NIO reported its third-quarter earnings on Wednesday morning, Beijing Time, and held an analyst conference call afterward to address the most important concerns of investors.
Here's a summary from CnEVPost, and there's also a live text of our transcript of the call at the end of the article.
Vehicle Deliveries
Current NIO deliveries are primarily affected by supply chain volatility and are expected to reach 23,500 to 25,500 units in the fourth quarter, said William Li, founder, chairman and CEO of NIO.
NIO's new orders continue to grow, with a record high of new orders in October, he said.
Chip supply is now better than the worst of the third quarter, but still faces challenges. The good thing is that NIO "has adapted to the situation – and always finds some solutions when possible," Li said.
Compared to the automotive industry as a whole, NIO has a relatively small share of sales, so it faces fewer difficulties compared to established car companies, he said.
Many of NIO's domain controllers are developed in-house, so it has some advantages in finding alternative chips.
Power battery giant CATL is trying to ensure the supply of batteries to NIO, but this is still the ceiling of NIO's delivery volume.
The JAC NIO plant has a few more upgrades to follow, but they won't have as big an impact as they did in October. New NIO models will be built in the new plant, and there will be a capacity creep, but it won't have an impact on the production of existing models, Li said.
ET7 and new models
NIO plans to have the ET7 available in showrooms around the Chinese New Year, which comes on February 1, according to Li.
The release of the ET7's assisted driving capabilities will be a long-term process, and NIO will consider a number of factors, including regulations, safety and reliability, and will not deliberately make demonstrations of autonomous driving.
NIO's 150 kWh battery is moving forward on schedule, with availability scheduled for the fourth quarter of next year, and is still on track.
Development of NIO's NAD hardware and software systems is well underway, and in addition to the ET7, development of two other new models based on the NT2.0 platform is on schedule, with deliveries to customers expected to begin in the second half of next year, Li said.
With the growth in scale, NIO's long-term target for the margin of vehicles based on NT2 models is 25 percent. NIO will reach that goal if it reaches 300,000 units of annual production capacity.
NIO's current models will be upgraded to the NT2 platform, but it will manage the pace carefully. The development work for the upgrade is already underway.
Many of NIO's new models are being developed in parallel, and the costs will be reflected in the financial statements over time.
NIO will offer some hardware upgrades to existing models next year when they become available. The company has considered the possibility of upgrades in the design of its products.
New plant and capacity growth
In addition to the upgrade of the JAC NIO plant, the construction of NIO's second plant in NeoPark is proceeding on schedule.
Construction of the plant started on April 29 and the main structure was topped out on August 26. Equipment installation will start at the end of November and the plant will be officially put into operation in the third quarter of next year.
With the completion of NIO's second plant, the two plants can reach a maximum annual capacity of 600,000 units with double shifts, which can meet the needs in the short term.
About Norway and European expansion
NIO's work in Norway has met expectations, with a quarter of the test drive customers placing orders, much more efficiently than in China.
NIO ES8 orders in Norway exceeded expectations, with 92 percent of consumers choosing the battery rental service BaaS, Li said.
NIO hopes to establish an after-sales service system in Norway before aggressively pushing sales.
The company's low deliveries in Norway in September and October were not due to a lack of orders, but rather a controlled pace, and NIO's deliveries in Norway will increase significantly in November.
NIO will enter at least five additional European countries next year, all offering NT2-based products. The ES8, based on the first-generation platform, will only be available in Norway.
Regulatory credits and subsidy withdrawal
Most of NIO's sales of regulatory credits materialized in the third quarter, earlier than last year.
Li said NEV penetration has risen quickly this year, as has the price of regulatory credits, and expects that next year the price of regulatory credits may be lower than it is now.
In response to a question about China's subsidy rollback for NEVs, Li said the average selling price of NIO vehicles is high and the expected subsidy rollback won't have much of an impact on it.
The following is the text of CnEVPost's live report of the conference call:
NIO's new orders continue to grow, with a record high of new orders in October, said William Li, founder, chairman, and CEO of NIO.
Current NIO deliveries are mainly affected by supply fluctuations, and total deliveries are expected to reach 23,500 to 25,500 units in the fourth quarter of 2021.
Development of NIO's NAD hardware and software systems is well underway, and in addition to the ET7, development of two other new models based on the NT2.0 platform is on schedule for delivery to customers starting in the second half of next year, Li said.
In addition to the upgrade of the JAC NIO plant, NIO's second plant in NeoPark will start installing equipment at the end of November and will be officially put into operation in the third quarter of next year, said Li.
NIO ES8 orders in Norway exceeded expectations, with 92 percent of consumers opting for the company's battery rental service BaaS, he added.
The JAC NIO plant will have small amount of renovations to follow, but they won't have as big an impact as they did in October. New NIO models will be built in the new plant and there will be a capacity creep, but it won't have an impact on the production of existing models, Li said.
Most of the sales of regulatory credits occurred in the third quarter, earlier than last year.
With the growth in scale, NIO's long-term target for vehicle margin based on the NT2 platform is 25 percent.
NIO plans to have the ET7 available in showrooms around Chinese New Year, which arrives on February 1, Li said.
The current chip supply is better than the worst third quarter, but still faces challenges. Again, the good thing is that NIO has adapted to the situation.
Compared to the whole automotive industry, NIO's sales account for a relatively small percentage, so the difficulties it faces are also relatively smaller than those of established car companies.
Many domain controllers are developed by NIO itself, so it has some advantages in finding alternative chips.
CATL is trying its best to ensure the supply of batteries to NIO, but it is still the ceiling of NIO's delivery volume.
The average selling price of NIO vehicles is high, and the expected subsidy withdrawal will not have much impact on it.
The release of ET7's assisted driving capability will be a long-term process, and NIO will consider a number of factors including regulations, safety, and reliability, and will not deliberately go for autonomous driving demonstrations.
NIO's 150 kWh battery is advancing on schedule, with plans to deliver in the fourth quarter of next year, and is still on track.
If NIO reaches an annual capacity of 300,000 vehicles, it will be able to achieve a 25% vehicle gross margin.
NIO's current models will be upgraded to the NT2 platform, but NIO will manage the pace carefully. R&D work for the upgrade is already underway.
NEV penetration has risen rapidly this year, as has the price of regulatory credits, and next year the price of regulatory credits may be lower than it is now.
NIO's work in Norway has met expectations, with a quarter of the test drive users placing orders, much more efficiently than in China.
NIO hopes to establish an after-sales service system in Norway before aggressively pushing sales. The company did not deliver much in Norway in September and October, not because there were not enough orders, but because it was controlling the pace. NIO's deliveries in Norway will increase significantly in November.
NIO will enter at least five additional European countries next year, all offering NT2-based products. The ES8, based on the first-generation platform, will only be offered in Norway.
Many of NIO's new models are being developed in parallel, and the costs will be reflected in the financial statements over time.
With the completion of NIO's second plant, the two plants can reach a maximum annual capacity of 600,000 units with double shifts.
NIO will offer some hardware upgrades to existing models next year when the time comes. The company has considered the possibility of upgrades in the design of its products.
This article was first published by Phate Zhang on CnEVPost, a website focusing on new energy vehicle news from China.