NIO Inc. (NYSE: NIO) – Nio Shares Updates on Rising Margins, ET7, Chip Shortage, Europe Expansion and More: What You Need to Know


Chinese electric vehicle manufacturer Nio Inc (NYSE: NIO) is looking to increase its gross margin to 25% in the coming years, company executives told analysts on a post-earnings conference call on Tuesday.

What happened: The maker of the ES8 electric SUVs and upcoming ET7 sedans said the target can be achieved if the company achieves an annual output of 300,000 electric vehicles based on the NT2.0 electric vehicle platform (Nio technology).

“We should be able to achieve an average gross profit margin of 25% over the long term with the launch of new products,” the Nio executive told investors.

Nio posted a gross margin of 20.3% in the third quarter, up from 12.9% a year ago and 18.6% in the second quarter of 2021.
The vehicle margin slipped from 20.3% to 18% sequentially, but was above the 14.5% recorded in the third quarter of 2020.

The electric vehicle maker also said it continues to seek opportunities to get listed in Hong Kong.

Here are some key takeaways from Nio’s earnings call on Tuesday:

Chip supply better than Q3: Nio said the chip supply situation is much better now than in the third quarter, but the challenge is still quite large and it is “very difficult to predict” what will happen next. The electric vehicle maker said the battery is really a big constraint in terms of production and supply.

On ET7: Nio plans to start delivery for ET7 in the first quarter of next year. The company also expects shipments of two new models based on the NT2.0 platform to begin in the second half of next year.

Expansion abroad: Nio said he will step up efforts in 2022 to penetrate more global markets after the recent debut in Norway, where ES8 orders have exceeded expectations. In Europe, it aims to enter five new markets.

About 92% of customers in Norway have chosen the battery as a service option.

Grant: Nio said that its average selling price is quite high, and considering that the subsidy will not be very large compared to the vehicle’s selling price, it would not have an impact.

HK List: Nio executives said the company is “open-minded and closely monitoring the market” for all possibilities to be listed in Hong Kong.

Regulatory credits: Nio said, unlike the previous one, that he was able to get regulatory credits in the third quarter well in advance.

Why is this important: Nio estimated deliveries to reach 23,500 to 25,500 units in the fourth quarter. The midpoint of that estimate is only 61 units higher than Nio’s third-quarter deliveries of 24,439 EVs.

The company had experienced success in production last month due to the modernization of the plant. He expects a few more upgrades at the JAC-NIO plant, but said the impact won’t be significant.

Nio’s factory in Hefei can manufacture models of sedans and sport utility vehicles. After all the ongoing expansion work and with additional shifts, the plant would be able to manufacture up to 300,000 cars per year.

The automaker plans to add an additional 300,000 units of capacity from a second plant currently under construction and expected to be completed next year.

Nio currently has three models on sale and plans to launch three new electric vehicles next year, including the already announced ET7 premium sedan.

Price action: Nio shares closed down 5.93% at $ 40.64 per share on Tuesday and were down a further 2.44% after-hours trading.

Photo: Courtesy of Nio

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