Image Source : China Visual

BEIJING, March 2 (TMTPOST) —— NIO's gross profit margin of vehicle sales was 6.8% in the fourth quarter of 2022, down 9.6 percentage points from the previous quarter and 14.1 percentage points from the same period last year, according to the financial report released by NIO on Wednesday evening.

The company reported revenue of RMB 16.06 billion ($2.33 billion) in the fourth quarter, up 23.55 percent from the third quarter and up 62.26 percent year-on-year, marking 11 consecutive quarters of positive growth. In 2022, the total annual revenue was 49.27 billion yuan ($7.1 billion). The R&D expenditure in the fourth quarter was 3.98 billion yuan, and the total R&D expenditure for the year was 10.84 billion yuan ($1.6 billion).  The company's cash reserves reached 45.5 billion yuan ($6.6 billion).

Li Auto, also a leading car maker in China, reported a 20% gross profit margin in its automotive business in the fourth quarter of 2022, up 12 percentage points from the previous quarter.

In the earnings conference call held on the same day, Qu Yu, Financial Controller of NIO, explained that the model ES8, ES6, and EC6 will be replaced by a new generation model in the second quarter of 2023, so the company lowered its sales forecast for the three models in the fourth quarter of 2022.  Related Inventory provisions and purchase commitment losses related totaled RMB985 million ($142 million) in the quarter. Excluding this impact, the total vehicle gross margin in the fourth quarter of 2022 was 13.5%.

As the revenue is growing, NIO's losses are also widening. Net loss widened to 5.786 billion yuan ($836.7 million) in the fourth quarter, up 169.9% year-on-year and 40.8% quarter-on-quarter respectively.    The net loss for the whole year reached 14.437 billion yuan ($2 billion) in 2022, an increase of 259.4% over the same period last year.

It is worth noting that the gross profit rate of NIO declined significantly in the fourth quarter to only 6.8%, which was 20.9% and 16.4% respectively in the fourth quarter of 2021 and the third quarter of 2022. The company explained that its plunging automotive gross margin in the fourth quarter was due to inventory provisions related to existing ES8, ES6, and EC6 models, accelerated depreciation of production facilities, and loss of purchase commitments. For the whole of 2022, NIO's automotive gross margin was 13.7%, down 6.4 percentage points from the previous year.

Between the plunging gross profit margin and widening losses is the gap between the spending on R&D and the expenditure on marketing. NIO's R&D expenditure in 2022 was 10.836 billion yuan ($1.6 billion), up 136 percent year on year.  Spending on marketing and administrative expenses was 10.537 billion yuan ($1.5 billion), up 57.6 percent year on year.    For the first quarter of this year, the company is expected to deliver 31,000 to 33,000 vehicles and generate revenue of 10.62 billion yuan ($1.53 billion) to 11.54 billion yuan ($1.67 billion).

In the earnings call held in the evening, NIO's Chairman Li Bin revealed that the company will gradually realize a network of power swap stations in highway services areas in the first half of this year. By the end of 2023, more than 2,300 power charging stations will be built.