Tesla (TSLA.US) added, BYD (002594.SZ, 01211.HK) added, Xiaopeng (09868.HK, XPEV.US) also added, Weilai (NIO.US, 09866.HK) in the end to keep up?
Weilai CEO Li Bin said at the 2021 performance conference that there is no need to adjust the price of existing products, but it will be combined with the upgrade of intelligent hardware to provide post-installation upgrade services for existing users. This year, there are plans to upgrade the performance hardware of the current 866 (that is, the "old three" models of ES8, ES6 and EC6), such as the annual model that launches performance upgrades, there will be price adjustments, combined with raw materials and costs, reasonable pricing.
This is Li Bin's response to whether Weilai has increased the price, not without adding, but not blindly adding, according to the actual situation and through the performance upgrade of existing models to reasonably increase.
So in the face of raw materials and chip supply chain problems, can Weilai hold up?
Vehicle gross margin target: 18%-20%
Affected by the short interruption of production caused by supply chain shortages, NIO's revenue growth momentum in the fourth quarter of 2021 has slowed down significantly.
In the fourth quarter of 2021, NIO's deliveries totaled 25,000 units, up 44.26% year-on-year, lower than 422.67%, 111.94% and 100.22% in the previous three quarters, respectively, and also lagging behind Xiaopeng and Ideal (02015. HK, LI.US) delivery level, see chart below.
Affected by this, NIO's automobile sales revenue in the fourth quarter only increased by 49.26% year-on-year to 9.215 billion yuan (unit RMB, the same below), an increase lower than the 165.91% in the previous three quarters.
As a result, including services and other revenues that grew 46.75% year-on-year to $685 million, NIO's total revenue for the fourth quarter of 2021 increased by 49.08% year-on-year to $9.9 billion.
Quarterly revenue growth may not be as expected, but the gross margin of auto sales revenue in the fourth quarter has improved, up 3.63 percentage points from the same period last year (Q4 2020) and 2.83 percentage points from the previous quarter (Q3 2021) to 20.88%, as shown in the chart below.
Driven by the improvement in gross profit margin of automobile sales, NIO's total gross profit for the fourth quarter of 2021 increased by 48.83% year-on-year to 1.7 billion yuan, and the net loss attributable to shareholders increased by 46.04% year-on-year to 2.179 billion yuan. Excluding non-continuous items such as share-for-equity salaries, the adjusted net loss increased by 31.49% from the same period last year to RMB1,747 million.
For the whole year, NIO's deliveries increased by 109.09% year-on-year to 91,400 units. The annual automobile sales revenue increased by 118.47% year-on-year to 33.170 billion yuan, driving the total revenue to increase by 122.27% year-on-year to 36.136 billion yuan.
Among them, the annual gross profit margin of the automobile sales business increased by 7.37 percentage points from 2020 to 20.06%, and the gross profit increased by 264.12% year-on-year to 6.821 billion yuan.
From the beginning of the third quarter of last year to this year, the cost of raw materials upstream of batteries rose sharply, and the entire industry chain had to share this upward pressure, coupled with the price increase of basic production raw materials such as aluminum and copper, which had a negative impact on the gross profit margin of its automobile sales.
NIO was able to achieve an improvement in gross profit margin, mainly due to the increase in single-vehicle sales revenue and the cost optimization brought about by the 75-degree ternary iron lithium battery pack.
Li Bin said at the performance conference that Weilai began to use a 75-degree ternary iron lithium battery from the fourth quarter of last year, which is lower than the original 70-degree ternary battery cost, which is very helpful for the improvement of gross profit of vehicle sales in the fourth quarter.
For the outlook for 2022, NIO has set a gross profit margin target of between 18% and 20% for its auto sales business, taking into account the potential impact of rising raw material costs.
Weilai said that in the face of challenges brought by multiple factors such as fluctuations in chip supply, rising raw material costs, the epidemic situation, and the international situation, it will work closely with partners to ensure the next production and delivery work.
Chips are a very big challenge, with more than a thousand chips per vehicle, 10% of which will face tight supply from time to time, which will indeed have a great impact on production and delivery.
