Smart and Sustainable Electric Mobility
CATL's revenue from abroad in the first half of the year amounted to RMB 67.17 billion, contributing 35.49 percent of its total revenue.
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CATL's revenue from abroad in the first half of the year amounted to RMB 67.17 billion, contributing 35.49 percent of its total revenue.
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China contributed 22.99 percent of Tesla's revenue in the second quarter, up from 20.97 percent in the first quarter and up from 22.36 percent in the same period last year.
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Gotion's earnings preview implies it will post a net profit of RMB 7,439 to RMB 124.4 million in the second quarter, a year-on-year increase of 129.46 percent to 283.68 percent.
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BYD's earnings preview implies that its net profit for the second quarter will be RMB 6.37 billion to RMB 7.57 billion, up 128.56 percent to 171.62 percent year-on-year.
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NIO reported weak first-quarter underlying results but showed surprising Opex discipline to start the year and also presented a better-than-feared outlook for second-quarter sales, Edison Yu's team said.
NIO (NYSE: NIO) today reported weaker-than-expected first-quarter earnings, but emphasized on the analyst call that more prudent cash management will follow, as well as expressing confidence in delivering 20,000 vehicles per month in the coming months.
As usual, Deutsche Bank analyst Edison Yu's team provided their first impressions of the earnings report.
Here's what the team had to say.
1Q23 Earnings First Look
NIO reported soft underlying 1Q results, largely as previewed but showed surprising opex discipline to start the year, and also initiated a better than feared 2Q volume outlook.
Deliveries for the first quarter were already reported at 31,041 units, leading to revenue of 10.7bn RMB, vs. our/consensus 10.9bn/11.7bn forecasts, hurt by lower ASP.
Gross margin of 1.5% was below our 2.5% forecast (consensus >7%), driven by downside in vehicle margin (5.1% vs. our 6.5%), partially offset by better "other" margin (-21.0% or +870bps QoQ).
Opex of 5.5bn was materially below our expectations, both on R&D and SG&A.
All together, adjusted EPS of (2.51) came in better than our/consensus estimates.
Management provided a stronger than expected outlook for 2Q23, calling for 23,000-25,000 deliveries. This compares to our 23,000 unit forecast and suggests June will be up materially QoQ (~11,000 at mid-point vs. just 6,155 in May) as the new ES6 ramps up quickly.
We suspect there were concerns June may see some supply chain constraints that don't appear to be materializing. This translates into 8.7-9.4bn RMB in revenue, vs. our 9.0bn forecast.
Looking beyond, management is targeting >20,000 deliveries per month in 2H including 10,000 of new ES6 in July. This will likely be difficult to achieve (sustain at least), in our view, given underperformance of the sedans (ET5, ET7) and we don't think management will get credit for this.
On vehicle margin, 2Q will still be under pressure with 3Q recovering back to double digits and 4Q >15%.
R&D is expected to still trend around 3-3.5bn (non-GAAP basis) per quarter and SG&A will step up sequentially in 2Q although the CEO's tone suggested certain incremental spend could potentially get pushed out at least until the performance of core NIO stabilizes.
Lastly, NIO is officially pushing out its operating profit breakeven target by a year (or less), which is long overdue based on our latest modeling.
NIO Q1 earnings miss expectations, gross margin drops to 1.5%
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NIO is holding a first-quarter earnings analyst call and this article will provide key highlights from the call, with the latest being at the top.
NIO is confident that the gross margin will return to double digits in the third quarter and to 15 percent in the fourth quarter.
NIO ES6's locked-in orders have met expectations and the test drive conversion rate is the highest of any model.
NIO is targeting 10,000 units of the new ES6 for both production and delivery in July.
The other models besides ES6 still have a chance to achieve the target of 20,000 units delivered per month, except that the ET5 faces a greater challenge after the withdrawal of national subsidies.
NIO will launch ET5 Touring on June 15.
