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Author | Chai Xuchen
Editor | Zhou Zhiyu
As we move towards the next decade, Nio has delivered a new report card.
On the evening of November 20, Nio released its third-quarter report, with a record high delivery volume of 62,000 units, and the market expected a more impressive financial performance. However, Nio's performance has never been a simple linear growth fully anchored to sales volume, which adds some ambiguity to external judgments about its fundamentals.
The financial report shows that in the third quarter, Nio's vehicle sales increased by more than 6,000 units compared to the same period last year, but automotive sales revenue slightly declined year-on-year, and the loss also expanded, which seems contrary to market intuition.
The reason lies in the decline in Nio's average selling price, which was 270,000 yuan per unit in the third quarter, lower than the previously implied guidance of 282,000 yuan.
The financial report explains that this is due to changes in the product mix. In September, Nio's mid-range models such as ES6, ET5T, ET5, and EC6 carried the flag, contributing over 90% of sales. This is similar to the situation where Li Auto's entry-level L6 and XPeng's MONA became sales powerhouses. On the other hand, the &#34;reinforcements&#34; from Ledo have not yet been released in large numbers in the third quarter, with only over 800 units delivered that season.
However, even so, Nio's overall scale effect has begun to appear, and with the decline in battery costs, Nio's automotive gross margin increased from 12.2% in the second quarter to 13.1%. Coupled with the profit increase brought by high battery swap station utilization, Nio's overall gross margin recorded 10.7%, exceeding the market expectation of 10.5%.
As for the loss aspect, CFO Qu Yu stated that the expansion of losses in the third quarter mainly came from losses of invested enterprises. He believes this is a normal phenomenon in the fiercely competitive automotive industry.
However, objectively speaking, Nio's revenue has contracted, but expenditures are still growing rapidly. Under the commitments of self-research in technology, the research and production of new products from three sub-brands, the establishment of stores, and the coverage of energy infrastructure for &#34;county-to-county&#34; connectivity, Nio still needs to invest a large amount of resources. But in the view of Chairman Li Bin, this is a necessary buildup before an explosion.
At the earnings conference on the evening of November 20, Li Bin set a new goal, stating that Nio aims to double its sales next year (reaching about 440,000-450,000 units) and achieve breakeven by 2026, with the goal of achieving profitability for the entire year.
In other words, Nio wants to &#34;borrow&#34; another year or two from the market to realize its grand ambitions and roll up its performance snowball.
The capital market quickly reacted, with Nio's Hong Kong stock price dropping from HKD 37.05 on November 20 to HKD 35.95 at the close on November 22. Clearly, investors seem to have developed some &#34;aesthetic fatigue&#34; regarding Nio's grand narrative. The key question is whether the promises for the next year or two can truly be realized?
Li Bin's confidence comes from the upcoming &#34;three arrows&#34; multi-brand strategy and the imminent arrival of a large product lineup.
Li Bin revealed that next year, the Nio brand will gradually switch to the NT3.0 platform, entering a new product cycle; regarding Ledo, in addition to the L60, there are six or seven medium to large SUVs and a large five-seat SUV ready to go
At the same time, the firefly, positioned similarly to BMW's MINI, will be unveiled at next month's NIO Day product launch and is set for official delivery in the first half of next year.
Li Bin believes that the three major brands under his company will have distinct roles, with NIO focusing on improving gross profit, and both Le Dao and Firefly responsible for volume sales.
He stated that Le Dao is currently accelerating production, aiming to reach 10,000 units per month by December, with a delivery and production target of 20,000 units per month by March next year. The next two family SUVs will respectively target Li Auto's L7 and L8, with both vehicles already in the final preparations for mass production. Li Bin &#34;Versailles&#34; remarked that their costs and prices will be more competitive than those of Li Auto; coupled with the expansion of battery swap facilities, he is not worried about demand.
From the current performance of Le Dao, it has indeed successfully created a hot-selling model, driven by its low starting price, spaciousness, BaaS model advantages, and the momentum of high-end brands sinking into the market, with relatively sufficient orders on hand. Li Bin mentioned that although the L60 is not as hot as it was initially, the recent test drive conversion rate remains very high.
Thus, the sub-brands are expected to be the main contributors to incremental growth next year. However, industry insiders believe that for NIO to achieve positive profitability on schedule, the high-end positioned NIO brand must provide critical lift.
In the current environment of consumer downgrading, NIO has already felt some resistance. After retracting some promotional policies in late October, the monthly sales of the parent brand dropped from a steady 20,000 to 17,000 units. The revenue and delivery guidance for the fourth quarter indicates that NIO's average selling price per vehicle will continue to decline to 242,000 yuan.
Industry insiders point out that since NIO adopts a high-end service and battery swap model to establish a premium image, it needs to release more high-margin products and scale to dilute the initial investments. Whether NIO's high-margin models can maintain stable performance compared to the current single-digit gross margin of Le Dao and the upcoming Firefly will be crucial for supporting the entire NIO company in eliminating deficits.
Qu Yu stated that the company's gross margin target for the automotive business in the fourth quarter remains at 15%, and it aims to continue increasing it to 20% next year through optimizing market strategies and supply chains. Li Bin remains confident, declaring that next year, the Le Dao brand aims to gradually achieve a gross margin of 15% under the scale effect; on the other hand, the flagship sedan ET9, equipped with &#34;black technology,&#34; is also about to be released.
At this point, Li Bin still holds multiple cards, but how to combine them into a winning hand according to the timing is the secret of the &#34;gambling god's&#34; strategy. The next year or two will be a critical period for NIO's efforts; if it can successfully navigate through, it will obtain the ticket to become a giant

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- NIO's Q3 report revealed a record delivery of 62,000 vehicles, but revenue declined slightly, and losses widened, contrary to market expectations.  
- The decrease in average selling price to 270,000 yuan was attributed to changes in product mix, with the ES6 and ET5 models driving over 90% of sales.  
- Despite challenges, NIO aims to double sales in 2024 and achieve profitability by 2026, supported by a multi-brand strategy and new product launches, although investor confidence appears to be waning.

NIO is waiting for an explosion in two years