Weilai said that some of its gross profit loss in 2021 is related to the rise in chip prices, the price problem of chips can be overcome, the main challenge is the uncertainty of supply: the problem is not the highest-end NVIDIA Orin chip, because it has direct strategic cooperation with these partners, the main problem is the basic chip, such as TI, Infineon, etc., but the future will look for alternatives in the market.
Three new models based on the NT2 are proposed
Since the third quarter of 2021, NIO's deliveries have begun to lag behind two other new forces, Ideal and Xiaopeng, or related to its failure to launch new models.
NIO said that 2022 will be a year of full acceleration for its delivery of three brand new models based on the NT2:
1) The FIRST BATCH OF PRODUCTION VEHICLES OFF THE LINE ON MARCH 24, 2022, WILL BE DELIVERED ON MARCH 28 AND WILL BE EQUIPPED WITH NAD, AN AUTO'S AUTONOMOUS DRIVING PLATFORM DEVELOPED BY WEISOFT, AND WEILAI SAID THAT IN THE FOURTH SEASON THIS YEAR MAY BE READY TO OPEN A NAD SUBSCRIPTION SERVICE FOR SOME USERS IN SOME REGIONS. At the performance conference, Li Bin revealed that the order volume of ET7 may be higher than the 15,000 vehicles earlier rumored by the media.
2) At nio DAY in December 2021, NIO released the MID-size smart coupe ET5, equipped with NIO's automatic driving system NAD, NIO's panoramic digital cockpit PanoCinema with AR and VR technology, and more than 100 comfortable, safe and intelligent configurations as standard. ET5 has received more attention from a more diverse user base, with orders outperforming expectations and deliveries expected in September this year.
3) NIO will also release the ES7, the first SUV model based on the NT2, in the near future, which is positioned in the mid-to-high-end five-seat SUV market and is scheduled to start delivery in the third quarter of this year.
ES7 or benchmark BMW's X5L, the integration of Weilai Sandian (motor, battery pack, electronic control), Sanzhi (intelligent driving, intelligent cockpit, intelligent service) technology, emphasizing high performance and luxury, for users with higher requirements on product performance and quality, so Li Bin believes that ES7 will not compete with its existing product sales, but should be an increment.
NIO expects vehicle deliveries in the first quarter of 2022 to be 25,000 to 26,000 units, up approximately 24.6% y/y to 29.6%. Quarterly revenue may increase by 20.6% year-on-year to 25.1% to 9.987 billion yuan.
In the first two months of this year, NIO's total vehicle deliveries were 15,800 units, an increase of 23.28% year-on-year, and its first quarter performance target may mean that the number of vehicles delivered in March 2022 may reach 9,217-10,217 units, an increase of 27% to 40.79% year-on-year.
From these data, THE PERFORMANCE OF WEILAI IN THE FIRST QUARTER THIS YEAR MAY STILL BE RELATIVELY BEHIND, BUT WITH THE DELIVERY OF NEW MODELS, THE DELIVERY VOLUME MAY BE ABLE TO CATCH UP LATER.
Production capacity is expected to increase in the second half of the year
Weilai said that the capacity upgrade of the JIANGHUAI NIO plant is in the process of phased advancement, and it is expected that the production capacity of the entire production line will be increased to 60JPH (hourly workload) in the middle of the year. Located in Hefei Xinqiao Electric Vehicle Industrial Park, the plant construction and equipment installation have been basically completed, the commissioning work is progressing smoothly, the second production base is planned to have a production capacity of 60JPH, which is scheduled to be officially put into operation in the third quarter of this year, and the first model produced is ET5. The first ET5 prototype rolled off the production line at the Trial Production Center on March 15.
Jianghuai factory can reach 60JPH in the middle of the year, Hefei factory is also planned according to 60JPH, but there is a climbing process, if according to 60JPH, double shift 4000 hours, production capacity or can reach 240,000 vehicles, about 20,000 vehicles / month; if overtime more, such as 5000 hours, production capacity or up to 300,000 vehicles.
