Nio expects Q1 deliveries between 20,000 and 20,500 vehicles

Chinese electric car maker Nio Inc. on Monday forecast current-quarter deliveries between 20,000 and 20,500 vehicles, after its fourth-quarter revenue more than doubled on rising demand for battery-operated vehicles.

Nio delivered 17,353 vehicles in the fourth quarter ended Dec. 31.

“Nio concluded a transformational 2020 with a new quarterly delivery record of 17,353 vehicles in the fourth quarter,” CEO William Li said in a statement on Monday in the U.S. “The strong momentum has continued in 2021 as we achieved a historic monthly delivery of 7,225 vehicles in January.”

The upstart posted a wider-than-expected loss in the fourth quarter, a year after a government cash injection saved the company from bankruptcy.

The net loss amounted to 1.39 billion yuan ($203.6 million), compared with 2.86 billion yuan a year earlier, the New York-listed company said in the statement. Revenue was 6.64 billion yuan.

Nio’s improving fortunes are emblematic of Chinese EV makers’ nascent success. Rival Li Auto posted its first quarterly profit last week and SAIC-GM-Wuling Automobile Co. — General Motors’ joint venture in China — has been outselling Tesla Inc. in recent months.

Nio shares climbed more than 1,000 percent last year, leading gains by U.S.-listed rivals Li Auto and Xpeng Inc., pulled higher by excitement around the prospects for growth in China’s electric car market, the world’s biggest. The stock fell 4.8 percent to $47.37 in premarket trading in New York on Tuesday.

As of January, Nio had delivered 82,866 electric cars in China since its first model came to market in June 2018. Its high-end sport-utility vehicles have proven a hit with wealthy consumers, helping to push Nio’s gross margin to 17.2 percent in the December quarter.

Electric-vehicle demand in the world’s biggest car market is set to soar in coming years as consumers embrace cleaner automobiles and the cost of EVs tumbles. Research firm Canalys said in a report last week that EV sales in China may grow more than 50 percent in 2021.

“Prospects are very good,” said Chris Jones, Canalys’ chief automotive analyst. “There is already an excellent network of standardized public EV chargers, good government support and now a return to strong consumer demand.”

Still, Nio CEO Li said production capacity will be constrained by the global chip shortage that is impacting the global automotive industry. While monthly capacity has risen to 10,000 units, production will remain at 7,500 “due to supply-chain limits, including the chip shortage,” Li said on a call with reporters in China on Tuesday.

“Though we believe we are able to meet expected demand for the second-quarter, there’s indeed a higher risk,” Li said.

In the early months of last year, the automaker looked to be running out of cash having spent heavily on marketing and splashy showrooms for its ES8 and ES6 electric SUVs. But in April, it received a $1 billion investment from entities led by the municipal government of Hefei and in July, a $1.5 billion credit line from Chinese banks.

Shanghai-based Nio’s SUV range starts from 358,000 yuan, more expensive than Tesla’s most popular basic Model 3 sedans, which start from 249,900 yuan. Nio unveiled its first all-electric sedan, the ET7, in January, a car that will pit it more squarely against the Palo Alto, California-based company.

Nio will focus on maintaining itself as a premium brand while “Tesla holds an ambition to become Volkswagen or Ford in electric-vehicle making,” Li said earlier this year. He talked about the possibility of producing cars for the general mass market in future, but “not necessarily under Nio’s brand.”

Another point of difference between Nio and Tesla is that Nio has embraced the so-called “battery-as-a-service” model, whereby consumers are able to buy the car shell while leasing the battery and upgrading it as technology changes and improves. This makes the upfront cost of buying an EV cheaper.

The new ET7 for example starts from 378,000 yuan without a battery pack, almost 20 percent less than a vehicle with a pre-paid battery.

“Car buyers’ growing appetite for luxury wheels could stoke robust sales growth for Nio over the next couple of years,” Bloomberg Intelligence analyst Steve Man said in a recent note. He predicts Nio may reach breakeven on an operating profit basis as soon as late 2022.

Bloomberg and Reuters contributed to this report.

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