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Objectively speaking, NIO's financial report data has improved, with significant rebounds in multiple data indicators, showing signs of improvement. However, compared to other new energy vehicle makers like Li Auto and Xpeng, NIO still lacks a hit product to turn the tide.

Written by Li Yue

Produced by Jieche Technology On September 5, NIO officially announced its second-quarter and mid-year financial results for 2024. The report showed that NIO achieved revenue of 27.355 billion yuan in the first half of 2024, an increase of 40.65% year-on-year, with revenue in the second quarter reaching 17.446 billion yuan, an increase of 98.9% year-on-year. Despite the revenue growth, NIO still incurred significant losses, which further expanded. In the first half of 2024, NIO reported a net loss of 10.384 billion yuan, an expansion of 4.95% year-on-year, with a net loss of 5.046 billion yuan in the second quarter, a narrowing of 16.7% year-on-year.

Objectively speaking, NIO's financial report data has improved, with significant rebounds in multiple data indicators, showing signs of improvement. However, compared to other new energy vehicle makers like Li Auto and Xpeng, NIO still lacks a hit product to turn the tide.

1

Among the "NIO-Xpeng-Li Auto" trio

NIO currently lacks a hit product the most

Currently, the cost of car manufacturing is increasingly high, with significant investments required for research and development and marketing of each vehicle model.

For automakers, the absence of a high-volume hit product can be extremely detrimental. Among the "NIO-Xpeng-Li Auto" trio, NIO arguably lacks a hit product the most.

Currently, NIO offers up to 9 vehicle models, with 8 models currently available for sale, categorized into the ET, ES, and EC product lines. The best-selling model is the NIO ES6, with only one month exceeding 10,000 units sold, and recent sales hovering around 7,000 to 8,000 units per month.

If we define a monthly sales volume of 10,000 units as a hot-selling model and 20,000 units as a hit product, then NIO currently lacks a truly hot-selling model. This limits its overall sales ceiling, consistently hovering around the 20,000-unit mark.

Turning to Xpeng, its current lineup includes the X9, G9, G6, P7i, P5, and the latest model, MONA M03.

In the past, Xpeng's P7 was an instant hit upon its launch, with monthly sales once approaching 10,000 units, but it failed to sustain this momentum. Subsequently, the lack of a hit product kept Xpeng's monthly sales around the 10,000 to 20,000 unit range. However, with the strong sales of the latest MONA M03 model (expected to exceed 20,000 units monthly), Xpeng holds high hopes of achieving a sales turnaround with this model.

Li Auto, on the other hand, has never lacked hit products. Its L6, L7, L8, and L9 models have all been hot-sellers, each achieving monthly sales of over 10,000 units. Most recently, the Li Auto L6 has emerged as the brand's sales leader, with consecutive monthly sales exceeding 20,000 units for the past three months, firmly establishing it as a hit product.

2

LeDao L60's positioning is neither here nor there

No obvious advantage

During the financial report conference, NIO Chairman and CEO William Li announced that the LeDao brand's first model, the L60, targeted at the mainstream family market, would officially launch on September 19 and begin deliveries at the end of September.

Li also revealed that orders for the LeDao L60 exceeded expectations after it rolled off the production line. The pre-sale price of the model is set at 219,900 yuan, with room for adjustment upon its official launch. The supply chain for the LeDao L60 is prepared for monthly deliveries of 10,000 units this year, with the hope of reaching 20,000 units monthly next year.

Li expressed that from a long-term perspective, with the launch of new products and updates to existing ones, NIO aims to achieve monthly sales of 30,000 to 40,000 units in China for the NIO brand and meet its operating target of a 25% gross margin.

Clearly, NIO has high hopes for the LeDao L60 to become a volume driver. In terms of product positioning, the LeDao L60 has a clear target in mind: the best-selling Model Y. As such, it strives to outperform the Model Y in various parameters. Moreover, its pricing is set to be 30,000 yuan cheaper than the Model Y.

While the LeDao L60 clearly aims to compete with the Model Y, it cannot be denied that Tesla's brand premium is undeniable. The Model Y currently leads in sales among single models in the Chinese automotive market and is the most competitive pure electric SUV.

Put simply, without Tesla's brand premium, the LeDao L60 may struggle to compete solely on price. The market is not short of similar competitors like the LeDao L60.

Competitors such as the ZEEKR C10, ZEEKR C11, Nezha L, and HAIXI 07EV, all positioned as medium-sized SUVs, are priced lower than the LeDao L60.

In the large SUV segment, models like the Xingji N01, eπ008, ZEEKR C16, IM Motor LS6, and JiYue 01 offer competitive advantages in size and space, with prices roughly on par with the LeDao L60.

It can only be said that the LeDao L60 has arrived somewhat late to the party, as the market competition has already intensified, and achieving monthly sales of over 10,000 units will undoubtedly be a challenge.

3

Slowing growth of pure electric vehicles

How long can NIO hold on?

Car manufacturing is a capital-intensive industry that requires continuous investments. However, if profits cannot be turned around, funds will eventually run out.

According to NIO's financial report, its cash reserves stand at 41.6 billion yuan. While this amount can certainly sustain operations for some time, the outlook remains uncertain. During the second-quarter earnings call, William Li explicitly stated, "While ensuring steady growth in sales, optimizing gross margins is a crucial task for us in the next phase."

"NIO will continue to optimize product costs and increase the proportion of high-margin models in the market to enhance overall vehicle gross margins. We expect the NIO brand's vehicle gross margin to reach 15% by the fourth quarter of this year," Li emphasized.

Li also revealed that NIO's products will gradually transition to the third platform (NT3) starting with the ET9. "The goal of our NT3 platform design is to achieve an average vehicle gross margin of over 20%," Li said, noting that the company aims to maintain monthly sales of 30,000 units, a 20% vehicle gross margin, and profitability for its core NIO brand in China.

It is evident that NIO is aware of the financial risks it faces, but reducing expenses is only one aspect of the solution. More importantly, revenue generation is key, and the primary means of doing so is to boost product sales.

However, NIO currently faces a significant challenge: the overall growth rate of the pure electric vehicle market is slowing down. According to data from the China Passenger Car Association, China's new energy vehicle sales totaled nearly 4.99 million units from January to July this year, an increase of 33.7% year-on-year, compared to a 36.2% increase in the same period last year, a 90% increase in 2022, and over 160% in 2021. Notably, this year's growth in China's new energy vehicle sales is primarily driven by plug-in hybrids, which increased by 71.6% year-on-year to 2.08 million units, while pure electric vehicle sales only grew by 15.5% year-on-year.

NIO focuses solely on pure electric vehicles and does not offer plug-in hybrids or extended-range electric vehicles, which means it cannot cater to a more diversified market demand. In contrast, its competitors are expanding their product lines. Some automakers that previously focused on plug-in hybrids and extended-range electric vehicles are now entering the pure electric market, such as Li Auto, which plans to launch new pure electric products in the first half of 2025, adopting a dual-technology strategy of extended-range and pure electric vehicles. Others that specialize in pure electric vehicles are looking to add plug-in hybrids and extended-range options, such as AVATR, which has introduced its Kunlun extended-range technology, while Zeekr and Xiaomi have also hinted at joining this trend.

Among all automakers, those adhering to a pure electric technology route may become increasingly scarce. However, even if only two automakers remain, one will undoubtedly be Tesla, and the other is likely to be NIO. Why NIO? Because its vast self-built battery swapping system inherently conflicts with plug-in hybrids and extended-range electric vehicles, and abandoning this advantage would be detrimental.

So, who knows how long NIO can hold on?