On September 5th, Chinese electric vehicle manufacturer NIO released its Q2 2024 financial report.

Gross margin rises to double digits

Performance data shows that NIO's revenue in the second quarter reached 17.45 billion yuan, a year-on-year increase of 98.9% and a month on month increase of 76.1%. The growth in revenue is mainly driven by the increase in sales volume. In the second quarter, NIO's sales reached 57373 units, a year-on-year increase of 143.9% and a month on month increase of 90.9%, setting a new quarterly high.

The company is currently still operating at a loss. NIO reported a net loss of 5.046 billion yuan in the second quarter, a year-on-year decrease of 16.7% and a month on month decrease of 2.7%. The adjusted net loss was 4.535 billion yuan, a year-on-year decrease of 16.7% and a month on month decrease of 7.5%.

The gross profit margin performance is very impressive. NIO's overall gross profit margin for the second quarter reached 12.2%, an increase of 6 percentage points year-on-year and 3 percentage points month on month.

During the conference call, Qu Yu, Vice President of Finance at NIO, mentioned that NIO's brand achieved a gross profit margin of 12.2% in the second quarter, mainly due to improvements in supply chain and production efficiency. Qu Yu further stated that with the continuous growth of automobile sales, the gross profit margin of the whole vehicle will gradually increase in the next two quarters and is expected to reach 15% in the fourth quarter.

Looking ahead to the third quarter, NIO expects sales to be between 61000 and 63000 units (i.e. monthly average of 20300-21000 units), with a year-on-year growth of approximately 10.0% to 13.7%; The revenue guidance is between 19.11 billion yuan and 19.67 billion yuan, with a year-on-year growth of about 0.2% to 3.2%.

As of August this year, NIO's sales have maintained a level of just over 20000 for four consecutive months.

ONVO L60 will begin delivery at the end of September

NIO's second brand ONVO has released its first car L60, which will be launched on September 19th and begin delivery at the end of September. NIO founder Li Bin said that the initial delivery volume should not be very high, and he hopes that the monthly delivery volume of L60 can reach around 10000 vehicles by December this year.

In order to deliver the L60, NIO has made preparations in terms of production capacity. Li Bin revealed that the company has already put two factories into operation, and the second factory has started upgrading to a dual shift system to support the production of L60. At the end of September or early October, the second factory will complete the upgrade to a dual shift system. At the same time, the company is also planning a third factory, which is expected to start production around the third quarter of next year.

Li Bin said, "We have full confidence in the comprehensive competitiveness of ONVO L60's products. Next, we will make every effort to ensure the ramp up of production capacity and fully meet market demand. ONVO is targeting a market of over 8 million vehicles, and combined with BaaS and charging and swapping networks, it is very competitive. In terms of sales volume, its upper limit is much higher.

Li Bin stated that the company's operational goal for ONVO products is to achieve a car profit margin of 15% or above. For NIO, a high-end pure electric brand, the company also has a long-term sales target of reaching 40000 vehicles per month and a corresponding vehicle profit margin of 25%.

The impact of European tariffs on NIO

As the EU imposes higher tariffs on cars made in China, the cost of exporting to Europe by major automakers has risen sharply。This is undoubtedly a big blow to a number of car companies, including NIO, that are planning to expand in Europe.。

In response, Li Bin said in a conference call that the company will focus on the existing five European markets that have been launched.。In 2021, NIO will use the Norwegian market as the first stop for the brand to enter Europe.。The following year, Weilai entered the car market in four European countries, including Sweden, Germany, the Netherlands and Denmark.。In addition, the company has R & D and innovation centers in Munich and Berlin, Germany, and Budapest, Hungary.。

NIO does not disclose its overseas sales, but according to market research firm Dataforce, it sold 2,404 vehicles in Europe last year.。However, as NIO also has a "subscription" service in Europe, the actual number may deviate from third-party statistics.。

"We also know that it will take longer to establish such a high-end brand in the European market, and we are very patient.。"But at the same time, that doesn't mean we've stopped our activities there."。Earlier this year, we just opened our Weilai House in Amsterdam and we are still installing and deploying our exchange stations in Europe.。So we will keep the same plan。"