Chinese EV maker NIO Inc. (NIO) reported an adjusted loss of $0.39 per share for the fourth quarter, which was larger than Wall Street was expecting. In the first quarter, Nio expects to deliver 31,000-33,000 vehicles, well below the estimated 44,000.
Yahoo Finance’s Brad Smith and Seana Smith break down the report.
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Editor’s note: This article was written by Stephanie Mikulich.
Video Transcript
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BRAD SMITH: Let’s get to some trending tickers on Yahoo Finance. We’re tracking shares of NIO ticking to the downside after reporting a steeper than expected adjusted loss per share. The EV maker also forecasting Q1 deliveries between 31,000 and 33,000. That misses estimates of just over 44,000 here.
You’re taking a look at shares down by about 4.3% pre-market. I think one of the huge things that investors are also trying to wrap their minds around is whether or not one of at least the early adoption peaks for EVs is behind us or in the rear view mirror.
At least, as of right now, this is a company that could be facing some of that normalization when you think about the even sequential Q3 2023 versus Q4 2023 decline that they saw in deliveries there. So that’s down sequentially.
You’re also looking at this outlook that is down compared to the estimates that were out there. And then largely here, it’s going to come back to where this company continues to see an average selling price in an environment where there’s a large pricing war that’s really been initiated here to try and capture consumer, that’s a little more value conscious at this point, especially at that higher end of some of these car purchases.
SEANA SMITH: Yeah, Brad, and also, this is a company that’s not profitable. When you take a look at the losses here for the last year, they had a loss of another $2.9 billion. So it’s an extremely competitive market. They’re being forced to lower their prices in order to drive sales. And that’s pressuring margins.
Yes, margins did improve, but they were lower than what the Street was looking for. Vehicle margins here, 11.9% in the fourth quarter. Yes, that was up, but it was still a miss of the 13.6% that the Street was looking for.
And NIO’s CFO Steven Feng was trying to alleviate some of the fears out there from analysts, from investors on the Street, saying that moving into the 2024, they are going to prioritize their business objectives, improve system capabilities, and also optimize cost management.
And we know the company made moves to– within their workforce, they had about a 10% workforce reduction that was announced toward the end of last year. They have had some liquidity issues just in terms of more capital that has been needed to keep business moving here.
So I think it’s a couple of things. One, they’re running up against more pressure on margins as they need to lower costs. And then two, the fact that demand isn’t anywhere near what forecasters had initially anticipated. And we’re seeing that not only play out obviously in China, but that’s also playing out around the world. And a huge headwind here for a number of those automakers.