Nio (NIO): A look at the good and the bad from the Chinese EV-maker’s Q1 report

Shares of Nio Inc. (NYSE: NIO) were down 4% on Friday. The stock has dropped 43% year-to-date and 60% over the past 12 months. The company delivered disappointing results for the first quarter of 2022 a day ago and provided a bleak outlook for the year. Here’s a look at the good and the bad from the EV-maker’s earnings report:

Revenue growth

Nio’s total revenue grew 24% year-over-year to $1.56 billion in Q1, beating estimates. The top line growth was driven by a nearly 25% increase in vehicle sales which amounted to $1.45 billion in the quarter. Vehicle sales were fueled mainly by higher delivery.

Other sales increased 15.6% to $105.1 million, driven mainly by higher sales of service and energy packages. Nio expects revenues for the second quarter of 2022 to increase approx. 10.6-19.4% to $1.47-1.59 billion.

Higher losses and lower margins

Nio reported net loss of $281.2 million in Q1 which was wider than the $68.8 million reported a year ago. However, net loss attributable to ordinary shareholders narrowed to $288 million from $744 million in the year-ago period. Adjusted net loss per ADS was $0.13 compared to $0.04 last year.

Gross margin dropped to 14.6% from 19.5% last year due to lower vehicle margin and a reduction in other sales margin due to increased investments in the power and service network. Vehicle margin decreased to 18.1% from 21.2% last year due to lower average selling price caused by changes in product mix.

The company is tackling rising material costs by adjusting product prices. With new product deliveries, higher revenue per vehicle and increasing production output, vehicle margin is expected to see a rebound from the third quarter of 2022.   

Deliveries

Nio delivered 25,768 vehicles in Q1, up 28.5% year-over-year. The pandemic-related lockdowns in China affected the company’s vehicle production and deliveries during the quarter. Nio delivered 5,074 vehicles in April and 7,024 vehicles in May. Deliveries were back on track in June as vehicle production and the supply chain returned to normal. For the second quarter of 2022, Nio expects vehicle deliveries to range between 23,000 and 25,000, representing an increase of 5-14% YoY.

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