Written by Cláudio Afonso | LinkedIn | X
Earlier this week, local media in China reported that Nio was planning to increase prices for some of its best selling electric vehicles (EVs) in China as it eyes higher vehicle margins. In early June, the chief executive William Li said the company targets to reach 20% of vehicle margin in the upcoming platform NT3.
The reported price hikes are 3,000 yuan [$413] for the ET5/ ET5 Touring models and 5,000 yuan [$689] for the ES6 — Nio’s entry level SUV — and EC6 models.
However, a salesperson at a Nio store in Shanghai, speaking to local media outlet “The Paper,” explained that the perceived increase is actually due to a reduction in current discounts from next week, on July 22.
“We have not received any notification of a price increase. Instead, our cash subsidies and optional package funds will be reduced. When one cycle of subsidies ends, the next cycle will have different activities, and the subsidy strength may decrease,” he stated.
He further detailed that there are various ongoing discounts, including optional discounts, free NOP usage rights, and financial plan discounts, totaling around 28,000 yuan.
Ten days ago, the company decreased the free battery swap vouchers provided with the BaaS [battery as a service] from 4,000 yuan [$551] to 2,000 yuan [$275].
Nio’s vehicle margin for the first quarter of 2024 was reported at 9.2%, an increase from the 5.1% in the first quarter of 2023 but a decrease from the 11.9% recorded in the fourth quarter of 2023.
The company attributed the year-over-year margin increase to reduced material costs per unit, while the quarter-over-quarter decrease was due to lower average selling prices resulting from increased promotions during product transitions and changes in product mix, despite the lower material costs.
“Vehicle margin in the first quarter of 2024 was 9.2%, compared with 5.1% in the first quarter of 2023 and 11.9% in the fourth quarter of 2023. The increase in vehicle margin from the first quarter of 2023 was mainly attributable to decreased material cost per unit,” Nio stated in their Q1 report.
The decrease in vehicle margin from the fourth quarter of 2023 was mainly due to lower average selling price as a result of increased promotion during product transitioning, changes in product mix, and partially offset by the decreased material cost per unit,” the company added.
With Nio’s NT3 platform, in which the new flagship sedan Nio ET9 will be built in early 2025, the company aims to achieve an average of 20 percent vehicle margin.
During the first quarter earnings call, William Li, Nio‘s Founder and CEO, emphasized the importance of this new platform in enhancing the company’s financial performance and competitiveness.
“Starting from next year, we will gradually upgrade our product lineup to the NT3 platform, beginning with the ET9,” said Li. “For the third-generation product, we will incorporate more in-house technologies, such as custom-designed chips, to improve vehicle margins.”
On Monday, when asked about his opinion on Nio stock, the host of CNBC’s “Mad Money” show Jim Cramer reaffirmed his bearish view.
In January 2021, when Nio shares were trading around the all time high of over $60 per share, Cramer named Nio “the next Tesla” after the CEO William Li said — for the first time — the brand was considering to start producing mass-market vehicles under a sub-brand.
Written by Cláudio Afonso | LinkedIn | X
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The post Nio to Reduce EV Discounts from July 22 in Pursuit of Higher Margins first appeared on EV.