With the announcement of Xpeng Motors' 2023 Q4 and full-year financial reports, the financial performance and business development of NIO, Xpeng Motors and Li Auto, the three traditional leading new forces that were once known as "Wei Xiaoli", have been disclosed in the past year.
However, the pattern has long changed, and the youngest of the three is to become the "leading big brother", and will further expand its leading edge in 2023, becoming the first "ashore" new car-making force with a revenue of over 100 billion yuan and a net profit of over 10 billion yuan throughout the year. Prior to this, only Tesla and BYD were among the world's new energy vehicle companies that could achieve annual profitability.
The financial reports of NIO and XPeng have their own outstanding problems, among which NIO's losses continued to expand last year, and it seems that it is getting farther and farther away from profitability; although XPeng successfully reduced losses last year, the annual gross profit margin fell by 10 percentage points year-on-year, which also makes people more worried about its profit prospects.
01
The ideal has come ashore, and Weilai and Xiaopeng are still crossing the river
Judging from the financial data on the revenue side, it is obvious that the ideal is the most "profitable" of the three "Wei Xiaoli", and it is also the first Chinese new power car company to achieve annual profitability.
In Q4 alone, the ideal net profit reached a terrifying 5.75 billion, a year-on-year increase of more than 20 times, driving the annual net profit to exceed 10 billion, turning losses into profits for the first time.
In addition, the most eye-catching performance in the ideal financial report is the gross profit margin performance - the gross profit margin in Q4 and the whole year is more than 20%, which is not only behind NIO and Xpeng, but also much higher than the average level of about 10% in China's automotive industry, reflecting its higher profit margins and cost control capabilities.
Looking at NIO's side, the annual revenue reached a new high, reaching 55.6179 billion yuan, a year-on-year increase of 12.9%, but the loss also hit a new high, exceeding 20 billion yuan. Among them, the net loss in Q4 was as high as 5,367.7 million, a year-on-year decrease of 7.2%, a month-on-month increase of 17.8%, and a total of more than 20 billion yuan for the whole year, an increase of 43.5% year-on-year.
It is equivalent to an average loss of more than 5 billion yuan per quarter last year, which is much higher than the other two.
At the same time, NIO's gross profit margin performance is also worrying, of which the gross profit margin in Q4 was 7.5%, compared with 3.9% in Q4 2022 and 8.0% in Q3 2023, an increase of 3.6 percentage points and a decrease of 0.5 percentage points, respectively. Gross margin for the full year was 5.5%, down 4.9 percentage points from 10.4% in the previous year.
In this regard, NIO explained that the gross profit margin decreased compared with Q3 2023, mainly due to the decline in the gross profit margin of providing energy solutions with the expansion of the energy network, which was partially offset by the increase in the gross profit margin of automobiles. For reference, its Q4 gross margin was 11.9%, an increase of 5.1 percentage points from 6.8% in the same period of 2022 and a slight increase from 11.0% in Q3 2023.
In terms of Xpeng, it is in a similar situation to Weilai, with a total annual revenue of 30.68 billion yuan, an increase of 14.2% compared with last year, but a loss of 10.38 billion yuan, an increase of 13.57% year-on-year.
However, fortunately, Xiaopeng has already improved in Q4 last year, with a loss of 1.35 billion yuan, a decrease of 42.8% compared with 2.36 billion yuan in the same period of 2022, and a decrease of 65.3% compared with a net loss of 3.89 billion yuan in Q3 of 2023. This change was due to the improvement of Xpeng's gross profit margin, which was 6.2% in Q4, a significant increase from -2.7% in the previous quarter.
Although the gross profit margin in Q4 has improved, the company's annual gross profit margin is still in a relatively low state compared with the industry average. In 2023, Xpeng's annual gross profit margin will be 1.5%, a year-on-year decrease of 10.0 percentage points. Moreover, the profit margin of automobiles was negative 1.6%, down 11 percentage points year-on-year.
Xpeng explained that "the increase in promotional activities and the expiration of subsidies for new energy vehicles, as well as the loss of inventory reserves and purchase commitments related to the upgrade of the G3i and existing models, had a negative impact of 2.4 percentage points on vehicle profit margins in the current fiscal year." In addition to the foregoing, the vehicle margin was positive 0.8%. ”
In addition, Xiaopeng's gross profit margin is the lowest in "Wei Xiaoli", which is also related to the low average price of its bicycles.
