Nio's Q4 Loss Widens Despite Higher Revenue As Tesla Rival Eyes Long-Term Growth After Year Of Investment

Nio Inc. NIO reported on Wednesday higher fourth-quarter revenue but the loss widened amid a contraction in margins. The company said it is moving away from a year of investment into one of execution and also signaled the launch of five new models in 2023. The Chinese start-up also reported solid deliveries for February, outperforming its domestic peers XPeng Inc. XPEV and Li Auto LI

What Happened: Shanghai-based Nio reported a fourth-quarter non-GAAP net loss of $0.44, or 3.07 yuan, wider than the 1.07-yuan loss in the year-ago quarter and a 2.11-yuan loss in the third quarter of 2022.

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Revenue came in at 16.06 billion yuan or $2.33 billion, a 62.2% increase from a year ago. On a quarter-over-quarter basis, revenue climbed 23.5%.

The revenue growth reflected a 60.2% year-over-year and 23.7% quarter-over-quarter increase in vehicle sales due to higher deliveries amid the volume ramp of the ET5 and ES7 vehicles. Other sales jumped 90.3% to $189.1 million.

Gross margin came in at 3.9%, markedly lower than 17.2% in the year-ago quarter and 13.3% in the third quarter. Vehicle margin also pulled back notably to 6.8% from 20.9% in the fourth quarter of 2021 and 16.4% in the preceding quarter. Nio attributed the contraction to accelerated depreciation, and losses on purchase commitments for the existing ES8, ES6 and EC6 amid the transition to new models under the Nio Technology Platform 2.0.

"In 2022, we made positive strides in the research and development of core technologies and competitive products, infrastructure deployment and global market expansion, laying a solid foundation for the Company's long-term growth," said William Li, CEO of Nio.

Nio competes with Tesla Inc. TSLA in the domestic market.

February Deliveries: Nio reported February deliveries of 12,157 units, up 98.3% from a year ago. This represented roughly 43% sequential growth.

The Outlook: The company guided to first-quarter deliveries of 31,000 to 33,000 units, a 20-28% year-over-year increase. Given the company has already delivered 20,633 vehicles in the quarter, it is left with a target of 10,337-12,337 units for March to hit the guidance.

Revenue for the quarter is expected to grow 10-16.5% to $1.58 billion to $1.67 billion.

CEO Li said in 2023, the company plans to deliver five new products based on the NT 2.0 platform, deploy 1,000 additional Power Swap stations to further improve holistic user experience, and continuously strengthen its competitive advantages in key areas of smart electric vehicles."

CFO Steven Feng said the company will focus on improving our execution efficiency in 2023 following decisive investments and accelerated global market entry in 2022.

Price Action: In premarket trading on Wednesday, Nio stock was up 1.06%, at $9.49, according to Benzinga Pro data.

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