Introduction: Due to the increase in R&D and marketing investment, WEILAI will lose more than 4 billion yuan in 2021, and because there will be no new products listed for up to a year, its sales will gradually be surpassed by rivals such as Xiaopeng and Ideal.
(Text/Pan Yuchen Editor/Lou Bing) On March 25, NIO, a new car-making force, announced its financial data for the fourth quarter and full year of 2021. Total revenue for the fourth quarter of 2021 was RMB9,900.7 million, an increase of 49.1% year-on-year. The total revenue for the whole year was 36,136.4 million yuan, an increase of 122.3% year-on-year.
In addition, the operating loss for the fourth quarter of 2021 reached 2,445.1 million yuan, an increase of 162.5% year-on-year. The operating loss for the whole year was 4,496.3 million yuan, a decrease of only 2.42% from the previous year. After the earnings report, as of the close of Hong Kong stocks on March 25, NIO shares fell 7.11% to close at HK$162 (as of press time).
Losses narrowed slightly year-on-year
The vast majority of NIO's revenue comes from car sales. In the fourth quarter of 2021, NIO's auto sales were 9,215.4 million yuan, an increase of 49.3% year-on-year. The annual automobile sales revenue was 33.1697 billion yuan, an increase of 118.5% year-on-year.
The increase in automobile sales is positively related to the growth of NIO's automobile sales. NIO delivered 25,000 vehicles in the fourth quarter of 2021, up 44.3% year-on-year, and delivered 91,400 vehicles in 2021, up 109.1% from 2020.
In terms of other sales revenue, NIO reached 685.4 million yuan in the fourth quarter of last year, an increase of 46.8% year-on-year. Last year, it was 2,966.7 million yuan, an increase of 175.9% year-on-year. Weilai said that other revenues mainly come from services supporting automobiles, energy packages, accessories, used cars, auto finance and sales of new energy credits.
In terms of gross profit achieved, NIO's gross profit in the fourth quarter of last year was 1.6995 billion yuan, an increase of 48.8% year-on-year. The gross profit for the whole year was 6,821.4 million yuan, an increase of 264.1% year-on-year. Automotive gross margin in the fourth quarter of last year was 20.9%, up 3.7 percentage points from the same period last year. Automotive gross margin for the full year 2021 was 20.1%, an increase of 7.4 percentage points over the previous year. Weilai said that this is mainly driven by the higher average price of the models on sale and the increase in the acceptance of 100kWh batteries.
In terms of operating losses, NIO's loss in the fourth quarter of 2021 reached 2.4451 billion yuan, an increase of 162.5% year-on-year. The operating loss for the whole year was 4,496.3 million yuan, a decrease of 2.42% from the previous year. Net loss attributable to shareholders in the fourth quarter of last year was 2,179.2 million yuan, an increase of 46.0% year-on-year; net loss attributable to shareholders for the full year was 10,572.3 million yuan, compared with a net loss attributable to shareholders in 2020 was 5,610.8 million yuan.
In terms of R&D investment, NIO's R&D expenses in the fourth quarter of last year were 1.8285 billion yuan, an increase of 120.5% year-on-year; the annual R&D expenses were 4.5919 billion yuan, an increase of 84.6% year-on-year. Nio said this is mainly due to the increase in the design and development costs of R&D personnel and new product technologies, including the newly released ET7, ET5 and ES7 models, as well as NAD driver assistance systems.
In terms of sales, general and administrative expenses, NIO's investment in the fourth quarter of 2021 was 2,358.2 million yuan, an increase of 95.4% year-on-year; the investment for the whole year was 6,878.1 million yuan, an increase of 74.9% year-on-year. Nio said this was mainly due to the increase in personnel in the sales and service function, costs associated with the expansion of the sales and service network, and incremental marketing and promotion expenses.
As of December 31, 2021, NIO's cash and cash equivalents, restricted cash and short-term investment balances were $55.4 billion.
Is the battery price increase a human factor?
Since the second half of last year, Nio's sales have declined significantly.
The main reason for this is that the past 2021 was the first full year since the launch of the first new car ES8, which also means that Weilai still relies on the ES8, ES6, EC6 three SUV models to meet the challenges of emerging new electric vehicles throughout the year.
