China-based EV company Nio finished 2022 with growing revenue and more loss from operations. It said the increased loss was largely because of the lower order forecast for existing models, as new model deliveries will start in the second quarter. The carmaker is confident that the improving vehicle margin and decreased material prices can help the company to achieve positive operating income in the fourth quarter of this year.
Nio reported its financial results for 4Q 2022 and 2022 on March 1.
Highlights of Nio 2022 financial results | ||
Item | Result (CNY million) | YoY change |
Total revenues | 49,268.6 | 36.3% |
Vehicle sales | 45,506.6 | 37.2% |
Gross margin(%) | 10.4 | -840bp |
Vehicle margin(%) | 13.7 | -640bp |
Operating income | -15,640.7 | 247.9% |
Net income | -14,437.1 | 259.4% |
Source: Nio, compiled by DIGITIMES Asia, March 2023
The carmaker reported a vehicle margin of 6.8% in the fourth quarter of last year, significantly lower than 16.4% in the previous quarter and 20.9% in the fourth quarter of 2021.
At a conference call following the release of financial results, Stanley Qu, Nio's senior vice president of finance, said the company lowered its order forecast for existing models since it will begin delivering new models in the second quarter of this year. The modification resulted in increased inventory provisions, accelerated depreciation on production facilities, and losses on purchase commitments for the current models.
He said the vehicle margin would have reached 13.5% when the above factors were excluded.
According to Nio, it expects vehicle delivery to be between 31,000 and 33,000 cars in the first quarter of 2023, an increase between 20.3% and 28.1% from 2022. An analyst asked if the supply bottleneck affected the guidance like last year.
William Li, Nio's founder and CEO, said as China lifted COVID restrictions, the component shortage is no longer the issue. While the company will need some time to ramp up production in the second quarter of this year as new model deliveries start, it will experience less pressure in supply.
The CEO also said Nio will have new battery suppliers in 2023. For example, it plans to introduce a battery pack that it co-develops with CALB, a China-based battery company, to the market this month.
As for the partnership with CATL, Nio's major supplier, Li said Nio will maintain the long-term strategic collaboration with the battery maker. The duo are negotiating a new pricing scheme but have not signed any new agreement.
Battery price has long been a burden for EV makers. On Wednesday, Li said battery companies have realized they must handle the battery price volatility with carmakers.
Although Nio saw its vehicle and gross margin drop in 2022, Li said he is confident the company can reach 18% to 20% in gross margin in the fourth quarter of 2023.
He explained that the margin growth will benefit from new vehicle deliveries and raw material prices decrease, including those of chips. He added that the lithium production will be sufficient this year and the demand is expected to be more moderate than last year. The price of lithium carbonate will likely decline to CNY200,000 (US$29,004.8) or lower per tonne in the fourth quarter.
Li said Nio targets a gross margin between 18% and 20% and is confident in reaching the goal. If the raw material prices decrease in 2023 as the company expected, Nio will see positive net income in the fourth quarter as planned, Li said. However, the positive results will not include new strategic business investments in new brands, for example, because they are outside the original plan.