The sub-brand ALPS is still on track and will start delivering products in the second half of next year. NIO will be managed more carefully in terms of pace and efficiency.
The development of models for NIO's second-generation platform has been completed, and now we need to think about how the marketing team can better sell the cars.
NIO's goal is to obtain a fair share of the current eight vehicles in their segments.
NIO Q1 earnings miss expectations, gross margin drops to 1.5%
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NIO and XPeng both saw net losses in the first quarter, while Li Auto posted net income.
With the release of NIO's (NYSE: NIO) financial results, the trio of US-listed Chinese electric vehicles all reported first-quarter earnings.
With this article, we try to give readers a quick look at how the financials of NIO, XPeng (NYSE: XPEV), and Li Auto (NASDAQ: LI) compare in a few charts.
It should be noted that NIO and XPeng currently offer only battery electric vehicles (BEVs), a fast-growing but small market in China that currently accounts for about 30 percent of all passenger car sales.
Li Auto's full range of vehicles are extended-range electric vehicles (EREVs), essentially plug-in hybrids, targeting a much larger market.
In terms of quarterly deliveries, all three companies are essentially continuing to grow in 2020-2021.
In the first quarter of 2022 so far, NIO and XPeng have had a weak delivery performance, while Li Auto's has continued to grow, especially in the last two quarters.
In the first quarter of the year, Li Auto delivered 52,584 vehicles, while NIO and XPeng delivered 31,041 and 18,230, respectively.
Since all three companies derive their revenue primarily from car sales, the change in deliveries essentially corresponds to the change in revenue.
In the first quarter, Li Auto's revenue was RMB 18.8 billion, NIO was RMB 10.7 billion and XPeng was RMB 4.03 billion.
Their gross margins have been relatively stable over the past two years, with NIO and XPeng declining significantly over the past two quarters due to promotional activities.
Li Auto's gross margin has rebounded over the past two quarters after seeing a decline in the third quarter of last year.
NIO and XPeng has been continuing to face net losses while Li Auto has been profitable for multiple quarters.
In the first quarter, NIO had a net loss of RMB 4.74 billion, XPeng had a net loss of RMB 2.34 billion, and Li Auto achieved net income of RMB 934 million.
NIO Q1 earnings miss expectations, gross margin drops to 1.5%
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NIO reported revenue of RMB 10.68 billion in the first quarter, below market expectations of RMB 12.275 billion, compared to RMB 9.911 billion in the same period last year.
Previous data showed that NIO delivered 31,041 vehicles in the first quarter, slightly above the lower end of the guidance range of 31,000 to 33,000 vehicles.
NIO's previous revenue guidance for the first quarter was between RMB 10.93 billion and RMB 11.54 billion.
Below is its press release, as the CnEVPost article is being updated.
otal revenues in the first quarter of 2023 were RMB10,676.5 million (US$1,554.6 million), representing an increase of 7.7% from the first quarter of 2022 and a decrease of 33.5% from the fourth quarter of 2022.
Vehicle sales in the first quarter of 2023 were RMB9,224.5 million (US$1,343.2 million), representing a decrease of 0.2% from the first quarter of 2022 and a decrease of 37.5% from the fourth quarter of 2022. The decrease in vehicle sales over the first quarter of 2022 was mainly due to lower average selling price as a result of higher proportion of ET5 and 75 kWh standard-range battery pack deliveries, partially offset by an increase in delivery volume.
The decrease in vehicle sales over the fourth quarter of 2022 was mainly due to a decrease in delivery volume, and lower average selling price as a result of higher proportion of ET5 and 75 kWh standard-range battery pack deliveries.
Other sales in the first quarter of 2023 were RMB1,452.0 million (US$211.4 million), representing an increase of 117.8% from the first quarter of 2022 and an increase of 11.3% from the fourth quarter of 2022.
The increase in other sales over the first quarter of 2022 was mainly due to the increase in sales of accessories, provision of repair and maintenance services, provision of auto financing services, sales of used cars and provision of power solutions, as a result of continued growth of our users.