In addition, WEILAI also had two fatal accidents suspected of being caused by assisted driving in the third quarter of last year, and no investigation results have been announced so far, and the product strength has also been questioned.
In contrast, the sales of the P7 model of the main competitor Xiaopeng have been rising, and the P5 listed last year has gradually begun to be delivered; although the ideal one model is still on sale, it has also been remodeled with last year. In the face of opponents who continue to expand their product lineup, Weilai has been surpassed by Xiaopeng and approached by ideals from the first of "Wei Xiaoli" last year, and even once surpassed by the second-tier brand Nezha in the past two months.
However, the long-term situation of fighting the old with the new may be improved this year. The first is that the ET7, which has been postponed until this year, will meet with consumers in the near future, while the MIDSed sedan ET5, which was released at the end of last year, is scheduled to start delivery in the second half of the year.
In addition, NIO will release a new SUV model ES7 in the second quarter of this year. Li Bin, founder, chairman and CEO of Weilai, said that the new car will be benchmarked against the domestic BMW X5L. Although the three SUV and the existing ones are in the price range of 350,000-600,000 yuan, Li Bin said that the new car will not affect the sales of existing products.
It is worth mentioning that with the recent comeback of chips and the rise in the price of raw materials for electric vehicles led by lithium, many new energy vehicle companies have successively announced price increase plans, and Weilai, which has the highest average transaction price, is the only company in the main new forces that has not officially announced price increases.
In this regard, Li Bin said in the conference call that there is no need for Weilai to increase prices at this stage, but there is still room for maneuver, saying that it will combine the upgrade of smart hardware and changes in battery costs to adjust prices at the right time.
He admitted that the chip problem is still a very big challenge, and Weilai uses more than 1,000 chips per vehicle, of which 10% are in tight supply. Li Bin said that Weilai's production capacity in the late third quarter is temporarily worry-free, and chip prices have been included in the scope of gross profit considerations, but the volatility of the supply chain, especially the basic chips, still needs to be solved.
For the price increase of raw materials such as lithium carbonate, Li Bin believes that this is more of a "speculative" problem. He called on the upstream of the industrial chain such as lithium ore and battery suppliers to proceed from the long-term interests of the entire industry and not artificially create price increases.
Profitable after two years
In addition, like most new forces, NIO, as a company, has not been able to get rid of losses. Although last year's losses were reduced compared to 2020' losses, operating losses of nearly $4.5 billion remained high.
Li Bin explained in the conference call that at present, WEILAI's funds are mainly used for research and development, production equipment, sales and service networks, charging and replacing networks and other infrastructure, and the investment in these projects is very huge. In terms of production capacity, the production line upgrade of the JAC WEILAI plant is currently being promoted in stages, and it is expected that the full production line production capacity will be increased to 60JPH in the middle of the year. In addition, the construction and equipment installation of the second plant in Hefei Xinqiao have been basically completed, with a planned production capacity of 60JPH, which is scheduled to be officially put into operation in the third quarter of this year, and ET5 is from the factory.
In terms of sales and service network, NIO has built 46 NIO centers and 341 NIO spaces, 60 NIO service centers and 179 authorized service centers, covering a total of about 150 cities.
At the R&D level, although NIO invested a total of nearly 4.6 billion yuan last year, an increase of more than 80% year-on-year, there is still a long way to go compared with the nearly 7 billion yuan of sales and management expenses.
"There is no doubt that we will not compromise on our investment in research and development." Li Bin stressed in the conference call that it is expected that the scale of R & D personnel will reach 9,000 by the end of this year, a significant increase compared with now. The NAD driver assistance system is also expected to be open to users in some areas by the end of this year.
Qu Yu, vice president of finance of NIO, said that the company has been committed to achieving gross profit coverage of sales and management expenses in 2021, and this goal is expected to be achieved within this year. Regarding the company's overall financial situation, Li Bin said that WEIlai plans to achieve breakeven by the fourth quarter of 2023 and achieve overall profitability for the whole year of 2024.
Based on last year's financial situation, WEIO also gave its business expectations for the first quarter of this year in the financial report. Vehicle deliveries were approximately 25,000 to 26,000 units, up about 24.6% to 29.6% year-on-year, and revenue was RMB9.631 billion to RMB9.987 billion, up approximately 20.6% to 25.1% year-on-year.
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