Nio Loss Narrows After Electric-Car Demand in China Picks Up

(Bloomberg) -- Nio Inc.’s losses narrowed in the third quarter as electric-car sales jumped, a reassuring sign for investors who have pushed the Chinese manufacturer’s shares up 10-fold this year.

• Net loss was 1.05 billion yuan ($154.2 million) in the three months through September compared with 2.52 billion yuan a year earlier, the carmaker said in a statement Tuesday. Revenue jumped to 4.53 billion yuan, beating the average analyst estimate of 4.38 billion yuan and up from 1.84 billion yuan a year ago.

Key Insights:

• The Shanghai-based company is gradually approaching profitability, reporting a gross margin of 12.9% for the quarter. Chief Executive Officer William Li’s spending cuts and a funding pact reached with a regional government earlier this year are easing pressure on Nio’s finances.
• The EV maker projected fourth quarter revenue in a range from 6.26 billion yuan to 6.44 billion yuan.
• Nio is cementing its role as a challenger to Tesla Inc. in China’s premium electric-vehicle segment, with both companies benefiting as the coronavirus pandemic recedes in the country. Nio delivered 12,206 vehicles in the third quarter, up more than 150% from the year-earlier period. It predicted deliveries of between 16,500 and 17,000 vehicles for the fourth quarter.
• Nio’s electric SUVs command a price premium over Tesla’s popular Model 3 sedan, yet competition is set to intensify as the U.S. company prepares to bring out its Model Y compact SUV. “Another wave of price cuts for premium electric vehicles in China may be on the horizon, stirring up what could be an intense rivalry,” Bloomberg Intelligence analysts led by Steve Man said in a Nov. 11 report.

Market Reaction

• Shares of Nio have surged about 1,000% this year. The stock rose as much as 2.5% in aftermarket trading in New York on Tuesday after closing at $46.59.

Get More:

• NIO Inc. 4Q Revenue Forecast Beats Estimates

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With assistance from Bloomberg