Last year, the average price of Xpeng's bicycles was 198,000, a difference of more than 100,000 yuan compared with NIO's 308,000 yuan and Ideal's 320,000 yuan. The low average price of Xpeng bicycles is related to the fact that the Xpeng G6 launched last year returned to a pragmatic route in pricing, controlling the starting price at about 200,000 yuan, and the increase in sales after listing was immediate.
However, this situation is not long-lasting, with the intensification of the price war in the new energy vehicle market, a few days ago, Xiaopeng announced that the price of all G6 models will be adjusted, a decrease of up to 20,000 yuan, which means that the starting price of the car has dropped to 189,900 yuan. This move may make it difficult for Xpeng's gross profit margin to increase to a reasonable level in a short period of time.
02
Reducing expense ratios is key to making a profit
The ideal of "Wei Xiaoli" was established at the latest, but it was the first to achieve profitability, why is this?
Judging from the financial data on the expense side, the ideal expense ratio is significantly lower than the other two, which may be the key to its profitability. Specifically, Ideal's expense ratio in Q4 and the whole year of 2023 is less than 8%, while NIO's Q4 and annual expense ratio are more than 23%, and Xpeng's Q4 expense ratio is 13.49% and the annual expense ratio is 21.38%, which shows that Ideal has stronger capabilities in financial management and cost control and is more efficient in spending money.
In addition to selling, general and administrative expenses, another very large fixed expense of car companies is research and development.
In the past, ideals gave people the impression that they were reluctant to invest in R&D, and R&D expenditure had been at the bottom of "Wei Xiaoli" for a long time, but this "brainwashing bag" would be thrown away from now on. Because of the rapid growth of ideal R&D investment in the past year, Q4 reached 3.49 billion yuan, a year-on-year increase of 68.6%, and the annual reached 10.59 billion yuan, an increase of 56.1% year-on-year. This level is already close to NIO and far behind Xpeng.
In its financial report, Ideal also explained the large increase in R&D investment: mainly due to the increase in employee compensation due to the increase in the number of employees, as well as the increase in expenses to support the expansion of product portfolio and technology.
For reference, as of December 31, 2023, the ideal number of R&D personnel is 6,726. As of December 31, 2022, the number of its R&D personnel was 4,838, an increase of 1,888 in a year. Referring to the data of Everbright Securities, the average salary of ideal R&D personnel at the end of 2022 was 785854 yuan, and the salary cost of ideal R&D personnel alone has increased by more than 1.4 billion yuan in the past year.
In addition, 2024 is an unprecedented product year for Ideal, with the release and delivery of Ideal MEGA in March, and large-scale user delivery of 2024 Ideal L7, Ideal L8 and Ideal L9 will start in the same month. In addition, the all-new product Ideal L6 will also be released in 2024. Considering the R&D cycle, the R&D investment for these new products started in the previous year.
However, despite the rapid catch-up, NIO is still the most willing of the three to spend money on R&D, its Q4 R&D investment reached 3.9721 billion yuan, a year-on-year decrease of 0.2%, but exceeded 3 billion yuan for five consecutive quarters, maintaining the industry leader, and the annual R&D investment reached 13.4314 billion yuan, 2.8414 billion yuan higher than the second ideal, a year-on-year increase of 23.9%.
Although Xpeng has the least R&D investment among the three, it still maintained growth last year, of which Q4 R&D investment was 1.31 billion yuan, a year-on-year increase of 6.3%, and the annual R&D investment was 5.28 billion yuan, a slight increase of 1.2% year-on-year.
Overall, NIO's fixed costs among the three are the highest, with nearly 8 billion yuan in R&D, sales and management in Q4, accounting for nearly half of the revenue, and more than 25 billion yuan for the whole year, which is an important reason why its road to profitability is still a long way to go.
03
Whose expectations are more optimistic?
While disclosing last year's financial indicators, the three also made a brief outlook for the Q1 performance in 2024: among them, the ideal expects to deliver 100,000 to 103,000 vehicles in Q1 in 2024, a year-on-year increase of 90.2% to 95.9%, and the revenue is expected to be 31.25 billion to 32.19 billion, a year-on-year increase of 66.3-71.3%.
