Abstract: Weilai said that it will not increase prices for the time being, and the richness of the product matrix in 2022 is expected to become a catalyst for development
▲ Image source IC
Text | Wang Jingyi
Edit | Zhao Cheng
The annual revenue was 36.14 billion yuan, an increase of 122.3% year-on-year; the net loss was 4.02 billion yuan, narrowing by 24.3% year-on-year; and the cash reserve was 55.4 billion yuan.
On March 25, Nio Motors ( NYSE: NIO ) released its 2021 financial report showing the above content.
Affected by the reduction of battery costs and the expansion of sales scale, the gross profit margin of NIO's vehicle sales for the whole year was 20.1%, which became one of the biggest highlights of the financial report.
Citibank research report said that Weilai's auto gross margin in the fourth quarter of last year was stronger than expected, and the expected car delivery volume in the first quarter met market expectations. The release of ET7, along with any potential average selling price increase, is expected to be the next catalyst for the company's growth to lift the buy rating.
The gross profit exceeded 20%, which became the biggest highlight of the financial report
One of the biggest highlights of the financial report is that the gross profit margin of automobiles for the whole year reached 20.1%. Since the second quarter of 2020, the gross profit margin of NIO vehicles has turned positive for the first time (9.7%), and has since improved all the way.
"The battery that began to use 75 degrees of ternary iron lithium in the fourth quarter of last year is indeed lower than the cost of the original 70-degree ternary battery, which is very helpful for the improvement of gross profit in the fourth quarter." In addition, after the increase in sales, many apportioned costs can be reduced a lot. Li Bin, founder of Weilai Automobile, said.
For reference, BMW's vehicle gross margin in 2021 is 17%, tesla's is 29.3%. Due to the recent continuous rise in raw materials for new energy vehicles and the pressure on the profitability of car companies, Li Bin hopes that the gross profit margin of WEILAI's automobiles in 2022 will be 18%-20%.
In order to cope with the rising cost, many car companies, including Xiaopeng and Ideal, have raised the price of cars, but Li Bin said that Weilai has no idea of raising prices for the time being.
Weilai told Caijing Automobile (ID: caijingqiche) that it will adjust the price of existing models in combination with the upgrade of intelligent hardware, and the 2022 ES8, ES6, EC6 product strength will achieve major upgrades, equipped with 8155 chips and 5G communication modules, as well as several other optimization improvements, and the price will also be reasonably adjusted. At the same time, NIO will also provide existing users with post-installation upgrade services for the above hardware. Prices for existing models will not be adjusted until the upgrade.
Li Bin said that in the next few years, we will continue to increase investment in research and development of key technologies, especially in key areas related to full-stack autonomous driving technology and power batteries. Investment in research and development of core technologies can not only enhance the sustainable competitiveness of technologies and products, but also improve gross profit margins and profitability in the long run.
According to the financial report, NIO's net loss in the fourth quarter of 2021 was 2.1434 billion yuan, an increase of 54.4% year-on-year; the net loss for the whole year was 4.0169 billion yuan, narrowing by 24.3% year-on-year.
In the fourth quarter, half of the annual loss was recorded, which was closely related to the increase in R&D and sales management expenses. R&D expenses for the fourth quarter were RMB1,828.5 million, up 120.5% year-on-year; R&D expenses for the full year were RMB4,591.9 million, an increase of 84.6% year-on-year. The R&D team reached nearly 9,000 people at the end of the year.
"If we didn't do long-term R&D investment, WEILAI could have achieved short-term profitability a long time ago, but we chose not to do so." Qin Lihong previously said it bluntly in an interview with Caijing Automobile (ID: caijingqiche).
At the same time, NIO is building sales channels and infrastructure on a large scale. Sales and administrative expenses for the fourth quarter were RMB2,358.2 million, an increase of 95.4% year-on-year, while sales and administrative expenses for the full year were RMB6,878.1 million, an increase of 74.9% year-on-year.
In 2021, 605 new substations will be added, bringing the total to 777 – only 172 new substations in Weilai, more than quadrupled in one year. At the same time, WEILAI launched a second-generation replacement power station with stronger performance, providing services for a maximum of 312 vehicles in a single day.
Weilai told Caijing Automobile (ID: caijingqiche) that in 2022, a total of 1,300 substations, 6,000 supercharge piles, and 10,000 destination charging piles will be built to improve the strength of the service and sales network system.
▲ Image source Weilai official website
Breakeven is expected in 2024
As of February 28, NIO has delivered 182853 new cars. Among them, 91,429 units were delivered in 2021, an increase of 109.1% year-on-year, of which 20,060 units were in the first quarter, 21,896 units in the second quarter, 24,439 units in the third quarter, and 25,034 units in the fourth quarter.
Li Bin pointed out on the earnings call that in 2021, in Shanghai's more than 350,000 yuan of fuel and electric SUVs, Nio's market share reached 23%, and the overall sales ranked first, and it is believed that this trend will also expand to third- and fourth-tier cities.
This is of course the "first" with some pre-definites, but it also reflects the appeal of NIO in the luxury market.
CaijingQiche (ID: caijingqiche) learned from Weilai that the average transaction price of Weilai brand vehicles exceeded 430,000 yuan, higher than BMW and Audi brands.
In 2022, NIO plans to deliver three new models, starting with the upcoming delivery of et7 on March 28, and the number of models on sale will increase from three to six, including the first mid-size car ET7; the mid-size coupe ET5 is expected to start delivery in September 2022; and the mid-size and large SUV ES7 will be released in mid-April 2022.
Li Bin revealed on the earnings call that after the ET7 opened the test drive on March 5, the strong product force got good test drive feedback from users, and the order conversion exceeded the company's expectations, and the current number of ET7 orders was more than 15,000 units. The ET5 is "the most ordered car we've ever released," but didn't disclose the exact numbers.
Li Bin said that the medium and large car market of more than 300,000 yuan where ET7 is located sold 750,000 yuan last year, and the average monthly sales of the BMW 5 Series directly targeted by it were 15,000 units. The medium and large five-seat SUV market where ES7 is located has a capacity of 200,000 units and is still growing, "I am still very confident in the market segment." ”
Deutsche Bank analyst Edison Yu believes that NIO has gained popularity as an ambitious high-end brand with a leading service infrastructure that no chinese automaker can match.
Although NIO's car sales have stagnated in the past few quarters due to operational bottlenecks, Deutsche Bank believes that by the end of this year, with the enrichment of the product camp, NIO's delivery volume will grow from 10,000 units per month to 25,000 units per month, which will shift the focus from supply constraints to product cycles.
In order to reach a larger market, NIO will start preparing new brands for the mass market from 2021. Li Bin said that the business work of the new brand 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.
According to the financial report, in 2018, 2019, 2020 and 2021, NIO recorded revenue of RMB4.9512 billion, RMB7.8249 billion, RMB16.2579 billion and RMB36.14 billion respectively.
Losses are narrowing. In the past four years, NIO generated net losses of RMB9,639 million, RMB11,295.7 million, RMB5,304.1 million and RMB4.02 billion, respectively.
NIO expects to break even for the current quarter in the fourth quarter of 2023 and breakeven for the full year of 2024.