Source: Wall Street See
NIO Inc. stated that the focus of the next stage is to further optimize the gross margin while maintaining sales volume. Meanwhile, the small car of YINGHUA, a peer sub-brand, is about to be launched. NIO Energy is formulating an independent financing plan and will continue to open up to investment. By the end of this year, NIO will provide LeDong users with more than 1000 battery swapping stations.
NIO's revenue in the first quarter fell year-on-year, lower than analysts' expectations, but gross margin improved through effective cost control. In addition, NIO provided optimistic delivery guidance for the second quarter of 2024, increasing from 54,000 vehicles to 56,000 vehicles.
On the Q1 2024 earnings call on June 6th, NIO Chairman Li Bin revealed that the first car from NIO's sub-brand, codenamed 'Firefly', will start delivering in the first half of next year. This car is positioned as a boutique small car, with a selling price between 100,000-200,000 yuan. It is currently in development stage, and details such as appearance, configuration, and brand name have not yet been announced. Like 'Alps' (marketed as 'Leda' at launch) before it, 'Firefly' is merely the internal code name for the new car.
NIO has claimed that development of Firefly has progressed smoothly and performed very well. It is positioned as a boutique small car in China, with a price range in the hundreds of thousands of RMB, but it is designed to very high safety and quality standards. Currently it is planned for shared sales network with NIO, similar to BMW and MINI, with delivery planned to start in the first half of next year, but the release time is yet to be determined.
The positioning of the three brands is clear. NIO is targeted at the high-end market, aimed at both business and household customers; ONVO targets mainstream household market users; Firefly is positioned in China as a boutique small car, to meet the demand for the second family car. In terms of price, the main sales are in the tens of thousands, twenties and thirties, with clear distinction, and the common feature is that they are all replaceable battery-powered.
Meanwhile, NIO Energy has an independent financing plan, and will continue to be open to investment in the future. Li Bin said, we are very bullish on the long-term sustainability of NIO Energy's operation. We are currently in the investment stage and need to first establish a network. There will be some forward-looking investment, but the overall profitability is very clear. Currently, each NIO battery swapping station can provide 60 services per day to achieve breakeven. Considering investment in energy storage, flexible upgrades and other areas, we have no doubts about the profitability of battery swapping stations. NIO will begin deploying fourth-generation battery swapping stations soon, and by the end of the year, there will be over 1,000 swapping stations available for Leda users.
In addition, optimizing gross margin is an important task for the next stage. Li Bin said that starting from June, we will focus on adjusting the product structure, increasing the proportion of first-line high-gross-margin products, and narrowing the terminal discount range, such as reducing the number of swapping coupons. The next task is to continuously optimize gross margin while ensuring sales volume.
In the first quarter, the company was in a period of product transition, and the overall vehicle gross margin was 9.2%. At the same time, other business gross margin performance improved significantly as a result of increased charging and swapping infrastructure utilization and enhanced profitability in after-sales service business. The overall vehicle gross margin is expected to return to double-digits in the second quarter, with continued improvement in the third and fourth quarters.
In addition, Li Bin said that despite the ongoing intensification of market competition, NIO's long-term and resolute investment and innovation in important areas such as technology, products, services, and communities, have begun to show cumulative comprehensive competitiveness. The systemic advantages of being 'Chargeable, Swappable, Upgradable' are further gaining market recognition and driving steady sales growth.
Editor/Lambor