EV maker Nio narrows loss on record deliveries, pledges more cost-cutting to compete in China’s cutthroat market

The Shanghai-based carmaker posted a third-quarter net loss of 4.56 billion yuan (US$639 million), 24.8 per cent narrower than the previous quarter
Revenue more than doubled quarter on quarter to 19.1 billion yuan as the company delivered 55,432 vehicles

Electric & new energy vehicles

Daniel Renin Shanghai

Published: 8:30pm, 5 Dec 2023

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Chinese electric vehicle (EV) maker Nio reported on Tuesday that revenue growth from record vehicle deliveries led to a narrower loss in the third quarter, as it pledged to further reduce costs amid escalating competition in the mainland China market.

The Shanghai-based carmaker, which last month cut 10 per cent of its workforce, posted a net loss of 4.56 billion yuan (US$639 million) for the three months ending September 30, 24.8 per cent narrower than its 6.06 billion yuan loss in the previous quarter but 10.9 per cent wider than its 4.11 billion yuan loss in the same period a year ago.

Its per-share loss was valued at 2.53 yuan, beating a forecast of 2.97 yuan in a Bloomberg survey of analysts. Revenue increased 117.8 per cent quarter on quarter and 46.7 per cent year on year to 19.1 billion yuan.

“Our focus remains on advancing core technologies, developing key products, and expanding sales and service capabilities,” William Li, co-founder and CEO of Nio, said in a statement after the earnings announcement. “We are confident in Nio’s long-term competitiveness in the smart electric vehicle market.”

People check out a Nio ET5 in a showroom in Berlin, Germany, on August 17, 2023. Photo: Reuters

The company, which has yet to report a profit since its establishment in 2014, delivered a record 55,432 vehicles in the third quarter, 38.4 per cent above its previous high-water mark of 40,032 units in the fourth quarter of 2022.

It predicted its total deliveries in the fourth quarter would decline between 11.6 and 15.2 per cent to between 47,000 and 49,000 units, compared with the three months ending September. Fourth-quarter revenue could reach 16.7 billion yuan, the company predicted, which would be a 12.6 decline compared with the third quarter.

Nio makes premium EVs that take on Tesla’s Model 3 and Model Y in China, the world’s largest EV market, where the presence of 200 competitors is raising concerns about severe overcapacity.

China’s top three indigenous premium EV makers, Nio, Xpeng and Li Auto, are facing new rivals such as smartphone vendor Xiaomi and search-engine giant Baidu, which are luring wealthy motorists away from the established players with new intelligent vehicles.

“Heightened competition in the Chinese electric-car market will prompt more key players to focus on cost reduction to survive potential price wars,” said Gao Shen, an independent analyst in Shanghai. “For premium EV makers, it will be advisable for them to launch more low-priced vehicles to shoot at a wider base of customers.”

Nio aims to reduce its workforce by a third by 2027 as it rapidly deploys robots, Ji Huaqiang, vice-president of manufacturing, logistics and operations, told reporters in a media briefing last month.

Chinese EV makers speed towards 2023 sales record

At present, Nio builds its vehicles at two plants in Hefei, capital of eastern China’s Anhui province, through partnership with state-owned carmaker Jianghuai Automobile Group (JAC).

On Tuesday, JAC said in a filing to the Shanghai Stock Exchange that it had sold assets worth 3.16 billion yuan at the two factories to Nio.

Ji said in November that JAC would remain an important partner with Nio in production even after its disposal of the assets.

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