Nio (NIO) wants drivers to take the path to happiness.
Last month, the Chinese electric vehicle maker launched its new lower-priced brand Onvo. The name comes from "On Voyage" and the Chinese name, “Le Dao,” which translates to “Path to Happiness."
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In a bid to take on Tesla's (TSLA) Model Y, the world's best-selling EV, Nio unveiled the Onvo L60 SUV with a sticker price starting from 219,900 yuan ($30,476), 12% below the price of the Model Y, which starts at 249,900 yuan in China, Reuters reported.
Nio plans to start delivery of the Onvo L60 in September.
CEO and founder William Li introduced the Onvo L60 SUV, adding that the company also aimed to take on Toyota Motor's RAV4 by providing family cars that balance customer experience and ownership costs.
CEO says investments starting to pay off
"RAV4 and Model Y were the benchmark for family cars in their time. With technologies evolving and people’s understanding of smart EVs deepening, today it’s time for us to redefine the new standards for family cars," Li said at the event in Shanghai, according to Reuters.
On Thursday, Nio reported first-quarter revenue of $1.37 billion, down 7% from a year ago and missing Wall Street’s call for $1.48 billion.
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Nio also reported a loss of CNY5.18 billion, or about $618.2 million, which was more than 9% larger than a year ago and wider than the CNY4.48 billion loss that analysts had projected.
On a per-share basis, the company lost CNY2.57, or 35 cents, more than the CNY2.31 analysts anticipated.
Nio delivered 30,053 vehicles in the quarter, in line with its downwardly revised projections in March. The company delivered 31,041 vehicles in the same quarter of last year.
"Despite fierce competition, our continuous investment in technologies, products, services, and the community starts to pay off and set us apart from others," Li said during an earnings call with analysts.
Li said that ET7 Executive Edition was launched at the Beijing Auto Show, telling analysts that “with all-around upgrades, the 2024 NIO ET7 batch caters to the needs of the business community.”
"It is well placed to compete with the premium executive model, especially ICE models, such as BMW 5 Series, Audi A6, and the Mercedes E-Class," he said.
In addition, Li said that Nio will also start shipping its lowest-cost brand, Firefly, in the first half of next year
Li also told analysts during the call that Nio plans to start offering its products and services in the United Arab Emirates by the end of this year.
In December, Nio inked a deal for an investment of $2.2 billion from CYVN Holdings, which is based in Abu Dhabi.
The agreement boosted CYVN's shareholding to 20.1% of Nio's total issued and outstanding shares, following an investment of $1 billion in July,
Analyst cites margin expansion
The investment came as Nio looked to boost efficiency by cutting a tenth of the workforce and deferring non-core projects.
On June 1, Nio said it had delivered 20,544 vehicles in May 2024, up 233.8% year-over-year, and 66,217 vehicles year-to-date in 2024, marking a 51% increase.
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In May, Nio said it had further expanded its strategic cooperation on battery swapping by partnering with GAC Group and FAW Group.
"Nio is committed to establishing a rapidly evolving battery-swapping ecosystem and providing efficient and convenient recharging experiences for its users," the company said in a statement.
Battery swapping is an attempt to address drivers’ anxiety about driving range, and it is faster than recharging as it only takes a few minutes.
The Chinese EV industry took a blow last month when President Joe Biden quadrupled tariffs on electric vehicles from China to 100%, effectively sealing off one of the world’s biggest passenger car markets.
Analysts weighed in after Nio issued its earnings report.
Bank of America Securities analysts raised the firm's price target on Nio to $6 from $5.90 and kept a neutral rating on the shares after the company announced first-quarter results and gave second-quarter delivery guidance.
The firm lifted its sales volume forecasts following the report but reiterated a neutral rating as it expects the positives from volume growth in 2024 to be partially offset by slower margin expansion.
Citi analyst Jeff Chung lowered the firm's price target on Nio to $8.50 from $10.40 while keeping a buy rating on the shares after the second-quarter guidance came in at 54,000-56,000 units.
To factor in year-to-date strong sales momentum and upcoming new model launches of two more brands, Onvo and Firefly, Chung raised the firm's 2024-25 sales forecasts to 227,000 and 308,000 units, respectively, but cut its 2024-25 gross profit margin forecasts.
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