The increase in other sales over the fourth quarter of 2022 was mainly due to the increase in provision of auto financing services, sales of accessories, provision of repair and maintenance services, provision of power solutions and sales of used cars, as a result of continued growth of our users, and partially offset by a decrease in revenue from rendering of research and development services.
Cost of Sales and Gross Margin
Cost of sales in the first quarter of 2023 was RMB10,514.2 million (US$1,531.0 million), representing an increase of 24.2% from the first quarter of 2022 and a decrease of 31.9% from the fourth quarter of 2022.
The increase in cost of sales over the first quarter of 2022 was mainly driven by the increase in (i) delivery volume, and (ii) cost from the sales of accessories, provision of repair and maintenance services, sales of used cars and provision of power solutions, associated with increased vehicle sales and expanded power and service network. The decrease in cost of sales over the fourth quarter of 2022 was mainly attributed to (i) the decrease in delivery volume, (ii) the decrease in average material cost per vehicle as a result of higher proportion of ET5 and 75 kWh standard-range battery pack deliveries, and (iii) the inventory provisions, accelerated depreciation on production facilities, and losses on purchase commitments related to the previous generation of ES8, ES6 and EC6 in the fourth quarter of 2022.
Gross profit in the first quarter of 2023 was RMB162.3 million (US$23.6 million), representing a decrease of 88.8% from the first quarter of 2022 and a decrease of 73.9% from the fourth quarter of 2022.
Gross margin in the first quarter of 2023 was 1.5%, compared with 14.6% in the first quarter of 2022 and 3.9% in the fourth quarter of 2022. The decrease of gross margin from the first quarter of 2022 and the fourth quarter of 2022 was mainly attributed to the decreased vehicle margin.
Vehicle margin in the first quarter of 2023 was 5.1%, compared with 18.1% in the first quarter of 2022 and 6.8% in the fourth quarter of 2022. The decrease in vehicle margin from the first quarter of 2022 was mainly attributed to changes in product mix and increased battery cost per unit.
The decrease in vehicle margin from the fourth quarter of 2022 was mainly due to (i) changes in product mix, and (ii) increased promotion discount for the previous generation of ES8, ES6 and EC6, which were partially offset by (iii) the inventory provisions, accelerated depreciation on production facilities, and losses on purchase commitments for the previous generation of ES8, ES6 and EC6 in the fourth quarter of 2022.
Operating Expenses
Research and development expenses in the first quarter of 2023 were RMB3,075.6 million (US$447.8 million), representing an increase of 74.6% from the first quarter of 2022 and a decrease of 22.7% from the fourth quarter of 2022.
Excluding share-based compensation expenses, research and development expenses (non-GAAP) were RMB2,711.6 million (US$394.8 million), representing an increase of 79.1% from the first quarter of 2022 and a decrease of 23.7% from the fourth quarter of 2022. The increase in research and development expenses over the first quarter of 2022 was mainly attributed to the increased personnel costs in research and development functions and the increased share-based compensation expenses recognized in the first quarter of 2023.
The decrease in research and development expenses over the fourth quarter of 2022 reflected fluctuations due to different design and development stages of new products and technologies.
Selling, general and administrative expenses in the first quarter of 2023 were RMB2,445.9 million (US$356.2 million), representing an increase of 21.4% from the first quarter of 2022 and a decrease of 30.7% from the fourth quarter of 2022.
Excluding share-based compensation expenses, selling, general and administrative expenses (non-GAAP) were RMB2,239.3 million (US$326.1 million), representing an increase of 24.3% from the first quarter of 2022 and a decrease of 31.2% from the fourth quarter of 2022.
The increase in selling, general and administrative expenses over the first quarter of 2022 was mainly attributed to (i) the increase in personnel costs related to sales and general corporate functions, and (ii) the increase in expenses related to the Company's sales and service network expansion. The decrease in selling, general and administrative expenses over the fourth quarter of 2022 was mainly due to the decrease in sales and marketing activities and professional services.
