On December 5th, NIO's third quarter financial report was released, which was very impressive, with revenue, delivery volume, and other historical highs. The gross profit margin of the whole vehicle led the Chinese pure electric vehicle brand, indicating that the business situation of this new car making force leader has significantly improved.
In fact, since November, NIO has had a continuous stream of good news: on November 21st and 29th, NIO successively reached cooperation with Changan Automobile and Geely Holding in battery swapping business; On the eve of the release of the third quarter financial report, NIO appeared on the "Vehicle Production Enterprise Credit Information Management System" website of the Ministry of Industry and Information Technology, and is expected to obtain independent production qualifications. At this conference call, although there was no clear response to the issue of car manufacturing qualifications, Li Bin, founder, chairman, and CEO of NIO, indirectly stated, "From a manufacturing perspective, if we were to manufacture entirely independently, manufacturing costs would decrease by 10%."
Based on the third quarter report, Li Bin stated that he will continue to focus on advancing core technologies, developing key products, and enhancing sales and service capabilities. Looking ahead to the development in the fourth quarter, NIO expects a delivery volume of 47000 to 49000 vehicles, a year-on-year increase of 17.3% to 22.3%; The operating revenue ranged from 16.079 billion yuan to 16.701 billion yuan, a year-on-year increase of 0.1% to 4.0%.
In 2023, the price war in the automotive market has become increasingly fierce, with more than a dozen car brands competing to introduce preferential policies, and some models even reducing prices by more than 30%. "Price for quantity" has become the choice of most enterprises. However, in the face of "fancy promotions" from its peers, NIO has always insisted on "not engaging in price wars", focusing on promoting technological innovation and enhancing sales and service capabilities. Thanks to a stable pricing system, NIO can increase the gross profit margin of the entire vehicle after achieving economies of scale in production, leaving enough space for the long-term development of the enterprise. More "ammunition" is invested in technological research and development, rather than falling into a "price reduction vortex", truly achieving "building high walls, accumulating abundant grain, and slowly becoming the king".
Expanding hematopoietic function: setting a record for the highest delivery volume in a single season
The release of NIO's third quarter report undoubtedly injects a shot in the arm for NIO users and investors.
Data shows that NIO's revenue and delivery volume in the third quarter both reached historic highs in a single quarter: revenue of 19.07 billion yuan, a month on month increase of 117.4% and a year-on-year increase of 46.6%; The delivery volume reached 55432 units, a month on month increase of 135.7% and a year-on-year increase of 75.4%.
It is worth mentioning that the gross profit margin of the whole vehicle increased significantly month on month, returning to double digits and reaching 11%, which is a relatively high level among Chinese pure electric vehicle companies. In the subsequent conference call, the management also stated that NIO is confident in achieving a gross profit margin of 15% in the fourth quarter.
Undoubtedly, with a significant improvement in the overall business situation in the third quarter, NIO is entering a new stage of "self generation and self circulation".
Another company that is also developing well is its cash reserves. As of September 30, 2023, NIO's cash and cash equivalents, restricted cash, short-term investments, and long-term fixed deposits amounted to RMB 45.2 billion, a significant increase of RMB 13.7 billion compared to the previous quarter.
The growth of cash reserves is mainly due to multiple financing projects in the third quarter. In July this year, Abu Dhabi investment firm CYVN completed a strategic investment of approximately $1.1 billion through targeted issuance of new shares and transfer of old shares; In September and October of this year, NIO successfully issued a total of $1.15 billion in convertible senior bonds.
The fact that NIO can maintain such a high frequency and amount of financing in 2023 demonstrates its own strength and the optimistic development prospects of investors.
High end polishing under "long-term ism"
In the current fiercely competitive "price war" among car companies, how can NIO, which refuses to "exchange price for quantity," build a "development moat" in the fierce competition? The answer given by Li Bin during the conference call is to continue focusing on advancing core technologies, developing key products, and enhancing sales and service capabilities.
The person in charge of NIO told Blue Whale reporters that NIO's current "NIO Technology Full Stack" has covered various sectors of the intelligent electric vehicle manufacturing business, with multiple technological achievements leading the industry. For example, the first fully stack self-developed intelligent chassis domain controller (ICC) in China, the first vehicle wide operating system Tianshu SkyOS in China, and the first self-developed and mass-produced LiDAR main control chip "Yang Jian" in the industry, And NIO Link, NIO Panoramic Interconnection Technology, etc.
The latest financial report data shows that NIO's R&D investment in the third quarter reached 3.04 billion yuan, marking the company's fourth consecutive quarter of exceeding 3 billion yuan. In fact, since 2016, NIO has been continuously investing in the research and development field, with a total amount of nearly 40 billion yuan, making it the enterprise with the highest R&D investment among new forces.
The significant R&D investment has brought remarkable results. As of the end of October 2023, NIO has a total of approximately 7600 patent applications and authorizations worldwide, far exceeding other emerging brands.
At the same time, NIO products are also undergoing iterative updates. In the third quarter of 2023, with the launch and delivery of the all-new EC6, NIO officially completed intergenerational product switching, fully entering the product strong cycle, and becoming the world's first intelligent electric vehicle brand to complete vertical technology platform switching.
