Will NIO Limited Ever Pay A Dividend?

Moreover, the ES8 model, which has a price above $60,000, has reached the number one position in the category of premium electric SUVs.

Thanks to the strong growth in its sales, NIO improved from a gross loss of $30.2 million in the prior year’s quarter to a gross profit of $87.9 million, which corresponds to a gross margin of 12.9%. Nevertheless, NIO is still far from becoming profitable, as it posted a net loss of $154.2 million. On the bright side, its net loss decreased 58.5% over last year’s quarter, thus signaling that NIO could become profitable if it continues growing sales at its recent pace.

NIO has provided positive guidance for the fourth quarter, expecting the strong business momentum to remain in place. The company expects to deliver 16,500-17,00 vehicles in the fourth quarter. If it meets its guidance, it will more than double its sales over the prior year’s quarter and will achieve 35%-39% growth over the third quarter. It is evident that there are no signs of slowing down on the horizon for NIO.

Growth Prospects

The production cost of electric vehicles has greatly decreased in recent years, thanks to the sustained decrease in the cost of batteries, which comprises approximately one-third of the total production cost.

Source: Bloomberg

In addition, the autonomy of these vehicles has remarkably improved in recent years.

Given also that consumers are attracted by the minimal operating cost of electric vehicles, with no need for gasoline or diesel, the electric vehicle industry has become a high-growth industry.

Source: Bloomberg New Energy Finance

As the above chart shows, the electric vehicle industry is only in the very early stages of its growth trajectory. It is likely to continue growing at a fast pace for decades and the sales of electric cars are likely to comprise 35% of all the new vehicles sales in 20 years from now.

NIO is doing its best to enhance its production capacity in order to meet the growing demand for its vehicles. The company expects to boost its production capacity from 5,000 units in September to about 7,500 units by January-2021.

NIO is on track to more than double its revenue this year, from $1.1 billion in 2019 to $2.4 billion this year. Even better, the company has ample room to keep growing its revenue at a breathtaking pace for many more years. Analysts agree on this view, as they expect NIO to triple its revenue over the next two years, from $2.4 billion to $7.2 billion in 2022.

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Disclosure: Sure Dividend is published as an information service. It includes opinions as to buying, selling and holding various stocks and other securities.

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