NIO Remains A Best-In-Class Chinese EV But Might Disappoint Some In 2021

The company is preparing some important moves, including its expansion to the European market.

NIO et 7

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●  2020 was a bumper year for NIO, with significant improvements on revenue and costs metrics. 

●  NIO's 4Q profit was affected by the strong yuan and weak dollar.

●  The management's international expansion plan and the tightening global supply chain have loomed over its 2021 performance.

●  Compared with Toyota and even Apple, NIO is not looking so expensive anymore.

●  Long-term EV investors should take advantage of the current dip.

Top-down glance

According to its fourth-quarter earnings statement, NIO Inc. delivered 17,353 vehicles in 4Q 2020, a QoQ increase of around 42%. The company's vehicle sales generated USD 946.2 million, a YoY increase of 130%. The total revenues were over USD 1,01 billion, a YoY increase of 133.2%. According to the company, "the increase in vehicle sales over the third quarter of 2020 was mainly attributed to the sales of EC6s which began deliveries in late September 2020." In short, the most important indicator of judging EV stocks, revenue growth, beat the street’s estimates.

Glancing over the income statement, as the size effect showed, NIO's gross margin was 17.2% in Q4 2020, compared with a negative 8.9% from the prior year. In terms of operating expenses, 4Q 2020 R&D expenses were CNY 829.4 million, decreasing by 19.2% YoY, increasing by 40.4% QoQ. The drop in R&D expenses year-over-year resulted from the EC6's R&D finished process before September 2020. Besides, the company's overall cost-saving initiatives and improved operational efficiency also contributed to the decrease in operating expenses.


Likewise, the slide in SG&A expenses YoY was primarily driven by the company's overall cost-savings efforts and improved operational efficiency. Specifically, SG&A expenses for the same period were CNY 1.2 billion (USD 185 million), decreasing by 21.9% YoY, increasing by 28.3% QoQ. In addition, the firm explained that "loss from operations in the fourth quarter was CNY 931.4 million (or USD 142.7 million), representing a decrease of 67% YoY and a decrease of 1.5% QoQ."

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William K. 4 weeks ago Member's comment

Very Interesting Indeed! But then iit appears to me that the article is written from the point of view that all expenditures on product development, production improvement, and expansion, are all wastes of shareholder's profits. That is certainly a common form of greed that can not possibly be good, even for the greedy individuals.

It is time for boards of directors and CEOs to understand that a company exists to produce good products, and that the profits to shareholders are a SECONDARY benefit.

It seems that the "live for today" thinking has forgotten the second line of that quotation, "For Tomorrow WE Die," That rather much alters the whole concept a bit.