Loss from Operations
Loss from operations in the first quarter of 2023 was RMB5,111.8 million (US$744.3 million), representing an increase of 133.6% from the first quarter of 2022 and a decrease of 24.1% from the fourth quarter of 2022. Excluding share-based compensation expenses, adjusted loss from operations (non-GAAP) was RMB4,522.4 million (US$658.5 million) in the first quarter of 2023, representing an increase of 163.6% from the first quarter of 2022 and a decrease of 24.8% from the fourth quarter of 2022.
Net Loss and Earnings Per Share/ADS
Net loss in the first quarter of 2023 was RMB4,739.5 million (US690.1 million), representing an increase of 165.9% from the first quarter of 2022 and a decrease of 18.1% from the fourth quarter of 2022. Excluding share-based compensation expenses, adjusted net loss (non-GAAP) was RMB4,150.1 million (US604.3 million) in the first quarter of 2023, representing an increase of 216.9% from the first quarter of 2022 and a decrease of 18.1% from the fourth quarter of 2022.
Net loss attributable to NIO's ordinary shareholders in the first quarter of 2023 was RMB 4,803.6 million (US$699.5 million), representing an increase of 163.2% from the first quarter of 2022 and a decrease of 17.8% from the fourth quarter of 2022. Excluding share-based compensation expenses and accretion on redeemable non-controlling interests to redemption value, adjusted net loss attributable to NIO's ordinary shareholders (non-GAAP) was RMB 4,141.8 million (US$603.1 million) in the first quarter of 2023.
Basic and diluted net loss per ordinary share/ADS in the first quarter of 2023 were both RMB2.91 (US$0.42), compared with RMB1.12 in the first quarter of 2022 and RMB3.55 in the fourth quarter of 2022. Excluding share-based compensation expenses and accretion on redeemable non-controlling interests to redemption value, adjusted basic and diluted net loss per share/ADS (non-GAAP) were both RMB2.51 (US$0.36), compared with RMB0.79 in the first quarter of 2022 and RMB3.07 in the fourth quarter of 2022.
Balance Sheet
Balance of cash and cash equivalents, restricted cash, short-term investment and long-term time deposits was RMB37.8 billion (US$5.5 billion) as of March 31, 2023.
Business Outlook
For the second quarter of 2023, the Company expects:
Deliveries of vehicles to be between 23,000 and 25,000 vehicles, representing a decrease of approximately 8.2% to 0.2% from the same quarter of 2022.
Total revenues to be between RMB8,742 million (US$1,273 million) and RMB9,370 million (US$1,364 million), representing a decrease of approximately 15.1% to 9.0% from the same quarter of 2022.
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Deutsche Bank expects NIO to report soft results for the first quarter, with downside risk to margins, though some relief in on the way.
NIO (NYSE: NIO) will report first-quarter unaudited financial results on Friday, June 9, before the US markets open. As usual, Deutsche Bank analyst Edison Yu's team provided their preview.
"NIO is suffering from weaker-than-expected demand and is facing its greatest adversity since nearly going bankrupt in 2020," the team said in a research note sent to investors today titled "Struggling along for another quarter."
The team expects NIO to report soft results in the first quarter, with downside risk to margins, and a very weak outlook for sales, and margins in the second quarter.
Previous data showed that NIO delivered 31,041 vehicles in the first quarter, slightly above the lower end of the guidance range of 31,000 to 33,000 vehicles.
NIO's previous revenue guidance for the first quarter was between RMB 10.93 billion and RMB 11.54 billion, implying year-on-year growth of about 10.2 percent to 16.5 percent.
Yu's team expects NIO to report revenue of RMB 10.9 billion in the first quarter, with a gross margin of 2.5 percent and adjusted earnings per share of RMB -3.07.
This compares to the current analyst consensus estimates of RMB 11.7 billion, 7.4 percent, and RMB -2.66, respectively, in a Bloomberg survey.
