Chinese electric vehicle maker Nio (NYSE: NIO) on Thursday reported revenues of RMB 7.98 billion (USD 1.22 million) for the first quarter, an increase of 481.8% year-on-year, and a net loss of RMB 451 million (USD 68.8 million), which was 73.3% less than in the same period last year.
The company said its vehicle margin reached 21.2%, compared with –7.4% in Q1 2020 and 17.2% in Q4 2020. “That is better than what we expected,” founder and chairman William Bin Li told analysts on the earnings call on Friday, explaining that users chose more expensive models with features such as Nio Pilot.
Li tried to temper analyst expectations by saying that it would be difficult to reach further margin improvements from here. He said the company won’t cut prices either, as that would surely hurt the brand. Nio’s EVs can now be purchased from RMB 358,000 (USD 55,300), while Tesla recently cut the price of its Model 3 to around RMB 249,900 (USD 38,600). “We are 100% sure that we will not enter the mass market with the Nio brand,” he said, adding that it would require a totally new strategy.
Li said that after attending the Shanghai Auto Show, he found that Nio has no competitors in the premium market. He was, however, impressed by a model under the Baojun brand—produced by Wuling-Hongguang, a joint venture of SAIC Motor, Liuzhou Wuling Motors, and GM China—which is priced at about USD 10,000.
Li further commented on the plan to outfit its vehicles with lithium iron phosphate (LFP) battery packs, which could reduce costs, explaining that the precondition would be that the company can solve the power decay problem of the batteries in low temperatures.
Nio started the year with a new delivery record of 20,060 vehicles in the first quarter, representing strong growth of 422.7% YoY. “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,” Li said in a statement.
The company suspended its production for five working days at the end of March and beginning of April due to a lack of chips, which will affect vehicle deliveries in April, Li said during the call. “We have been tracking the chip supply every day,” he said, anticipating that things will get better in the third quarter of this year.
Despite the uncertainties, Nio still expects to deliver between 21,000 to 22,000 vehicles in the second quarter of this year. On May 6, the firm will launch in Norway, its first international expansion.