TMTPost --  Chinese electric vehicle (EV) manufacturer Nio Inc. is well on the track to launch new brand in the coming year following its second brand unveiled in less than a month.

Credit：Nio

The research and development (R&D) activities of Firefly are in good progress and Nio will start delivery of vehicles under the brand in the first half of next year, the chairman and CEO William Bin Li  told analysts at an earnings call. Li called Firefly vehicle a well-designed boutique car for the Chinese market. It will be a boutique compact vehicle and priced at around RMB100,000 to RMB 200,000 while following “a very high standard for the safety and the quality”, Li said.

In terms of the sales channel, Firefly will share the point of sales with Nio, just like how MINI is sharing its dealership source with BMW, Li said. Though the selling price of Firefly will not be as expensive as MINI product-wise, it is a very good project, Li added.

Prior to the update development of Firefly, Nio just unveiled the inaugural product L60 of its second EV brand ONVO three weeks ago. The company introduced ONVO, a brand for the mainstream family market on May 15, the International Day of Family. Presales of L60, an electric midsize SUV starting RMB219,990, began the same day. Its official launch and delivery will begin in September.

“With ONVO joining our brand lineup, we are poised to expand into the broader mainstream mass market and embark on the next stage of high-quality growth,” said Li at a statement of the financial results for the quarter ended March 31, 2024. The quarter saw Nio’s revenue weaker-than-expected while gross margin improved significantly.

Nio reported revenue of RMB9.91 billion (US$1.37 billion) in the quarter ended March 31, 2024, representing a 7.2% year-over-year (YoY) decline. The revenue fell short of analysts estimated US$1.4 billion. The net loss per share of RMB2.39, or US$0.36, also missed Wall Street expectation of US$0.33. Vehicle sales generated RMB8.38 billion with a 9.1% YoY decrease in the March quarter.

Gross margin in the first quarter was 4.9%, compared with 1.5% a year ago. The automaker mainly attributed its increase of gross margin over the first quarter of 2023 to the increased vehicle margin. Vehicle margin stood at 9.2%, up from 5.1% in the first quarter of 2023. The increase in vehicle margin was mainly due to decreased material cost per unit. The vehicle margin was still less than 11.9% in the fourth quarter of 2023, mainly due to lower average selling price as a result of increased promotion during product transitioning, changes in product mix, and partially offset by the decreased material cost per unit, Nio said.

The quarter-over-quarter (QoQ) decrease in gross margin was owing to more lower-margin models like ET5 and ET5T were sold in the first quarter, said Stanley Qu, senior vice president of Finance. As the delivery of more than 20,000 units in May showcased the recovery of Nio’s sales is under the way,the company will further optimize its product mix and then negotiate with its supply chain partners for more cost efficiency in the following months, so the vehicle margin is expected to return to double-digit in the second quarter and continue to improve in the following two quarters, Qu told analysts.  

William Li stressed significance of NT3.0 technology, the underlying tech of the NT3 platform that supports battery swap and 800V fast charging and carries batteris made by Nio. Nio plans to migrate all the products from NT2.0 to NT3.0 this year. Li said his company targets the NT3 product margin of around 20% on average and it do have a confidence of achieving such average margin after the NT3 upgrade completes. He reconfirmed the monthly sales target of 30,000 units under Nio brand, adding that Nio will break even with the core busines of the Nio brand in China. As to ONVO, the longer-run margin target of above or even around 15% is reasonable, given about 16% to 17% of Tesla’s current vehicle margin, Li said.