Looking ahead, Yu's team expects NIO to deliver 21,000-23,000 units in the second quarter.
NIO delivered only 12,813 units in April and May combined due to very low demand for the ET7 and ES7, the team noted.
The EV maker delivered 6,155 vehicles in May, down 7.55 percent from 6,658 in April, according to data released on June 1.
While production and supply chain issues appear to be resolved, underlying demand for NIO's premium BEVs has been disappointing as customers opt for gasoline models from German luxury carmakers BMW, Mercedes-Benz, Audi and Li Auto EREVs, Yu's team said.
The team attributed NIO's recent weak sales to 3 main factors. The following is from their research note:
1. NIO's pricing is the highest amongst the start-ups and premium BEV demand has been generally weak across the board.
2. The premium segment appears to be electrifying more slowly which may be counter-intuitive to those outside China. Based on our analysis of the premium SUV market (>300k RMB), the BEV mix is only 12% YTD, compared with PHEV (includes EREV) at 18%, leaving 70% for ICE.
This compares with the overall market that is 21% BEV and 10% PHEV, showing customer preferences are quite different depending on the sub-segment.
Our read is the EREV value position is resonating with a much broader audience than anticipated which Li Auto has done a very effective job at maximizing.
3. We believe NIO's brand appeal has hit a wall of sorts as it is struggling to get momentum outside of Shanghai (and surrounding provinces) and also beyond finance/tech social circles.
To illustrate this, we look at the performance of NIO's best-selling ET5. Nearly 40% of sales mix comes from this region and ET5 sells quite poorly in the south despite in theory having the broadest appeal amongst NIO's offerings.
Moreover, based on our channel checks, affluent older customers simply are not buying into the brand (yet) and still prefer traditional BBA cars.
Management will need to figure out ways to augment the appeal of its unique services such as battery swapping. For existing customers, the usage is actually quite high, having set records during recent holiday (69k swaps in one day or ~20% of car parc).
NIO officially launched the new ES6 -- the best-selling NIO SUV in history -- in China on May 24, and deliveries began the same night.
In addition to the new ES6, NIO will also begin deliveries of the new ES8 and the ET5 Touring, a derivative of the ET5 sedan, this month.
NIO's deliveries in June will get a boost from a full month of new ES6 deliveries and partial contributions from the ET5 Touring, Yu's team said.
The new ES6 starts at RMB 368,000, higher than expected, as many potential buyers are comparing it to the Li Auto Li L7, which starts at RMB 319,800, the team said.
(Image credit: CnEVPost)
For the ET5 Touring, the team expects pricing to be at RMB 335,000 - RMB 345,000, slightly higher than the regular ET5.
NIO management aims to capitalize on the success of the Zeekr 001, which proves there is a sizable local market for luxury sport EV wagons, the team said.
Yu's team expects NIO to see only a minimal improvement on vehicle margins in the second quarter.
"While lower battery input costs should help by at least 1-2% sequentially along with phasing out of aggressive promotional activity on first-gen 866 models, this will be partially offset by lack of overhead absorption/higher D&A as overall volume in 2Q will be down materially compared with 1Q," the team wrote .
As sales improve in the second half of the year, auto margins should return to double digits, the team said.
On the operating cost side, with sales under so much pressure, Yu's team suspects NIO management may be forced to show some level of restraint.
"We are skeptical NIO can achieve 'core' breakeven in 4Q23 and overall breakeven in 2024," the team wrote.
Also, cash burn will intensify due to declining deliveries, similar to what XPeng is experiencing, the team said, adding that they suspect NIO management will roll back its previous RMB 10 billion capex outlook.
Notably, the team remains bullish on the company's prospects, despite many investors have lost patience after multiple sales and margin disappointments.
"We think the stock is already embedding in a very negative path forward and we reiterate NIO's longer-term strategy of having multiple brands, holistic charging infrastructure, and an aspirational ecosystem can still ultimately win out once the dust settles on the EV wars," The team wrote.
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