NIO Inc (NIO) Q1 2025 Earnings Call Highlights: Navigating Growth Amidst Challenges

  • Total Revenue: RMB12 billion, up 21.5% year-over-year, down 38.9% quarter-over-quarter.

  • Vehicle Sales: RMB9.9 billion, up 18.6% year-over-year, down 43.1% quarter-over-quarter.

  • Other Sales: RMB2.1 billion, up 37.2% year-over-year, down 5.9% quarter-over-quarter.

  • Vehicle Margin: 10.2%, compared to 9.2% in Q1 last year and 13.1% last quarter.

  • Overall Gross Margin: 7.6%, compared to 4.9% in Q1 last year and 11.7% last quarter.

  • R&D Expenses: RMB3.2 billion, up 11.1% year-over-year, down 12.5% quarter-over-quarter.

  • SG&A Expenses: RMB4.4 billion, up 46.8% year-over-year, down 9.8% quarter-over-quarter.

  • Loss from Operations: RMB6.4 billion, up 19% year-over-year, up 6.4% quarter-over-quarter.

  • Net Loss: RMB6.8 billion, increased year-over-year, decreased 5.1% quarter-over-quarter.

  • Vehicle Deliveries: 42,094 units, up 4.1% year-over-year.

  • Q2 Delivery Guidance: Between 72,000 and 35,000, representing 25.5% to 30.7% growth year-over-year.

Release Date: June 03, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

  • NIO Inc (NYSE:NIO) delivered 42,094 smart EVs in Q1 2025, marking a 4.1% year-over-year increase.

  • The company launched and delivered new models including the ES6, EC6, ET5, and ET5T, which are expected to drive significant growth in Q2.

  • NIO Inc (NYSE:NIO) achieved year-over-year growth in both vehicle gross margin and overall gross margin due to cost reduction efforts.

  • The NIO brand’s ET9 surpassed BMW 7 Series and Audi A8 in China, marking a breakthrough for a Chinese brand in the premium executive segment.

  • NIO Inc (NYSE:NIO) raised over HKD4 billion in a share offering in Hong Kong, attracting global long-term investors.

  • Total revenues decreased 38.9% quarter-over-quarter, reflecting a seasonal impact on deliveries.

  • Vehicle margin decreased to 10.2% from 13.1% in the previous quarter due to increased manufacturing costs per unit.

  • The company reported a net loss of RMB6.8 billion, showing an increase year-over-year.

  • R&D expenses increased 11.1% year-over-year, driven by new product development and increased personnel costs.

  • SG&A expenses rose 46.8% year-over-year, primarily due to increased personnel costs and sales and marketing activities.

Q: How does NIO plan to achieve its target of 30,000 monthly sales for the NIO brand by year-end, given the moderate sales increase guidance for Q2? A: Bin Li, CEO, explained that NIO expects to deliver 25,000 to 28,000 units in June. The company has launched new models like the ES6, EC6, ET5, and ET5T, which are expected to stabilize prices and improve vehicle gross margins by over 10% from the previous generation. NIO aims for a balance between sales volume and selling prices, with a target of 25,000 monthly deliveries for the NIO brand in Q4, representing a 20% year-over-year growth.

Q: When will NIO see meaningful contributions from its cost reduction efforts, and can you quantify the expected improvements? A: Yu Qu, CFO, stated that since March, NIO has implemented cost control measures, focusing on short-term returns and efficiency improvements in R&D, logistics, and sales. The company aims for a 15% reduction in R&D expenses in Q2 and plans to control R&D expenses to RMB2-2.5 billion per quarter by Q4. SG&A expenses will be managed carefully, with a target to reduce them quarter-over-quarter and keep non-GAAP SG&A expenses within 10% of sales revenue by Q4.

Q: What feedback has NIO received from users after launching the NIO World Model, and how does it compare to previous autonomous driving solutions? A: Bin Li, CEO, mentioned that the NIO World Model (NWM) has been well-received, offering significant improvements in active safety and smart driving experiences. The NWM provides better point-to-point smart driving and parking experiences, with features like automatic toll gate pass-through. The NWM-based version will be released on the NX1931 chip in late June, and ONVO products will also switch to in-house developed smart driving chips in the long term.

Q: How does NIO plan to enhance the volume sales of the ONVO L60, and what are the expectations for the L80 and L90 models? A: Bin Li, CEO, explained that organizational and operational adjustments have been made to improve ONVO’s sales, with L60 deliveries increasing by over 40% in May compared to April. The L60 has been a top-selling product in its segment, and the L90 will be launched in Q3, expected to be a game-changer in the large space SUV segment. By Q4, NIO aims for a monthly delivery of 25,000 units across the three ONVO models.

Q: Can NIO achieve a breakeven in Q4, and what are the assumptions for this target? A: Bin Li, CEO, confirmed that NIO’s internal operational target aligns with the assumptions mentioned: achieving over 50,000 monthly sales, a vehicle gross margin of 17-18%, and SG&A expenses within 10% of sales revenue. With improved sales volume, cost reductions, and efficiency improvements, NIO is confident in achieving breakeven in Q4.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.

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