NIO (NIO) EV deliveries continue growing in Q4, but so do its losses

NIO (NIO) released its Q4 earnings Wednesday morning, and although EV deliveries continue growing, the company’s losses are also piling up.

Q4 2022 financial results

After achieving record EV deliveries in the third quarter, leading Chinese EV maker NIO adjusted its guidance for Q4 due to an outbreak of the Omicron coronavirus and “certain supply chain constraints.”

Rather than the previous guidance of 43,000 to 48,000 deliveries, NIO said it was expecting between 38,500 and 39,500.

Overshooting its adjusted target, NIO delivered another record in Q4, delivering 40,052 EVs, up 60% from Q4 2021 and a 26.7% increase from the previous quarter.

Nio says the increase was due to scaling production of its ET5 and ES7 models. The company stated on its earnings call that the NIO ET5 outperformed China’s most popular gas models, becoming the second-best-selling model in China this January among all mid-size sedans over RMB 300,000.

Despite the record performance, the company’s first-quarter guidance seemingly spooked investors, with NIO stock selling off in Wednesday’s trading session.

Another area of concern is NIO’s vehicle margins, which were 6.8% in the fourth quarter, significantly lower than the 20.9% achieved in Q4 2021. Nio noted several reasons for the drop, including “inventory provisions, accelerated depreciation on product facilities, and losses on purchase commitments.”

Overall, NIO posted a net loss of RMB 5,786.1 ($839.8 million) in the quarter, up 169% from Q4 2021 and 40.8% from the third quarter.

The weaker-than-expected production guidance comes as other EV startups like Rivian (RIVN) echoed the same in its fourth-quarter earnings Tuesday.

NIO’s Q4 earnings aligned with other Chinese EV makers, with XPeng, also missing delivery expectations after Covid lockdowns hampered their progress.

Other news from NIO’s Q4 earnings

The EV maker recently launched its flagship SUV, EC7, and its all-around flagship SUV, the ES8, at NIO day 2022 in December.

The NIO EC7 is a large-size coupe SUV equipped with the company’s second-generation NT 2.0 tech platform with powerful performance (0 to 100 km/h in 3.8 seconds) as the fastest NIO SUV yet. EC7 deliveries are expected to begin in May.

Meanwhile, the flagship six-seater ES8 SUV is designed for all scenarios, with two seat layouts for work, family, social, or exploration time.

Here are a few other updates from NIO’s Q4 earnings report:

• NIO now has 375 NIO houses and NIO spaces in 141 cities.
• The company has installed 1,331 power swap stations across its network.
• Mass production of power swap station 3.0 is expected to start in April.
• In the fourth quarter, Nio started offering NT2.0 products and services in Germany, the Netherlands, Denmark, and Sweden.
• In January, Nio delivered its first EL7 electric SUV to Europe’s first batch of users.