The company's recent situation
On March 15, NIO lowered the monthly rental price for BaaS battery rental services and officially signed a contract with Ningde Times for the long-life battery business1.
reviews
BaaS rental prices have been lowered, and user coverage is expected to expand. Recently, NIO lowered the monthly price of BaaS rental services to cover both incremental and existing users. The monthly rent for a 75 kWh battery pack was adjusted from 980 yuan to 728 yuan/month, and the car price was reduced by 70,000 yuan; the monthly rent for a 100 kWh battery pack was adjusted from 1,680 yuan to 1,128 yuan/yuan, and the car price was reduced by 128,000 yuan. NIO also promised that from now until May 31, users who choose the BaaS plan to buy a car can enjoy the discount of paying 4 battery rental service fees and receiving 1 and 60 free power exchange vouchers. If the billing period exceeds 12 months, the battery buyout fee can be partially deducted. The minimum purchase cost for a standard battery is 47,920 yuan, and the minimum purchase cost for a long-life battery is 88,640 yuan.
Based on a long-life battery strategy, it is expected to drive sales momentum. Under the BaaS model, NIO sells vehicles (without batteries) to users, and the battery asset management company Weineng buys batteries, provides rental services to car owners, and collects rent. Battery rents are affected by fluctuations in immediate battery costs, but are more related to long-term models of battery asset prices. In the past, NIO used material development and operational innovation as a solution path. Through research and development of battery positive and negative electrode and electrolyte materials, and refined power exchange system operation methods such as self-developed battery pack maintenance algorithms, NIO greatly improved the battery calendar life and cycle life, and officially signed a contract with Ningde Times for the long-life battery business at this event. We believe that this BaaS price adjustment is based on a long-life battery strategy, which is expected to increase the BaaS share and drive sales momentum by lowering the vehicle purchase threshold.
The first-mover advantage brings unique endowments, and the complementary layout is leading in the industry. NIO has a first-mover advantage in the charging and switching system. Currently, the company is leading the market in terms of the number of power exchange stations, and has reached power exchange cooperation with companies such as Ningde Times and Chang'an to jointly promote the construction of power exchange networks and unified power exchange standards. In addition, in 2024, the company plans to add 1,000 power exchange stations and 20,000 charging piles2. We believe that current energy supplementation is one of the core factors limiting the increase in pure electric models. The company is investing heavily in charging and switching networks, which is expected to enable vehicle sales. With the introduction of third party partners, the power exchange business model is expected to gradually be verified.
Profit forecasting and valuation
The current US and Hong Kong stock prices correspond to 0.8x EV/Rev in 2024, keeping the 2024/25 deduction for nonprofit unchanged. The target price of Hong Kong and US stocks remains unchanged at HK$62/8, all corresponding to 1xEV/REV in 2024. Hong Kong stocks and US stocks have 40.4%/43.4% upward space compared to current stock prices, respectively.
risks
Demand fell short of expectations due to increased competition in the market, and cost control and power exchange cooperation fell short of expectations.