NIO: Lot To Prove In 2022
Summary
- Q4 sets delivery record, but December is a bit sluggish.
- Expectations coming down as ET7 still ramping.
- Chinese EV subsidies to end in 2023.
Andy Feng/iStock Editorial via Getty Images
Over the weekend, we received fourth quarter delivery results from Chinese electric vehicle company NIO (NYSE:NIO). While the company did set a new record for quarterly deliveries, the overall figures were hurt by a production shutdown early in the period. With the December sales numbers not being that impressive and competition only continuing to increase, the company has a lot to prove this year.
For December, NIO reported 10,489 deliveries across its three vehicles. While this was growth of almost 50% over the prior year period, the final month of the year actually saw fewer deliveries than both September and November. Excluding October when the factory was shut down a bit for upgrades and restructuring, this was the second weakest year over year monthly delivery growth figure of 2021. The only month that was weaker was August, when the company was significantly hampered by supply chain constraints and had to cut its Q3 delivery forecast.
The Q4 results were also a little disappointing when you consider the past year or two. In every quarter of 2020, the company's delivery results topped the high end of management's guidance range, but that didn't happen in any quarter of 2021 (using original quarterly guidance). Don't forget, the factory shutdown caused estimates to drop for the quarter, so investors were hoping that management was being conservative with its guidance initially. As seen in the table below, that didn't happen, which really pressured the year over year quarterly delivery growth rate.
(Source: NIO releases, seen here)
In the short term, there isn't a lot to be positive about. China has reduced the EV subsidy figure for 2022, and it will be eliminated completely in 2023. NIO's next consumer vehicle launch, the ET7, won't come until the final days of this quarter, a bit later than some were hoping for. This also isn't a high unit sales model, and the mass market ET5 won't start deliveries until sometime in September even if things go as planned. NIO's plan to expand into Europe also seems to be taking a little longer than expected, putting it up against tough competition from Volkswagen (OTCPK:VWAGY), Tesla, (TSLA), and others.
The main result is that NIO's growth profile is starting to trail Chinese peers like XPeng (XPEV) and Li Auto (LI). In the last 6 months, the average revenue estimate for NIO in 2022 has risen by just 11.4% compared to 38.1% growth for XPeng and 30.2% for Li. XPeng also just announced a very strong finish to 2021, coming in well above its delivery guidance for the quarter. In 2020, NIO became an investor favorite in this space and saw its shares surge, but over the past year it significantly underperformed these other two Chinese names as seen below.
(Source: Yahoo! Finance)
While NIO reported a quarterly record for deliveries in Q4 2021, the December sales number wasn't that impressive. The company's growth story has taken a hit recently, as others like XPeng have passed it in monthly sales and Tesla remains well ahead. NIO has two new vehicles hitting the roads this year, but the first is still nearly three months out and is a more premium offering. Shares of this company have underperformed peers over the past year, leaving NIO with a lot to prove this year.
This article was written by
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Comments (22)
"Nio can also benefit from another provision laid out by the government. China's NEV subsidy policy dictates that models with a pre-subsidy price of over 300,000 yuan ($47,200) are not eligible for subsidies, except those that support battery swapping, CnEVPost said in another report."Source:
www.msn.com/...
NIO has done the same thing. The new line can serve all the current and future models with features placement for future upgrades; something that no car other than NIO offers.
Super Long NIO!
However Nio has decided to invest significantly in its infrastructure they have build 778 Power Swap stations ww (260 in Q4) and installed 4,582 superchargers and destination chargers. They are building an ecosystem and investing in their future. In 2022, NIO will be delivering 3 new models and a second huge giga factory (NeoPark) will be operational.
Therefore yes probably they have underestimated the EV sales growth in China whoever 2022 (and later years) appear quite promising.
Obviously Xpeng may do very well as well. On the other end they compete in a different market segment and they are probably quietly sharing the market (Xpeng mass and Nio premium).