Main points of the event: NIO Inc. held a press conference in Europe. NIO Inc. ET7, EL7 (that is, ES7) and ET5 will be booked in Germany, the Netherlands, Denmark and Sweden through the subscription model.
ET7 subscription delivery starts in October, and EL7/ET5 starts subscription delivery in 2023Q1. ET7 will begin subscription delivery in Germany and the Netherlands on October 16 and in Sweden and Denmark in November. EL7 will start subscription delivery in January 2023 and ET5 will start subscription delivery in March 2023. In terms of future planning, NIO Inc. will enter 25 countries by the end of 2025, and Ulai Alps will also enter the European market. Users can be divided into two modes: flexible short-term rental for one month and long-term rental for 36 months. The monthly rental fee for 75kWh battery models (including insurance, pick-up car and other service fees) is about RMB 0.9 million / RMB 0.7 million (exchange rate uses October 8 data, 1 euro = 6.93 yuan; 1 Swedish kroner = 0.64 yuan; 1 Danish kroner = 0.93 yuan), the rental price maintains a high-end position.
In terms of channels, NIO Inc. still uses the direct marketing model to establish a sales and service network in Europe. The NIO Inc. Center in Berlin is about to open, and eight NIO Inc. centers in Hamburg and other cities will also be completed and put into use one after another. In terms of service network, NIO Inc. has established a network of authorized service centers in five major European cities, namely Norway, Germany, the Netherlands, Denmark and Sweden, and the European version of NIO App was launched in August. In terms of energy replenishment system construction, NIO Inc. still adheres to the power exchange route in the European market, while external charging piles build a perfect power-up system. NIO Inc. has been connected to 380,000 charging posts and can be accessed directly using NIO Inc. NFC card. The Zusmarshausen exchange station between Munich and Stuttgart has been put into operation, and the one in Berlin is nearing completion. NIO Inc. plans to build 20 exchange power stations in Europe by the end of 2022 and 120 by the end of 2023. Wei Lai plans to build 1000 exchange power stations outside China by 2025, most of which will be located in Europe.
NIO Inc. uses vehicle sales (Norway) + subscription model (Germany + Netherlands + Denmark + Sweden) to open up the European market, flexible business model innovation to promote brand penetration in overseas markets, less financial pressure.
From the business model point of view, the subscription model tests the power exchange, service and other operational capabilities. Under this model, NIO Inc. can gradually improve the European market supporting system, and at the same time carry out brand promotion to provide the basis for the vehicle sales model. From the financial point of view, the revenue recognition cycle of the subscription model is longer, and the core focus is on the full rental rate and turnover level of the model. The company said that the gross profit margin of the subscription model is expected to be higher than that of the vehicle sales model. At the same time, it will use third-party financial companies to support vehicle subscriptions in the European market, which does not take up more from cash flow.
Profit forecast and investment rating: we maintain the company's performance forecast for 2022-2024, with revenue of 572.55, 89639, and 144.20 billion yuan, respectively, with a year-on-year growth rate of 58.44%, 56.56% and 60.88%. The net profit belonging to common shareholders is-73.39, 53.14, and 2.418 billion yuan. Corresponding to 2022-2024 PS valuation is 3-2-1 times, maintaining the "buy" rating.
Risk tips: unstable supply chains such as chips / batteries, tighter software OTA upgrade policies, etc.