On November 20, Beijing time, NIO Inc. released its Q3 2024 financial report, with key financial indicators as follows:

1. Vehicle deliveries: 61,800 units, including 81,000 units for the NIO brand and 832 units for the Letao brand, up 11.6% YoY and 7.8% MoM;

2. Total revenue: 18.67 billion yuan, down 2.1% YoY and up 7.0% MoM;

3. Vehicle sales revenue: 16.7 billion yuan, down 4.1% YoY and up 6.5% MoM;

4. Overall gross margin: 10.7%, compared to 8.0% in the same period last year and 9.7% in Q2 2024;

5. Gross margin of automotive business: 13.1%, compared to 11.0% in the same period last year and 12.2% in Q2 2024;

6. Gross profit: 2.007 billion yuan, up 31.8% YoY and 18.9% MoM;

7. Operating loss: 5.234 billion yuan, up 8.1% YoY and 0.5% MoM;

(Excluding share-based compensation expenses, adjusted business loss ('non-GAAP') was 4.591 billion yuan, up 8.3% YoY and down 2.3% MoM)

8. Net loss: 5.06 billion yuan, up 11.0% YoY and 0.3% MoM;

(Excluding share-based compensation expenses, adjusted net loss ('non-GAAP') was 4.413 billion yuan, up 11.6% YoY and down 2.7% MoM)

9. Net loss attributable to NIO's ordinary shareholders: 5.142 billion yuan, up 11.1% YoY and 0.3% MoM;

10. R&D expenses: 3.32 billion yuan, up 9.2% YoY and 3.1% MoM;

(Excluding share-based compensation expenses, it was 2.903 billion yuan, up 9.8% YoY and 0.5% MoM)

11. Selling, general, and administrative expenses: 4.109 billion yuan, up 13.8% YoY and 9.3% MoM;

12. Free cash flow: Positive!

13. Cash reserves: Cash and cash equivalents, restricted cash, short-term investments, and long-term time deposits totaled 42.2 billion yuan as of September 30, 2024.

Q4 outlook in the financial report:

1. Vehicle deliveries: Expected to range between 72,000 and 75,000 units, up 43.9% to 49.9% YoY;

2. Total revenue: Expected to range between 19.676 billion and 20.383 billion yuan, up 15.0%-19.2% YoY;

During the earnings call, Li Bin stated that the gross margin for Q4 would increase to 15%.

Core contents of the earnings call:

1. Letao customers: Whether they will poach NIO customers. Letao's largest customer base comes from Model 3, affecting 2% of NIO's customers while gaining more incremental customers;

2. Letao's production capacity: Expected to reach 10,000 units in December and 20,000 units next year, maintaining the previously announced pace;

3. Letao's stores: Currently 190 stores, with plans to expand to 300 by the end of the year to support monthly deliveries of 20,000 units next year;

4. Letao's gross margin: Increasing from 10% to 15%;

5. Two new Letao models: Two large family SUVs will be launched in 2025, one with five seats and the other with six or seven seats, targeting Ideal L7 and L8. Preparations for mass production have been completed, and both cost and price are more competitive than Ideal L7 and L8.

6. Third brand: Officially named "Firefly," to be officially unveiled at NIO DAY on December 21, with the debut of its first model. The model is scheduled for official launch and delivery in the first half of 2025;

7. Reason for the decline in NIO brand deliveries in October: Due to the narrowing of promotional incentives by approximately 15,000 yuan per vehicle, which previously put significant pressure on gross margins.

8. Gross margin improvement: Expected to increase to 15% in Q4 2024 and 20% in 2025;

9. Goals: Double sales volume by 2025 and achieve full profitability by 2026.

10. NIO Power: Currently profitable, with stronger profitability this year compared to last due to adjustments in BAAS pricing and increased sales of NIO and Letao.

Interpretation:

NIO once again reported the highest loss among listed new energy vehicle companies in Q3, with a cumulative loss of approximately 36 billion yuan over seven consecutive quarters since Q1 2023, averaging around 5 billion yuan per quarter. This is largely attributed to approximately 3 billion yuan in R&D investment each quarter.

The turnaround in free cash flow is positive for NIO's cash reserves.

Although Li Bin emphasized again during the earnings call that sales volume is everything for an automaker.

Letao's gradual ramp-up maintains NIO's pace without rushing. While companies like XPeng and Xiaomi have quickly ramped up deliveries, NIO remains unhurried. This pace is somewhat unconventional in the current new energy vehicle market.

NIO's confidence in doubling sales in 2025 stems from its updated product line, the volume ramp-up of Letao's L60, the launch of two new models, and the start of deliveries for the third brand, "Firefly."

As for achieving full profitability by 2026, that remains a distant goal that will be validated over time.

In 2025, the competitive landscape in the new energy vehicle market may shift towards extended-range power systems with large batteries and small fuel tanks offering a range of 400 km. This poses a significant challenge to NIO's battery swapping system. Of course, it may also have a greater impact on traditional gasoline vehicles.

NIO's battery swapping system leverages its scale to create advantages. Friends in Shanghai say that swapping batteries once a week meets their commuting needs and is very convenient. This highlights the network advantage of battery swapping stations. Achieving county-level coverage for battery swapping places high demands on NIO's infrastructure capabilities, but with NIO Power being profitable, there may be separate financing plans in the works.