Chinese electric car company Nio Inc. (NYSE:NIO) would really like to become the Tesla (NASDAQ:TSLA) of China one day. But if this week’s earnings report is any guide, Nio still has miles to go before it reaches its destination.
Reporting its Q2 2023 financial results Tuesday morning, Nio managed to miss pretty much every goalpost that Wall Street had set for the company. On sales, Street analysts had hoped Nio would report RMB9.2 billion, but the most Nio could scratch together was RMB8.8 billion — $1.2 billion, or 4% short of the mark. On earnings likewise, Wall Street was looking for Nio to report RMB2.41 per share in losses — but Nio reported a loss of RMB3.70 per share — $0.51, or 53.5% worse than expected.
Rounding out the bad news, Nio reported a 15% year over year decline in quarterly revenue, and an 18% sequential decline from Q1 2023. When you consider how all-around bad Nio’s news was, it’s actually pretty surprising that stock is down just 0.5% since the earnings report.
So, were investors just in a forgiving mood this week? Or was there something else than Nio said, that set their minds at ease, and caused them to give Nio a pass on its Q2 results?
Turns out, it was the latter.
Nio’s news on profit margins gave some encouragement. While total gross profit margins (including both profit from new vehicles sold, from used car sales, and from services such as “power solutions”) inched lower sequentially from Q1 2023 (down 50 basis points to 1%), margins on vehicle sales moved up a bit, from 5.1% to 6.2%.
Vehicle sales in July (i.e. one month after quarter-end) also showed improvement, with Nio reporting 104% year over year growth in shipments to 20,462 units moved. That was nearly as many sales in this single month, as Nio sold in all of the Q2 just reported on (23,520 vehicles). For the month of July at least, Nio briefly became “the top [seller of] premium electric … vehicles priced above RMB300,000” in China, as CEO William Bin Li pointed out.
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Investors may be weighing the hope that Nio will retain this title,…
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