Shanghai (Gazgu) – Currently, NIO has no plans to raise prices for its cars, although it is also under pressure to raise the cost of raw materials, said William Bean Lee, founder, chairman and CEO of NIO, during the March 25 quarterly earnings report. .
The company has some plans to upgrade smart equipment for the three models currently on sale, namely the ES8, ES6 and EC6 (abbreviated as “866 models”), and to offer after-sales service installation services to existing car owners in 2022. Appropriate price adjustments may occur after equipment upgrades. In addition, NIO will monitor changes in prices for batteries and raw materials and accordingly develop a reasonable pricing strategy.
In light of the rising cost of raw materials, the gross profit of cars in 2022 will be about 18-20%, Mr Lee said.
Speaking about the expectations of ET7 sales, Mr Lee said he believes the ET7 will further boost NIO sales and will not affect current sales of the “886 models”.
In the second quarter of 2022, the startup plans to launch its fifth production model ES7, the second of three models on the NT2 platform, which NIO is ready to launch this year, and pricing information will be published then. Delivery is expected to begin in the third quarter of 2022. Set as a full-size five-seater premium SUV, the ES7 targets the locally produced BMW X5L. The current market size of this segment is more than 200,000 units.
The enterprises of the NIO brand for the mass market are moving smoothly. So far, the creation of core teams has been completed, and the first batch of vehicles has entered a crucial phase of research and development.
As for production capacity, Mr Lee indicated that the capacity of the first plant is likely to reach 60 john an hour by the middle of this year. For the second factory, if it will operate 4,000 hours a year, the annual production capacity will be 240,000 units, namely about 20,000 units per month. If it works overtime up to 5,000 hours a year, then the annual production capacity will reach about 300,000 units.
NIO expects to see some fundamental improvements in car production in the fourth quarter of this year, which will help overcome the bottleneck of production capacity for production in the next phase.
As for the battery, since last year, NIO has partnered with its major battery supplier CATL, which has agreed to add additional battery production lines. Under NIO’s current plan for 2022, battery production capacity should be able to meet its requirements.
Chip shortages are now a big problem for NIOs. Mr Lee said the NIO vehicle needed more than 1,000 chips, about 10% of which could face supply constraints. The trouble was mainly due to the lack of conventional or cheaper chips. However, for high-end chips such as the Qualcomm Snapdragon 8155, the effect is much smaller as the NIO has long-term strategic partnerships with these vendors.
Moreover, NIO expects that annual investment in research and development in 2022 will be more than doubled than in 2021, and the number of its employees in research and development will reach approximately 9,000 by the end of this year. It also wants to reach a quarterly break-even point in the fourth quarter of 2023 and become profitable in 2024.
As for global business, Mr Lee said NIO plans to offer its products and services in Germany, the Netherlands and Denmark in 2022. Currently, work on creating a team and appropriate preparations for entering the market are in full swing.
Stephen Feng Wei, CFO of NIO, added that the company can currently supply about 100 ES8 per month to Norway. While overseas markets will not make a significant contribution to NIO’s overall sales this year, in the long run sales will naturally increase as a result of NIO’s commitment to improving its global product and service layouts and building local user communities .