NIO achieved impressive sales results in the third quarter of 2023, delivering 55,432 new vehicles, setting a quarterly delivery record. This also means that NIO has successfully stopped the trend of declining deliveries for two consecutive quarters. **The ES6 model played an important role in this and became the "savior" of NIO. Although the increase in deliveries has led to a sharp increase in gross profit margin, with the gross profit margin of automobiles reaching 11%, NIO has still failed to achieve profitability due to the year-on-year increase in losses. Compared with its peers, NIO's profitability is still not optimistic.
Behind NIO's continued losses is a problem with its business model. At a time when the competition in the new energy vehicle market is extremely fierce, NIO is facing many challenges. Contrary to speculation, NIO is not losing money because of the increase in deliveries, but because of its business model. The average selling price of a bicycle in NIO is 3140,000 yuan, and every time you sell a car, you will lose 820,000 yuan. NIO's profit model needs to be adjusted and optimized, and it is only expected to achieve profitability on the basis of increasing sales and reducing costs.
While NIO's prospects face certain challenges, there are some signs of the dawn. In October and November 2023, NIO delivered 16,074 and 15,959 vehicles, respectively, for a total of 32,033 units. Deliveries are expected to reach 47,000 to 49,000 units for the full year. NIO has also begun to take self-help measures to reduce costs and improve overall operational efficiency by reducing costs and increasing efficiency, laying off employees, etc. While layoffs can put a strain on capital, they are necessary to tide over times of crisis. In addition, NIO has also decided to acquire production equipment and assets from JAC, which will provide more opportunities and flexibility for NIO's development.
NIO's partnership with OEM JAC has recently changed. NIO announced the acquisition of JAC's first advanced manufacturing base and second advanced manufacturing base, which means that NIO will have its own production line and will no longer rely on OEM. This move is conducive to improving NIO's execution and reducing the cost of disputes and cooperation. However, at the same time, JAC and Huawei signed a cooperation agreement to carry out comprehensive cooperation in the field of intelligent new energy vehicles. This has raised concerns among some about the prospects for a partnership between NIO and JAC. While there are certain risks associated with this situation, it can also present new opportunities. Having your own production line improves execution while reducing the problem of negotiating with OEMs in terms of profit sharing and production schedule.
In summary, NIO has made some important progress in the third quarter of 2023, with improvements in deliveries and gross margin, but it is still not profitable. NIO still faces challenges in the future, but it is expected to gradually come out of the predicament by reducing costs, improving efficiency, and having its own production line. However, the partnership with JAC may face certain adjustments and risks, and the coming year will be a very critical year for NIO.