NIO expects to deliver 31,000 to 33,000 vehicles in Q1 2024, an increase of about 6.3% year-on-year. The total revenue is expected to be between 10.499 billion yuan and 11.087 billion yuan, an increase of about 3.8% year-on-year.
Xpeng expects to deliver 21,000 to 22,500 vehicles in Q1 2024, an increase of about 15.2% to 23.4% year-on-year, and total revenue is expected to be between 5.8 billion yuan and 6.2 billion yuan, an increase of about 43.8% to 53.7% year-on-year.
Judging from the expected year-on-year increase in this year's Q1 performance, Ideal has the most confidence in the market prospects, followed by Xpeng, and NIO is the worst.
In addition to deliveries, cash and liabilities are also important considerations for a company's expectations.
As of the end of 2023, NIO's cash reserves reached 57.3 billion yuan, but its total liabilities were as high as 87.79 billion yuan, and its asset-liability ratio was 75%, making it the only car company in "Wei Xiaoli" whose cash reserves could not cover its liabilities.
On the other hand, although the total liabilities also exceed 80 billion yuan, the cash reserves of 103.67 billion yuan can fully cover its liabilities, and the asset-liability ratio is 58%.
Xpeng's cash reserves are the smallest of the three, only 45.7 billion, but the relative total liabilities are also the lowest, only 31.06 billion, and the asset-liability ratio is 59%, which is basically the same as ideal.
For new EV makers that need to continue to burn money, cash reserves are often used as a key indicator to evaluate whether the company can sustain itself. Previously, in the face of the attention and doubts in the market, Li Bin, chairman of Weilai Automobile, responded in the live broadcast room that Weilai Automobile still has tens of billions of funds, so you can rest assured.
However, cash reserves are not absolute, and in the face of high losses and expense ratios, NIO's top priority is to optimize cost management. Feng Wei, Chief Financial Officer of NIO, made it clear in the financial report: "Looking forward to 2024, we will focus on high-priority business goals, improve system capabilities, and further optimize cost management efficiency." ”
In fact, NIO's action to reduce costs and increase efficiency has begun. At the end of last year, some foreign media broke the news that in order to reduce costs and strive to achieve profitability as soon as possible, NIO is planning to spin off the battery manufacturing business into a separate new company and raise external financing. Li Bin also revealed at the Q3 earnings conference in the same month that the battery self-made project was assessed as unable to improve the gross profit margin within three years, so adjustments have been made to develop battery packs, battery cells, and materials by NIO itself, and entrust others to produce them.
In fact, the average price of NIO's bicycles is not low, which proves that its high-end brand image has been successfully shaped, but the problem is that it maintains high-end high-quality service standards, resulting in its expense ratio has remained high.
As a result, on the one hand, NIO began to reduce service costs by adjusting the rights and interests of free battery swaps, and on the other hand, it launched new brands with lower positioning, hoping to increase sales to form a scale effect. A few days ago, NIO announced the naming and planning of the second brand "Ledao Automobile", the new brand will be officially released in the second quarter of this year, the first model is named "Ledao L60", the price is expected to be between 20-300,000 yuan, it is planned to be released in the third quarter, and large-scale delivery will begin in the fourth quarter. This move is believed by some industry insiders to help NIO expand its sales channels, achieve scale effects, and then turn around losses. But in the end, it is still unknown whether the market and users will pay.
In addition, it is worth mentioning that Ideal is the only car company among the three car companies to disclose free cash flow, of which Q4 free cash flow was 14.54 billion yuan, a new quarterly high, and the annual free cash flow reached 44.19 billion yuan, which indicates that the company's ability to return to shareholders has been further improved, because free cash flow refers to the maximum amount of cash available for distribution to shareholders (and creditors) without endangering the company's survival and development.
04
Driver's conclusion
On the whole, the "best financial performance in history" of Ideal is indeed very valuable, and all financial indicators are significantly better than Weilai and Xiaopeng, becoming the only "big brother" in the first echelon of China's new power car companies.
NIO and XPeng have their own advantages and disadvantages. At the same time, from the perspective of core financial indicators such as gross profit margin, average bicycle price, and cash reserves, it is not as good as NIO, but the advantage compared with NIO is that there are fewer losses, and the debt pressure is not so great, and the problem of NIO in this regard is more serious.
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