How Does Tesla’s Chinese Rival Nio Make Money?

How Does Tesla’s Chinese Rival Nio Make Money?

Nio, a Chinese automobile company that designs and manufactures premium electric vehicles, has seen its stock almost double year-to-date. Nio’s Revenues have grown from around $720 million in 2018 to about $1.12 billion in 2019, as its vehicle deliveries grew from around 11,300 units to about 20,600 units. Sales are expected to grow by 65%, driven by strong sales of the company’s ES6 5-seater electric SUV and the launch of the smaller EC6 SUV, which is expected to commence deliveries later this year. In our interactive dashboard Nio Revenues: How Does Nio Make Money? we discuss Nio’s business model, followed by sections that review past performance and 2020 and 2021 expectations for the company’s revenue drivers, and competitive comparisons with Tesla. The key elements of this analysis are discussed below.

Nio reported about $1.12 billion in Total Revenues for full-year 2019. This includes 2 operating segments:

  • Automotive: $1.06 billion in 2019 (94% of Total Revenues). Sells the company’s electric vehicles, which currently include the Nio ES 8, which is a premium SUV available in six or seven-seater configurations and Nio ES 6, a five-seater SUV.
  • Other: $66 million in 2019 (6% of Total Revenues). This segment includes revenues from the company’s service packages for its EVs and its energy solutions that include charging and battery swapping.

Total Revenues

Nio’s Automotive Segment

  • Sales from the Automotive segment have increased by 50% from $706 million in 2018, the year the company launched its vehicles, to $1.06 billion in 2019.
  • This was primarily driven by higher deliveries, which rose from 11.3k in 2018 to about 20.6k in 2019. However, the average price declined from $62k to about $52k, driven by a higher mix of ES6 SUVs, which have a lower price point compared to the flagship ES8 SUV.
  • We expect revenue to grow to $1.78 billion in 2020, as deliveries grow by over 70% to 35k units, driven by higher uptake of the ES6 and the launch of the more compact EC6, with the revenue growing further to $2.75 billion in 2021.
  • The Chinese automotive market has recovered well following the Covid-19 related disruption earlier this year, and Nio indicated that it saw a monthly delivery record of 3,436 vehicles in May 2020.
  • Additional details about how key drivers of Nio’s Automotive Revenues have changed over the years and are likely to trend going forward are available in our interactive dashboard.

Nio’s Other Segmen

  • Other sales have grown from $14.4 million in 2018 to $66 million in 2019 and we expect the metric to grow to $105 million in 2020 and $152 million in 2021, driven by a higher base of vehicles on the road, which should boost demand for service packages and energy sales.

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