It’s been a November to remember for NIO (NYSE:NIO). The Chinese electric car maker just hit three big milestones in two days. On Nov. 2, its market cap surpassed that of German automaker BMW. The very next day, its market cap not only crossed the $50 billion mark, but also surpassed that of General Motors (NYSE:GM).
NIO LAUNCHED A NEW BATTERIES-AS-A-SERVICE PROGRAM IN THE THIRD QUARTER. EXPECT AN UPDATE ON TUESDAY. IMAGE SOURCE: NIO.
Some key questions for NIO
While listening to NIO’s earnings call, auto investors should keep a sharp ear out for information on these topics.
- Costs. Production and deliveries have ramped up quite a bit over the last several months. Have costs kept pace, or is NIO finding some leverage at these production levels?
- Batteries-as-a-service. Is it proving popular? How profitable is it for NIO given the joint-venture arrangement?
- Cash. The automaker came close to going broke early this year, but was revived by a bailout put together by economic-investment authorities in China’s industrial Anhui province. It should be in much better shape now — it had $1.6 billion in cash at the end of June — but how much was left as of Sept. 30, and what does it plan to spend that cash on over the next couple of quarters?
- More new models? The company is expected to launch a sedan (probably called the ET7) early next year. Is that on track? Are there other new models in the works?
What to expect from NIO’s earnings
NIO’s stock has had a dramatic run since the company’s brush with bankruptcy in early 2020. Its price might be due for a pullback — but I don’t think the earnings report will be the catalyst that triggers one. I expect a loss that’s slightly better than Wall Street’s forecast, revenue roughly in line with the estimate, some good news on costs, and no bad surprises. We’ll find out on Tuesday.
Editor’s Note: This article has been updated to clarify that Nio’s earnings call will occur after the market closes on Tuesday.
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Growing fast
NIO has benefited from a lot of hype around the electric vehicle (EV) industry. Splashy stock market debuts from companies like Nikola (NASDAQ:NKLA) have generated a buying frenzy among EV investors. It’s tempting to lump NIO into the same class as start-ups like Nikola and Lordstown Motors (NASDAQ:RIDE), but there are a few key differences.
NIO went public in late 2018, well before the current wave of electric car IPOs. Unlike Nikola and Lordstown, NIO is already producing electric vehicles. Taking a page from Tesla’s playbook, NIO started with a sports car in 2016 and then quickly transitioned into specializing in electric SUVs, including 2017’s full-size ES8, 2019’s midsize ES6, and 2020’s EC6 “coupe SUV,” essentially a crossover SUV.
In October, NIO produced and delivered more than 5,000 vehicles in one month for the first time in its history, more than double its October 2019 output. Of course, that pales in comparison to the likes of General Motors, which sold more than 600,000 vehicles per month in 2019. Even the comparatively small-scale Tesla delivered more than 48,000 vehicles per month in Q3 2020.
