To The Moon

On Thursday before the bell, $NIO Inc.(NIO)$ will release its third quarter report.

Prior to this earnings release, Nio's shares are down 67% for the year, higher than $Li Auto(LI)$ 's 42% and slightly lower than $XPeng Inc.(XPEV)$ , whose sales collapsed.

According to the monthly sales data, total sales for the third quarter were 31,607 units, up 29.3% from the same period last year.

Nio's October sales were 10,059 units, a 174% jump from a year ago and a 7.5% decline from the last month. Nio's delivery data are not good considering the sales anomaly in October 2021.

1. Analysts' Expectations and the Key to Determining Nio's Share Price

Currently, the Bloomberg consensus expects Q3 revenue of 12.99 billion RMB, adjusted net loss of 2.12 billion and gross margin of 14.87%:

from bloomberg

The declining sales were reflected in the Q2 report, but management said on the earnings call that it maintained the 150,000 - 200,000 unit sales guidance given at the beginning of the year.

According to this projection, Nio's deliveries in the fourth quarter should reach at least 66,000 units, with an average of 22,000 units per month, which is much higher than Nio's current level.

At the same time, the management said the new model ET5 will sell more than 10,000 units in December.

• Can ET5 save Nio?

As the third quarter sales data has been released, Q4 sales guidance has become the focus of market attention.

2. Nio's current dilemma - sales bottleneck

Sales of older models are peaking and even declining in the face of competition.

Nio's monthly deliveries have been stagnant at 10,000 units for 13 months

data from company's earnings; compiled by Value_investing

By model, Nio currently has 6 models, namely ES6\ES8\ES7\EC6\ET7\ET5.

data from company's earnings; compiled by Value_investing

In terms of quarterly sales,

• the growth of ES6\ES8\EC6 has stagnated.
• the sales of ES6 and EC6 declined month by month in the third quarter.
• ES8 did not see an improvement in the third quarter.
• ES7's monthly sales stagnated at around 3,000 units after a short climb.
• The newly launched ET5 sold 1,030 units in October, and it is doubtful whether it can break 10,000 units in December.

ET5 is the cheapest model of Nio, and its sales will have a big impact on investors' confidence.

3. The uncertainty of Nio- fierce competition

China's 3 new energy giants are benefiting from the new energy vehicle dividend because of their early layout. After other EV makers and traditional fuel car companies join the competition, can this first-mover advantage transform into lasting competitiveness?

Looking at the monthly sales of XPeng, it seems that it can no longer maintain high growth.

data from company's earnings; compiled by Value_investing

Generally speaking, XPeng focuses on a mass market with more competitors. But the competitive pressure is increasing in the 300,000-400,000 high-end segment of Nio:

• XPeng launched its model G9 priced at RMB 300,000
• $Tesla Motors(TSLA)$ model y has a significant price cut in October
• $BYD COMPANY(01211)$ is about to launch a high-end luxury model.

The future of Nio is fierce competition.

As a result, Nio's first-mover advantage is gone, and it remains to be a question on whether it can achieve self-breakthrough in the competition subsequently.

This is the uncertainty of Nio at the moment.

At present, Bloomberg analysts are optimistic about Nio in the fourth quarter, believing that revenue can reach RMB 21.84 billion, surging 120.6% year-on-year.