Chinese Tesla challenger NIO posts best quarter on record EV deliveries, helping narrow losses and crush analysts’ estimates

Daniel Ren
·4-min read

NIO, the first of three Chinese electric carmakers to raise capital in New York, reported its best quarter since 2018, as a fivefold jump in sales on the back of record deliveries helped it beat analysts’ forecasts.

The Shanghai-based carmaker’s first-quarter sales jumped more than fivefold to 7.98 billion yuan (US$1.23 billion), while its net loss narrowed to 354.5 million yuan, or 0.23 yuan per share, under Chinese accounting rules. That’s better than the loss of 16 US cents per share expected in a poll by Investors’ Business Daily.

Including a one-time loss of 4.4 billion yuan spent buying a 3.3 per cent stake from minority shareholders in its NIO China unit, the group’s loss widened to 4.88 billion yuan during the quarter, under general accounting rules, it said in a New York Stock Exchange filing.

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NIO, the first carmaker to roll out a production model capable of travelling 1,000 kilometres (621 miles) on a single charge, delivered 20,600 electric cars in the first three months of 2021 versus 3,838 a year earlier, mostly to Chinese consumers in the world’s largest vehicles market.

“This will be the year for China’s leading smart electric vehicle companies to chalk up stellar gains,” said David Zhang, an analyst at North China University of Technology. “NIO and its Chinese counterparts are set to benefit from a rising penetration of electric cars although they are still lagging behind Tesla.”

NIO, along with Xpeng and Li Auto, are the most aggressive challengers to Tesla in China, but their sales make up only a small portion of the deliveries by the US carmaker, seen as the bellwether of the industry. Tesla delivered 35,478 electric cars from its Gigafactory 3 in Shanghai in March alone, more than double what its three Chinese rivals sold together.

The prospects for the coming months may be challenging, NIO said, as the worldwide shortage of semiconductor chips used in everything from games consoles and gadgets to vehicle automation systems is also turning around to bite the assemblers of electric cars.

The interior of Nio’s eC6 electric car during the 19th Shanghai International Automobile Industry Exhibition in Shanghai on April 19, 2021. Photo: AFP
The interior of Nio’s eC6 electric car during the 19th Shanghai International Automobile Industry Exhibition in Shanghai on April 19, 2021. Photo: AFP

“The overall demand for our products continues to be quite strong, but the supply chain is still facing significant challenges due to the semiconductor shortage,” William Li, NIO founder and chief executive, said in a statement. “In light of the strong momentum under a volatile macro environment, we expect to deliver 21,000 to 22,000 vehicles in the second quarter of 2021.”

NIO’s shares fell almost 5.3 per cent overnight to US$38.99 in New York. The stock has surged 11-fold in the past 12 months, giving the six-year-old carmaker US$63.8 billion in market value, more than Ford Motor’s capitalisation.

Earlier this month, Li told a press conference that NIO might lack the semiconductor stockpile to meet its target of assembling 7,500 electric cars in the second quarter.

Nio suspended production for five days at the end of March due to the lack of a US$1 chip. The carmaker expected to secure enough chips in the third quarter, Li said. Gross profit margin improved to 19.5 per cent from 17.2 per cent in the fourth quarter, NIO said.

UBS predicted that 6.6 million new electric vehicles would be sold on the mainland in 2025, nearly sixfold deliveries of 1.17 million units last year. Deliveries are expected to hit 18 million units, or 60 per cent of total new car sales, in 2030, it added.

Oliver Cox, a money manager at JPMorgan Asset Management who invested in NIO and Xpeng’s American depositary shares in his Pacific Technology Fund, said investors should focus on production expertise and market-share gains when investing in unprofitable Chinese EV makers, based on the experience of Tesla’s early production years.

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