Excellent core technology has always been an important weapon for NIO to firmly sit on the fishing ground in the price war among automotive companies. At present, the second generation technology platform of NIO has formed the strongest product matrix for 8 models, which can fully meet the diversified needs of users in the price range of 300000 to 600000 yuan, covering the main sales market with 80% of BBA sales. It is understood that 48% of NIO's new car buyers come from BBA, and some second-generation technology platform models even reach as high as 56%.
Moreover, from January to October this year, NIO's sales growth rate reached 40.2%, far exceeding BBA and other second tier luxury brands; In terms of market share, NIO is particularly strong and leading, with a market share of 60.6% in the high-end pure electric market with an average transaction price of over 300000 yuan.
Multi dimensional efforts and continuous upward development potential
According to data from the China Association of Automobile Manufacturers, the penetration rate of China's new energy vehicle market reached 37.7% in October 2023, with a pure electric penetration rate of 24.3%, an increase of 2.8 percentage points from last year. This means that new energy vehicles are integrating into people's daily lives and becoming the trend of development.
In line with the trend of market development, NIO has established a business closed loop throughout the entire industry chain, from technology to products, and then to energy supplement service infrastructure. In terms of technology, the "NIO Technology Full Stack" covers the panoramic view of intelligent electric vehicle business, which can meet NIO's research and operation needs in three dimensions and nine elements: intelligence, electric vehicle, automotive, product, service, community, multi brand, multi platform, and multi region.
It is worth mentioning NIO's achievements in intelligent manufacturing. NIO's second advanced manufacturing base has broken through the contradiction between traditional large-scale production and personalized customization, introducing multiple world leading fully automatic intelligent equipment and high flexibility production manufacturing processes into the production workshop. With nearly 3.6 million personalized configuration combinations, it only takes 14 days from user ordering to vehicle production.
The energy supplement problem that troubles countless users is also being gradually solved by NIO. As of December 5th, NIO has accumulated 2226 battery swapping stations, 3492 charging stations, 20479 charging stations globally, and connected over 1.46 million third-party charging stations. It is not an exaggeration to say that NIO is currently the car brand with the most battery swapping stations and charging stations in the Chinese market.
Based on the construction of massive charging and swapping stations, NIO has successfully established a high-speed swapping network in the "7 vertical, 4 horizontal, and 10 major city clusters" in China. It is understood that by 2025, the high-speed swapping network in the "9 vertical, 9 horizontal, and 19 major city clusters" will also be connected. Adhering to an open attitude, Li Bin also mentioned during the financial report conference call that NIO will open up its mass market brand battery packs and battery swapping stations to partners. Currently, the charging station business has basically reached a breakeven point, and some investors are interested in NIO Power's independent financing. NIO Power's independent financing will not be excluded in the future.
In terms of store layout, as of December 5th, NIO has accumulated 142 NIO centers, 326 NIO spaces, 314 NIO service centers, and 62 NIO delivery centers worldwide.
NIO in Li Bin's eyes, 2024 will be even better
After handing over an excellent transcript, where will NIO's future go? Li Bin said, "We have recently completed a comprehensive plan for the company's two-year operational plan to identify key goals, priorities, and action plans. At the same time, we have identified opportunities for organizational optimization, cost reduction, and efficiency improvement. We will continue to focus on advancing core technologies, developing key products, and enhancing sales and service capabilities, and are confident in NIO's long-term competitiveness in the smart electric vehicle market."
In terms of battery swapping business, NIO will also continue to explore new "cost reduction" paths. On November 21st and 29th, NIO successively reached cooperation on battery swapping business with Changan Automobile and Geely Holding, which means that NIO's battery swapping system has officially moved from private domain exclusive to public service field. "With the opening of the NIO Power battery swapping system, operating costs can be effectively amortized." Li Bin expressed high expectations for the battery swapping business during a conference call. It is not difficult to see that NIO's circuit replacement line is taking a path of "infrastructure first, policy breakthroughs, internal closed-loop, full scenario verification, and opening up to the outside world".
It is reported that by the end of 2023, NIO will also release a new flagship model on NIO Day. This year's annual event between NIO and its users will be held in Xi'an on December 23, 2023.
In addition to new car updates, the development direction of NIO's second brand Alps has also attracted public attention. It is understood that the first car of the second brand has recently completed the VB car (development verification trial production sample car) trial production. "We have great confidence in this car and there is still time for continuous optimization." Li Bin has high hopes for the first car of the second brand and stated that in terms of sales, NIO and Alpine stores do not share, and some service networks will be shared.
In Li Bin's expectation, the conversion of oil to electricity in the high-end market will accelerate in 2024, with infrastructure construction further promoting the conversion. "At present, we have over 700 battery swapping stations in Jiangsu, Zhejiang, and Shanghai, with BBA sales exceeding those in the same price range in three provinces and cities. This shows that infrastructure plays a significant role in promoting sales."
For the 2024 plan, Li Bin revealed that there will be minor changes to the second-generation technology platform products and no major changes. NIO, which has established a strong product matrix, will focus on steadily expanding its business development step by step while maintaining quality and supply chain stability. Next, NIO will begin to build a shared battery swapping network for the industry based on its mature and established battery swapping station network.
The competition in the field of intelligent electric vehicles is still ongoing, and the future is destined to be the main battlefield for innovators and long-term advocates. The price war in 2023 may continue, and the market will also test the adaptability of automotive brands from different dimensions. But in Li Bin's view, NIO will move forward at its own pace, and 2024 will be better than 2023.