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NIO Inc. – often dubbed the “Tesla of China” – is rapidly expanding. The Shanghai-headquartered electric vehicle (EV) manufacturer was founded in November 2014 and started targeting the mid-high range of China’s automobile market. In May 2021, the Chinese EV maker first expanded overseas by entering the market in Norway. Earlier in 2022, NIO announced a broader European expansion, rolling out its cars in Germany, the Netherlands, Sweden, and Denmark. By end of 2025, NIO wants to have its products in 25 countries worldwide.
What is behind NIO’s success?
The Chinese EV makes designs, develops, jointly manufactures, and markets premium “smart” electric vehicles. NIO aims to distinguish itself through innovations, such as its industry-leading battery swapping technologies “Power Swap”, Battery-as-a-Service (BaaS), and its proprietary autonomous driving technologies, called Autonomous-Driving-as-a-Service (ADaaS).
NIO’s battery swapping technology enables its vehicle drivers to simply drive to a “Power Swap” station to exchange the battery for a new one – instead of charging the battery at home or at power stations.
According to NIO, this offers a major advantage to the company as it takes only 3 minutes to swap a fully charged battery. Moreover, automatic battery and electric system checks are performed during each swap to keep both the vehicle and battery in the best shape. NIO claims that the battery swapping system prolongs battery lifetime by enabling controlled charging with low currents in comparison to fast charging. For drivers, the advantage is to get back on the road after just minutes, instead of waiting a certain amount of time until a battery is charged sufficiently.
NIO had 1,407 Power Swap stations and 948 traditional Charging stations across China as of July 2022. With operations in Europe running now, the company plans to deploy 1,000 Power Swap Stations outside China by 2025.
The BaaS scheme was launched in 2020. Buyers can choose to pay a monthly fee for battery usage – separately from the vehicle price. This allows NIO to offer their EVs at a reduced price since batteries are the most expensive part of an electric vehicle. ADaaS is planned as a monthly subscription base as well. The NIO ET7 is the first autonomous driving model. It was launched in 2021 and is engineered to meet both China and Euro NCAP five-star safety standards.
NIO’s business looking solid
NIO Inc.’s financial results for the second quarter of 2022 which ended June 30, show that the company achieved solid financial results “despite the tremendous challenges and cost volatilities”.
In full Q2, NIO delivered 25,059 vehicles, representing a growth of 14.4% year-on-year. Vehicle sales also went up 21% from the second quarter of 2021, reaching RMB 9,570.8 m (USD 1,428.9 m).
Total revenues were RMB 10,292.4 mn (USD 1,536.6 mn), marking an increase of 21.8% from the corresponding period in 2021 and a growth of 3.9% from the first quarter of 2022. Gross profit for Q2 stood at RMB 1,340.3 m (USD 200.1 m), representing a decline of 14.8% from the second quarter of 2021, and 7.4% from the first quarter of 2022.
However, NIO suffered a net loss of RMB 2,757.5 m (USD 411.7 m) in the second quarter of 2022 – an increase of 369.6% from the corresponding period of 2021 and a rise of 54.7% from the first quarter of 2022.
For Q3 2022, NIO expects to deliver between 31,000 and 33,000 vehicles, which is an increase of between 26.8% and 25.0% from the deliveries in the second quarter of 2021. Revenues are estimated to reach between RMB 12,845 m (1,918 m) and RMB 13,598 m (USD 2,030 m), indicating an increase of about 31.0% to 38.7% from the corresponding period in 2021.
Hong Kong-based financial institution CMB International believe that NIO sales momentum could continue in the fourth quarter. “We estimate that NIO’s current order backlog for the ET7 and ES7 is already enough to meet our 4Q22 sales assumption,” said the analysts.
NIO Inc. – listed in New York, Hong Kong and Singapore
NIO is the first auto company listed on three exchanges. The company has its primary listing on the New York Stock Exchange (NYSE: NIO) and carried out a secondary listing in Hong Kong in March 2022 (HKG: 9866). On May 20, 2022, NIO successfully listed its Class A ordinary shares on the Main Board of the Singapore Exchange Securities Trading (SGX: NIO). As per the company, the listing on the SGX is of great importance to NIO’s global business development.
As of September 30, 2022, NIO’s stock on NYSE was down 55.74% over the last 12 months. The price-to-book ratio of NIO is at 5.76.
What is next for NIO?
Being a pioneer and leading company in the premium smart EV market, analysts see NIO well positioned for the future. According to Frost & Sullivan, NIO’s vehicles have been well-received by consumers. The ES6, EC6 and ES8 were the top, second and fourth best-selling premium battery SUVs in 2021 as measured by sales volume in China.
According to Ferdinand Dudenhoeffer, director at the Center for Automotive Research (CAR) at the University of Duisburg-Essen, Germany, NIO’s battery swapping technology gives the company a real advantage in Europe. According to him, battery swapping is not only fast, but the swapped battery is significantly cheaper than the normal battery. “Swapping will bring great benefits in the big cities like London, Paris, and Berlin in taxi operations, so it’s coming. China is defining the rules,” Dudenhoeffer said.
Following the launch in other European countries, NIO now plans to expand into the US market by the end of 2025.
