s operating loss of around $600 million was slightly better than anticipated.
On the positive side, NIO saw an increase in vehicle deliveries, with approximately 50,000 vehicles delivered in the fourth quarter compared to about 40,000 the previous year. Moreover, for the full year of 2023, NIO achieved a delivery record, with around 160,000 units delivered, marking a growth of over 30% from the previous year.
CEO William Bin Li highlighted NIO’s achievements, noting that the company ranked first in China’s premium battery EV market with an average transaction price exceeding RMB 300,000 ($42,000). He also mentioned the upcoming deliveries of NIO’s 2024 products, which boast the highest computing power among production vehicles and aim to enhance users’ driving and digital experience.
Despite the mixed reaction from investors, it seems that American investors are slightly more optimistic, as indicated by the uptick in premarket trading of NIO’s U.S.-listed American depositary receipts. However, investors in Hong Kong are less enthused about the results. This divergence in sentiment reflects the ongoing uncertainty in the EV market, particularly regarding demand and pricing dynamics.
Looking at NIO’s projections for the upcoming months, the company anticipates shipping approximately 14,000 vehicles in March, representing a notable 33% increase compared to the same period last year. For the first quarter, NIO expects to deliver between 31,000 to 33,000 units, which falls short of Wall Street’s previous estimate of 44,000 units. However, this estimate appears outdated, as NIO has already reported January and February sales figures, totaling around 18,000 units. If we consider the current consensus call, this would imply shipping around 26,000 units in March alone, marking a record for any month and reflecting a remarkable growth of about 150% from March 2023.
Despite the impressive delivery figures, sales for the first quarter are expected to remain flat year over year, totaling approximately $1.5 billion, which is below the consensus forecast of about $2.1 billion. This discrepancy between delivery estimates and sales figures raises questions, as it’s unlikely that sales can increase by 40% year over year when deliveries are only up by 3%.
Investor sentiment towards NIO has been impacted by various factors, including price cuts by several automakers, including Tesla, in China, as well as a slowdown in demand growth. NIO’s U.S. American depositary receipts (ADRs) have fallen by 41% since the beginning of 2024, reflecting these concerns.
As NIO’s management prepares to host a conference call to discuss the results, investors will be keen to gain insights into several key areas, including Chinese EV demand, pricing dynamics, and competition within the industry. These insights will likely play a crucial role in shaping investor sentiment and future market expectations for NIO and the broader EV sector.