Nio's William Li Says EV Maker On Track To Break Even In 2024 Amid Rising Chip, Raw Material Prices

Chinese electric vehicle maker Nio Inc NIO said on Friday that supply chain issues, chip shortages and higher raw material prices continue to be a challenge for the industry and that it expects to achieve a full year breakeven in 2024.

Higher Raw Material And Chip Prices: Nio’s founder and CEO William Li told investors in a post earnings call on Friday that Shanghai-based Nio plans to make product improvements and will consider product pricing strategies based on the price of raw materials.

“The whole industry is confronted with the pressure of raw material price increases,” Li said.

“[The] chip shortage is another challenge. Chip prices have increased and that has impacted our gross margins.”

Nio reported a flat gross margin of 17.2% in the fourth quarter of 2021 on a year-on-year basis and 20.3% when compared with the third quarter of 2021. For the full year, Nio’s gross margin was 18.9%, compared with 11.5% a year ago.

Breakeven In Sight: Nio, which reported a net loss of $630.3 million in 2021, said it will “achieve a single quarter breakeven in Q4 2023” and expects to “breakeven in 2024 for the full year.”

Lithium Prices: Nio’s Li told investors that he sees the recent hikes in lithium prices as “opportunistic as there is no huge gap in demand.”

Nio To Double R&D Investments: Nio said 2022 will be a year of acceleration as it plans to move forward at full speed. The company said the R&D investment will more than double this year over 2021 towards new product development for the coming years.

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

See Also: Why Analyst Expects Tesla Rival Xpeng To Deliver Solid Q4 Earnings On Monday

ET7 And ET5 Delivery: Nio said it will begin delivery of its ET7 luxury sedan on March 28, while deliveries of ET5 mid-size sedan will begin in September. For ET7, Nio indicated that it has over 15,000 orders. Nio said the first batch of ET7 sedans have been made at its assembly line in Hefei, China. 

The company also plans to expand to Germany, Netherlands, Sweden and Denmark this year.

Nio reported a net loss of $336.4 million in the three months ended Dec. 31 and revenue of $1.5 billion. 

NIO Price Action: Nio shares were down 10.12% at $19.76 Friday morning. 

Photo courtesy of Nio.