Nio's Plan To Double R&D Spend This Year Is Big Take For The EV Maker: Analyst

Nio Inc’s NIO plan to more than double its R&D spend this year is a big step up for the electric vehicle maker, US Tiger Securities analyst Bo Pei told Benzinga on Friday.

What Happened: Nio said on Friday it sees 2022 as a year of acceleration and plans to more than double its Research a Development (R&D) investment towards new technology and product development for 2023.

“I think the key takeaway is that 2022 will be another investment year (confirmed what the company said before), with total gross profit = SG&A and R&D doubling from 2021, which is understandable given that the space is rapidly growing and very competitive,” Pei told Benzinga. 

The EV maker reported R&D expenses of $720.6 million in 2021, a jump of 84.6% over a year ago.

The analyst said investors will next focus on deliveries for Nio’s ET7 luxury sedan, which begins on March 28.

See Also: Why Alibaba And Tesla Rivals Nio, Xpeng Are Sliding In Hong Kong Today

“Production capability ramp-up is on track. By 4Q this year, production capability should not be an issue anymore. Overseas markets seem promising, with YTD deliveries in Norway ranking top two in 6- and 7- seaters models.”

Why It Matters: Nio founder and CEO William Li told investors on Friday that the company doesn't currently plan to increase prices but chip shortages and higher prices for chips and raw materials continue to pinch the industry. 

Li said Nio will achieve full-year breakeven in 2024.

Nio reported a net loss of $336.4 million in the three months ended Dec. 31 and a revenue of $1,553.6 million.

Price Action: Nio stock closed 0.5% higher at $21.9 a share on Thursday.

Photo: Courtesy of Nio