Earnings Call Transcript — NIO — 2020Q3

Overview

  • Total Revenues reached RMB4,526.0 M ($666.6 M).
  • Vehicle Sales were RMB4,266.8 M ($628.4 M) with 12,206 total number of cars delivered (8,660 ES6, 3530 ES8, and 16 EC6).
  • Vehicle margin was 14.5%, ES8 contributed a lot in this portion.
  • Net loss was RMB 1,047.0 M ($154.2 M), which was decreased by 58% from 2019Q3 and 11% from 2020Q2.
  • Cash and cash equivalents, restricted cash, and short-term investment were RMB22.2 B ($3.3 B), which was about 20 times more than the items in 2019Q3.
  • The monthly production capacity could be around 7,500 units per month in Jan 2021.
  • NIO has opened 22 NIO Houses and 159 NIO Spaces in 106 cities, and 159 power swap stations in 70 cities in China.
  • Business outlook: 1) Deliveries of the vehicles to be between 16,500 and 17,000 vehicles; 2) Total revenues to be between RMB6,258.7 million (US$921.8 million) and RMB6,435.8 million (US$947.9 million).

For more detailed information, please review the Q3 earnings report here:

Q&A Session

The take rate on BaaS of new orders is about 35%. The company is very happy to see this BaaS take rate momentum and it believes that BaaS is also going to improve in the future. BaaS can help the business to lower the initial purchase price and the users’ concerns regarding the battery’s degradation and also provide a flexible upgrade service to the user. For NIO Pilot, the take rate is around 50% and the company is expecting to see higher rates with the release of Navigate-On-Pilot.

  • Breakdown the margin increased by around 5 percent from Q2 to Q3

The increase in margin was mainly contributed by two factors: the increase in the average selling price (up by RMB10 K per car) and the lower bond cost per vehicle (derived from lower battery pack price and EDS price).

  • Views on the latest chip design and LiDAR

Didn’t disclose too much information about the chip design.

For the LiDAR question, Li said that NIO believes that LiDAR could definitely help on two aspects regarding autonomous driving: it could contribute to autonomous driving to free up for users (a matter of the availability or usability); it could help to avoid more accidents (a matter of reliability).

At the same time, in order to implement this technique into real production, NIO needs to figure out the issue of the cost. In the future, with the improvement of cameras and computing powers, NIO believes that LiDAR can play a role in some cases and the domains because it can help to reduce the accident rate in some corner cases.

  • Views on Model Y and global marketing strategy

NIO doesn’t think the upcoming Model Y will affect its order momentum a lot. Firstly, it is still the EV v.s. traditional cars — Model Y’s introduction to the China market is going to be beneficial for the overall market. Meanwhile, the target customers of NIO are basically not the same group of customers of Tesla. Two companies are using different two strategies to do their own business. The avg selling price of NIO is hundreds of thousand RMB higher than the one of Tesla.

NIO is planning to enter into the global market (European) in the 2nd half of 2021, providing the localized end service to European customers.

Data Engineer. Interested in topics related to data engineering, marketing, and investment in general.