Therefore, the company expects that the vehicle production capacity is expected to have a fundamental improvement in the second half of this year (the fourth quarter). It is worth noting that the ET7 is produced at the JAC plant, that is, in line with the ES8, ES6 and EC6 production - not only to ensure the production capacity of the three existing models, but also to cope with the mass production of the new car of the ET7 and prepare for the mass production of the ES7, et7's early production at the JAC plant will climb a little slower than the ET5 produced at the Hefei plant, or it will not reach the regular production capacity until the third quarter.
Battery production capacity: Weilai said that the bottleneck is also there, last year began to increase the production line, this year from the current point of view, battery production capacity should be able to meet its needs.
In addition, WEILAI also plans to enter the mass market, saying that the new brand work for the mass market is progressing smoothly, the core team has been built, the strategic direction and development plan have been clarified, and the first batch of products has entered the key research and development stage, or focused on the price of $30,000 (about 190,000 yuan) to $50,000 (320,000 yuan), but the premise is that there is enough gross profit and will not sacrifice gross profit to enter the market.
Sales and service network: Continue to expand
At present, NIO has 46 NIO centers and 341 NIO spaces, covering 155 cities around the world. It has 60 NIO service centers and 179 authorized service centers in 146 cities in China.
NIO said it will continue to expand its sales and service network in China, and plans to add no less than 100 new sales outlets and more than 50 NEW NIO centers and authorized service centers in 2022.
In terms of charging and replacing networks: 866 substations have been built, covering 190 cities in China, completing more than 7.6 million power exchanges, and deploying more than 711 supercharge stations and 3786 destination charging piles nationwide.
In 2022, WEIO will deploy 30 power Up Plan destination power-up routes, and the Chinese market will have built more than 1,300 substations, 6,000 supercharge piles, and 10,000 destination charging piles, and continue to lay out in the charging and replacing network to further enhance the user's power-up experience.
In addition, NIO's products and system-wide services will be officially launched in Germany, the Netherlands, Sweden and Denmark in 2022, and the team formation and preparations for related market entry are progressing smoothly.
Turnaround target: Reach break-even in the fourth quarter of 2023 and achieve full-year profitability in 2024
As mentioned above, WEILAI's gross profit margin increased to more than 20% in 2021, and its gross profit for the whole year increased by 264.12% year-on-year to 6.821 billion yuan, just covering the sales, marketing and administrative expenses of 6.878 billion yuan during the period, and could not offset the remaining 4.592 billion yuan of research and development expenses, which was the reason for its annual after-tax loss of 4.017 billion yuan.
Weilai said that this year will be a big year for R & D investment, it is expected that its gross profit will continue to cover its sales and administrative expenses, but considering the expansion of European business, R & D investment will be further increased, 2022 R & D investment or double compared to 2021 (the author estimates that it may reach 9.2 billion yuan), partly involving long-term technology research and development, but also including next year's research and development of new models and the trial of global market models.
Li Bin said that the number of R& D personnel will reach 9,000 by the end of this year. The author learned from the prospectus that NIO has 4,809 product and software developers as of the end of 2021, which is 31.63% of the total number of full-time employees in the world (the largest number of sales employees), which means that NIO will hire about 4,200 additional developers this year.
According to WEILAI's logic, its gross profit margin target of 18%-20% can cover sales and administrative costs, so the loss may mainly come from R & D expenditure, with the expansion of R & D investment, Weilai's loss is not also further expanded?
Weilai said that in addition to research and development, it will continue to deploy charging devices and automatic driving to improve user experience and ensure long-term development. The increase in revenue and profit margins of businesses such as services, as well as the economies of scale brought about by the expansion of automobile sales revenue, may allow them to improve their operational efficiency.
Li Bin said that the goal is to achieve quarterly break-even in the fourth quarter of 2023 and achieve full-year profitability in 2024.
summary
In 2022, when electric vehicle subsidies are about to be withdrawn, three new cars will follow, which may be able to regain some market share for Weilai. But brand competition is also becoming more and more fierce, in addition to the new forces, across the River Dragon Tesla, new forces such as Nezha and backed by traditional car companies of new energy vehicle brands such as Eian, etc., have their own superiority, benchmark high-end cars, plans to enter the mass market Weilai can win back the new force as desired? And can it achieve its goal of turning a profit in 2024? This year will see the beginning.
Author: Mao Ting