Chinese electric vehicle maker Nio reaffirmed on Tuesday its annual business targets, as it expects stronger sales, improving margins, and tighter cost control to lift its financial performance starting from the second quarter.
The company has previously set the final quarter of 2025 as the target to become profitable.
“2025 is the hardest year for products,” CEO William Li said during the company’s first-quarter earnings call on Tuesday, noting that several core models are set to launch in the second half.
Over the next six months, the Group will launch the new ES8 SUV under the Nio brand and Onvo’s second and third models, named L90 and L80.
Meanwhile, the company will ramp-up production of its most expensive and cheapest models, the ET9 and Firefly.
“The company’s deliveries are set to accelerate from Q3, with stronger sales, lower supply chain costs and the better efficiency from new products and the technologies.”
Li said that “both vehicle and the overall gross margin will keep improving” as Nio benefits from increased scale and the contribution of new technologies.
To improve operational efficiency, Li said Nio has implemented “strict investment and the return we built across R&D, supply chain, BaaS and the service functions under the BaaS business unit mechanism” since the first quarter.
“We have set clear goals for operational and ROI. We started the organization and consolidated teams, prioritized high-value projects, and introduced the plan to improve project productivity and cost efficiency,” he said.
“These measures have taken hold in Q2 and we are continuing yet,” he added.
“With growing sales, improving margins and the better cost control, we have a confident in improving the company’s financial position starting Q2 and meeting our full year business targets,” Li told analysts.
Citing the launch of the new Nio ES8 and the ramp-up of the recently launched four models, the chief executive said he expects sales of the core brand to be “around 25,000” units.
“With that, we believe that in Q4 for the Nio brand, the monthly delivery will be around 25,000 units. That’s around 20% year over year growth from last year’s Q4, which was around 20,000 units a month,” he stated.
Besides the volume, Li said also vehicle margin will rise and surpass 20%. “In that case, while improving the sales volume, we are also going to improving our vehicle gross margin significantly for the Nio brand to be above 20% in Q4,” he added.
The company delivered 42,094 electric vehicles in the first quarter including 27,313 from the core, premium Nio brand and 14,781 from its first sub-brand Onvo.
Sales of the Nio brand fell over 30% both year over year and sequentially in May to 13,270 units.
Firefly, the company’s newly launched sub-brand that rivals both BMW’s MINI and Smart, only began deliveries in late April.
Nio released its first-quarter earnings earlier this Tuesday, reporting year-on-year growth in gross profit, vehicle margin, and overall gross margin.
Despite the improvement in profitability metrics, the company’s operating loss widened to 6.418 billion yuan ($884.4 million), up 19.0% from a year earlier and 6.4% from the previous quarter.
