Delving into the Essence of Business, Straight to the Heart of the Enterprise

Lead Writer | Chen Ye

Following the launch of LeDao in September, NIO's second sub-brand, Firefly, has now made its debut.

On December 21, 2024, NIO Day 2024 was held in Guangzhou, where the Firefly brand was officially unveiled. The product shares the same name as the brand, with a pre-sale price of 148,800 yuan, scheduled for official release in April 2025.

This year marks the 10th anniversary of NIO's establishment. With the introduction of Firefly, NIO has now established a complementary pattern of three major brands, positioning itself as the player with the most mass-produced models and brands among emerging automakers.

However, NIO currently finds itself in a challenging situation, having reported losses exceeding 5 billion yuan for four consecutive quarters. Founder Li Bin stated, 'NIO aims to double its sales next year and achieve profitability by 2026.' Whether NIO can emerge from these losses remains to be seen.

01

A Decade of Auto Manufacturing: Forging Three Distinct Paths

Since its inception in 2014, NIO has dedicated itself to establishing a premium electric vehicle brand. On its 10th anniversary, founder Li Bin mentioned in an internal letter that NIO holds over 40% market share in the Chinese premium electric vehicle market, with an average transaction price exceeding 300,000 yuan.

However, scaling the premium electric vehicle market is challenging. Data indicates that out of the 4.95 million new electric vehicles sold in China in 2023, only 10% were premium models priced above 300,000 yuan, primarily sold in tier-one and developed cities.

To bolster its competitiveness in the new energy market, on September 19, NIO officially launched its second brand, 'LeDao,' targeting the family car segment. The first model, LeDao L60, began its initial deliveries at the end of September, with a starting price of 206,900 yuan for the standard range version.

Concurrently, NIO's third brand, 'Firefly,' was officially introduced at NIO Day 2024 on December 21, positioning itself as a premium smart electric mini-car brand. The new vehicle has a pre-sale price of 148,800 yuan and is scheduled for official launch in April 2025.

To date, NIO boasts a portfolio of 11 models across three brands, spanning a price range from approximately 150,000 to 800,000 yuan.

Currently, NIO's strategy for its three brands involves the main NIO brand focusing on improving gross margins, while LeDao and Firefly aim to increase scale and achieve 'volume' and 'sustainability' through synergistic research and development, supply chain management, and service systems.

From the first to third quarters of 2024, NIO delivered 30,100, 57,400, and 61,900 vehicles, respectively. The company's cumulative deliveries for the first three quarters reached 149,300 vehicles, marking a 35.72% increase compared to the same period last year.

Looking ahead to the fourth quarter of 2024, NIO's delivery guidance is set at 72,000 to 75,000 vehicles, representing a year-on-year increase of 43.9% to 49.9%.

In October and November 2024, NIO delivered 20,976 and 20,575 vehicles, respectively, totaling 41,551 vehicles over the two months. It has now surpassed the 20,000-vehicle mark for seven consecutive months.

In other words, NIO needs to deliver at least 30,500 vehicles in December to meet the lower end of its delivery guidance.

Currently, NIO's second brand, LeDao, carries a significant burden. Ai Tiecheng, Senior Vice President of NIO and President of LeDao Automobile, stated, 'In December, LeDao will accelerate deliveries, aiming for more than 10,000 deliveries and striving for a monthly sales volume of 15,000 to 20,000 vehicles in January next year.'

However, since its official launch on September 28, LeDao L60 has not delivered more than 2,000 vehicles in a single week. The first full month of deliveries in October saw only 4,319 vehicles, followed by 5,082 vehicles in November.

02

Net Loss of 15.53 Billion Yuan in Shareholder Net Profit

After a decade in auto manufacturing, NIO's clear multi-brand strategy has gradually taken shape. Li Bin's vision is for 'NIO to achieve 100% sales growth in 2025 and profitability in 2026.'

Considering NIO's deliveries in 2024, it has delivered a cumulative total of 190,800 new vehicles in the first 11 months, marking a 34% increase compared to the same period last year. Judging by this, doubling sales in 2025 is not a trivial goal for Li Bin.

Simultaneously, the likelihood of NIO achieving profitability in 2026 remains questionable. As early as 2022, Li Bin stated, 'NIO hopes to achieve full-year profitability in 2024.' However, this profitability commitment has yet to be fulfilled.

Financial reports indicate that in the first three quarters of 2024, NIO generated operating revenue of 46.03 billion yuan, an approximate 19.5% year-on-year increase, with a net loss of 15.53 billion yuan in shareholder net profit.

In the third quarter of this year, NIO's net loss was 5.06 billion yuan, further expanding both year-on-year and quarter-on-quarter. This marked the fourth consecutive quarter since the fourth quarter of 2023 that NIO has incurred losses exceeding 5 billion yuan.

Among the 'WXP' trio (Weilai, Xpeng, and Li Auto), NIO has significantly lagged behind. Specifically, Li Auto has achieved profitability for eight consecutive quarters, while Xpeng's net loss narrowed significantly year-on-year to 1.808 billion yuan, with the company announcing its aim to achieve breakeven by the end of 2025.

NIO attributes its losses primarily to a decrease in average selling prices and an increase in R&D investment. Reports indicate that the average selling price per vehicle in the third quarter of this year was 270,000 yuan, a 14% decrease from 314,000 yuan in the same period last year. NIO invested approximately 3.32 billion yuan in R&D during the third quarter, and with the increase in LeDao stores and the implementation of county-to-county battery swapping technology, NIO's operating costs continue to rise.

As of the end of the third quarter of 2024, NIO's total liabilities amounted to 87.92 billion yuan, with a debt-to-asset ratio of 84.55%, the highest since 2021, leaving only 16.07 billion yuan in net assets for the company.

Auto manufacturing is a capital-intensive industry, but fortunately, Li Bin excels at fundraising to replenish NIO's capital chain. As of September 30, 2024, NIO's cash and cash equivalents, restricted cash, short-term investments, and long-term time deposits totaled 42.2 billion yuan (approximately $6 billion). Previously, the 3.3 billion yuan in strategic investment received by NIO will be received in the fourth quarter, further enhancing its cash reserves.

Some market observers believe that for new energy vehicle companies to achieve breakeven, their monthly sales volume should be around 30,000 to 40,000 vehicles. The next two years will be challenging for domestic automotive brands, and the shuffling in the new energy sector continues to accelerate. If NIO's automotive business fails to become self-sufficient and continues to incur losses, it remains uncertain when it might follow in the footsteps of other struggling automakers.

END

Editor | Xiao'er

Typesetting | Wu Yue

Chief Editor | Lao Chao

Images sourced from the internet