Shanghai, China – Nio Inc., a Chinese electric vehicle manufacturer, reported a significant increase in its annual loss last year amid intense competition in the world’s largest EV market. The company’s fourth-quarter net loss of 5.4 billion yuan extended its annual deficit to 20.7 billion yuan ($2.9 billion) in 2023. Despite posting better-than-expected sales in the final quarter of the year, Nio faced challenges.
Nio’s Chief Financial Officer, Steven Feng, emphasized the company’s focus on business objectives, system capabilities improvement, and cost management optimization moving into 2024. While there was a slight improvement in vehicle margins to 11.9% in the fourth quarter, it fell short of analyst expectations. Unlike competitors Xpeng Inc. and Li Auto Inc., which started to see profitability, Nio did not reveal any major product launch plans for 2024. However, analysts anticipate the unveiling of a mass-market brand to compete with Tesla Inc.’s locally manufactured models, potentially helping to minimize losses.
The company is projected to deliver around 33,000 cars in the first quarter, a decrease from the 50,045 vehicles shipped in the previous quarter. Nio’s gross margins for the fourth quarter were 7.5%, below the market’s expectation of 10.2%. The company is anticipating revenue of up to 11.1 billion yuan for the current quarter, significantly lower than what analysts predicted. Nio, once considered a rising star in China’s EV market, received a capital injection from CYVN Holdings LLC last year to combat the challenges.
During an earnings call, Nio’s CEO, William Li, announced the launch of a mass-market brand called Alps in the fourth quarter. The brand’s first model, equipped with a swappable battery, will compete with Tesla’s Model Y SUV. Nio plans to introduce an even more affordable sub-brand in 2025, with vehicles priced below 200,000 yuan. The company is also expanding its presence in the United Arab Emirates.
Nio is actively promoting its battery-swap technologies and has partnered with other Chinese automakers to implement the technology. By allowing EVs to have their depleted batteries replaced with charged ones in a matter of minutes, driver concerns regarding range and charging times are addressed. Despite these efforts, Nio’s US-listed shares have declined by 41% this year.
The company is exploring various strategies, including staff reductions, cost-saving measures, and partnerships, to navigate the competitive EV market landscape. With the upcoming launch of new brands and technologies, Nio aims to regain its foothold in the industry and improve its financial performance.