Shanghai-based electric vehicle (EV) maker Nio (NYSE: NIO) delivered a record 10,331 vehicles during the second quarter of 2020, translating into total revenues of RMB 3.72 billion (USD 526.4 million), surpassing analyst expectations of RMB 3.5 billion (USD 504 million).
The firm’s total revenues grew 146.5% year-on-year (YoY), on the back of a surge in sales of Nio’s ES8 model, a 7-seater electric SUV. Nio delivered 2,263 Es8 vehicles in this year’s June quarter compared to just 413 in the same period last year, while sales of the ES6 mid-size SUV more than doubled.
Importantly, the company recorded a positive vehicle margin of 9.7%, compared to -7.4% in the first quarter of this year, and -24.1% in the second quarter of 2019.
On the company’s improving margins, Nio’s chief executive officer (CEO) William Li explained on the earnings call, “With the strong momentum of quarterly deliveries, vehicle’s average selling price, the reduction of battery pack and other BOM costs and the improvement of manufacturing efficiency, our gross margin has substantially increased in the second quarter.”
As a result, Nio’s operating losses narrowed by 64% YoY. Li commented, “The significant increase in deliveries and the direct sales model with the great support from our supply chain partners have enabled us to achieve positive operating cash flow for the first time in our history.”
Meanwhile, Nio’s latest model, the EC6 mid-sized coupe, starts at a pre-subsidy price of RMB 368,000 (USD 53,000), will first be shipped to customers in September of this year.
Looking to the third quarter, the company expects to set a new record for quarterly vehicle delivery of between 11,000 and 15,000. He added, “We will continue to improve our gross margin and expect our vehicle margin and gross margin to both exceed 10% in the second half of this year.”
Despite the strong quarterly results, Nio’s share price dropped 8.59% to USD 12.99 on Tuesday following the earnings release.