NIO failed to deliver a record-breaking number of vehicles in October due to operational difficulties. However, Deutsche Bank analyst Edison Yu’s team suggests that the Chinese automaker’s delivery difficulties may have finally improved, according to CnEVPost.
Yu’s team stated in a research note:
“NIO continues to frustrate us/investors with another round of operational issues (silicon carbide supply, EDS assembly) which are holding back volume in 4Q but we are optimistic that the worse may finally be over, further supported by the government’s gradual pivot away from COVID zero.”
Projected deliveries in December
Yu’s team claimed that the Chinese automaker might have to deliver about 20,000 vehicles to demonstrate that operation is truly improving.
In December, the team anticipates NIO to deliver 19,500 units. It includes 8,000 ET5 vehicles, boosting the Q4 total to around 43,000 units.
Product super cycle pushes into 2023
NIO is set to introduce five new models in the first six months of 2023. Apart from these, eight models will be available in June. One of these vehicles is reported to go up against the Tesla Model Y. As for the pricing, it is expected to cost around RMB 330,000 to 340,000.
It is also worth noting that six NIO models are now available in China. The NT 1.0 platform supports three models: ES8, ES6, and EC6. Meanwhile, the ES7, ET7, and ET5 are built on the NT 2.0 platform.
However, the three models based on the NT 1.0 platform, and the two additional models, will be updated by NIO in the first half of 2023, according to the team.
“With competition intensifying, we are encouraged by NIO’s aggressive product refresh cadence,” the team wrote.
The team increased their prediction for NIO deliveries in 2023 by 10,000 to 270,000 units in light of the new model’s faster cadence.
How does the lithium carbonate price affect gross margin?
NIO’s gross margin will be impacted by two percentage points for every RMB100,000 increase in the price of lithium carbonate.
Nonetheless, Li stated at the time that NIO anticipates the price of lithium carbonate to drop back to RMB 300,000 to 400,000 per ton the following year. For reference, lithium carbonate presently costs over RMB 600,000 per ton.
Yu’s team’s assessment predicts that the first half of 2023 will see significant pressure on gross margins.
However, according to NIO, the brand is about to recover in Q4 2023 and generate profit in 2024. The team stated:
“We generally think targets are achievable assuming raw materials can normalize somewhat.”
