NIO expects to hit 25% of annual vehicle gross margin goal for long run

Shanghai (Gasgoo)- NIO aims to achieve an annual vehicle gross margin of 25% for long run, and to achieve this long-term goal, the annual outputs of NT2.0-based vehicles should reach about 300,000 units, William Bin Li, founder, chairman, and CEO of NIO, said at an earnings call shortly after the company released its Q3 financial results on Nov. 10.

Photo credit: NIO

The startup will start delivery of the ET7, its fourth production model and also first sedan model, in the first quarter of 2022. The vehicle will be displayed at NIO Houses and NIO Spaces around next Spring Festival Holiday. Although NIO is facing challenges of chip supply as some new sensors and chips are used in the ET7, everything is currently proceeding on schedule, said Mr. Li.

He revealed the chip supply at NIO has been much improved from the worst situation in the third quarter. NIO has been gradually adapted to the unexpectedly changing situation and is striving to seek proper solutions. As NIO's output scale is relatively smaller than other mature legacy OEMs, the scope of chip tightness for the startup is partially mitigated. Besides, the company is also searching for alternative chips.

To ramp up capacity and introduce new products, NIO last month halted production at some assembly lines of the JAC-NIO Advanced Manufacturing Center. Mr. Li noted the future new products introduction to the revamped plant and the plant in Hefei Xinqiao Smart Electric Vehicle Industrial Park will not affect the manufacturing of existing products.

The production at NIO's new plant in Xinqiao EV industrial park will commence in the third quarter of 2022. Once NIO's two plants are fully operational, the total annual capacity may reach up to 600,000 vehicles based on double shift, said Li.

NIO announced the launch of its 75kWh standard-range hybrid-cell battery on September 23 and the models armed with this battery will be handed over to consumers in November. William Bin Li disclosed the capacity of the 75kWh battery-powered vehicles is expected to rise to a reasonable level in the first quarter of 2022.

As it will take time to ramp up the capacity of 75kWh battery, NIO will adopt some short-term measures to meet users' demands, such as encouraging them to use the 100kWh battery. However, the company will not choose to lower cars' prices.

Currently, batteries used in NIO's vehicles are all offered by CATL. According to Li, the battery supplier has made a huge investment in capacity expansion, while NIO's deliveries are still limited by battery supply.

The phase-out of new energy vehicle (NEV) subsidies has little effect on NIO's car deliveries because the subsidies are much lower than cars’ prices, which are set to target the premium EV segment.

In Norway, the first overseas market for NIO, the startup has received considerable amount of orders, and has delivered there some cars at the end of September and in October. The delivery will be significantly quickened this month.

NIO opened its first Norway-based NIO House on September 30. Li revealed about a quarter of consumers who did test drive of NIO's cars would place orders. In the future, NIO will continue the efforts to improve the construction and operation of battery swap stations and the building of sales networks in this country.

NIO plans to tap a total of five European countries by 2022. Except Norway, the other four countries will directly introduce NIO's NT2.0-based vehicles.