As NIO prepares to transition from its first decade to the second, the company is presenting a robust financial performance that is reassuring both its users and investorsOn November 20th, the company disclosed its third-quarter financial report for 2024, highlighting a surge in vehicle deliveries that marked a historic highThe report showcased impressive financial metrics, buoyed by cost-optimization measures that drove the highest automotive gross margin and overall gross margin in nearly eight quarters.

NIO's financial health continues to improve as wellIn the third quarter, the company recorded positive free cash flow, resulting in a cash reserve of 42.2 billion yuan, an increase of 600 million yuan compared to the previous quarterThis strengthening of its foundational financial position signals NIO's growing robustness in a competitive market.

The company also laid out its strongest quarterly guidance to date: projected deliveries for the fourth quarter range from 72,000 to 75,000 vehicles, reflecting a year-on-year growth of between 43.9% and 49.9%. Revenue guidance for the same period is set at 19.68 billion to 20.38 billion yuan, representing a year-on-year increase of 15% to 19.2%. Both guidance estimates mark record highs for the company.

During the earnings call, founder, chairman, and CEO Li Bin articulated ambitious growth targets for the next two years, signaling the company's aim for profitability by 2026. Such a goal is emblematic of NIO's evolving journey, especially as it enters a more competitive phase in the rapidly growing electric vehicle (EV) market.

The third quarter saw NIO deliver over 20,000 vehicles each month, a feat achieved for the first time in the company’s history, totaling 62,000 vehicles delivered during the quarter—a year-on-year increase of 11.6%. With these rising delivery numbers, NIO's revenue saw a sequential increase of 7%, culminating in 18.67 billion yuan, while the automotive gross margin reached 13.1%, up 2.1 percentage points from the same period last year

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The growth in automotive gross margin also propelled the overall gross margin of the company up to 10.7%, a rise of 2.7 percentage points year-on-year.

NIO CFO Qu Yu underscored the positive trend by stating, “Through sustained cost optimization, we achieved an automotive gross margin of 13.1% in Q3 2024.” The improvement in margins, coupled with the ongoing increase in deliveries, led the company to attain positive free cash flow during the quarter—a vital marker of financial health and liquidity.

This positive free cash flow signifies NIO's enhanced financial stability and its capacity to allocate resources for future growth endeavorsQu further disclosed during the earnings call that a corporate initiative dubbed "Mining" was introduced internally to facilitate the execution of cost-reduction strategies.

With just a few months left in the year, NIO is poised for an even more successful performanceThe forthcoming Q4 delivery guidance, positioned at 72,000 to 75,000 vehicles, alongside revenue projections between 19.68 billion and 20.38 billion yuan, are both set to achieve historical precedenceFurthermore, NIO aims for a 15% automotive gross margin in Q4, a strategic target aligned with its broader financial trajectory.

In an intensely competitive landscape for new energy vehicles in China, the notion of stability becomes exceptionally preciousPrior to the financial report, several investment institutions issued positive research forecasts, signaling optimism surrounding NIO's growthFor instance, Bank of China International increased its sales projections for NIO in 2024 and 2025 to 225,000 and 350,000 units, respectively, reiterating a "buy" rating and adjusting the target price to $9. DBS maintained its "buy" rating for NIO while raising the target price from $7.1 to $8, indicating increased confidence in the company's trajectoryAdditionally, Huachuang International validated that NIO has reached its critical turning point.

Li utilized a vivid metaphor, stating that “NIO has grown from a small sapling to a little tree capable of withstanding some winds." This sentiment underscores the progress made amid a fluctuating market landscape.

But the good news about NIO doesn’t stop there

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Throughout this year, the company has consistently achieved delivery levels exceeding 20,000 units for six consecutive monthsConversely, last year, NIO only reached this level in a single month (July).

According to data from the China Passenger Car Association, major German luxury brands, including Mercedes-Benz, BMW, Audi, and Porsche (collectively referred to as BBAP), have experienced varying degrees of sales declines in China this year, with decreases nearing 30% year-on-yearIn stark contrast, NIO's delivery volume has soared over 35% in the same period.

Notably, during the first ten months of this year, Chinese premium electric vehicle brands like NIO, Li Auto, and Zeekr reported volume increasesA report from Yiche Research Institute pointed out that emerging premium brands like NIO and Li Auto pose significant challenges to the traditional BBAP brands, which face stagnation or rapid declines in sales figures.

Driven by this shifting sales dynamic, numerous dealers from established luxury brands have begun to transition to NIOAt the Guangzhou Auto Show this November, NIO Senior Vice President Wei Jian revealed that since last year, 40 dealers from BBAP brands have made the switch to NIO, including the largest traditional luxury brand store in Guangzhou, which was also the biggest Audi 5S dealership in the Asia-Pacific region.

Beyond its luxury brand offerings, NIO's second brand, LeDao, is also positioning itself for accelerated growthIn September, LeDao's inaugural model, the LeDao L60, was officially launched, with a commitment to achieve 20,000 deliveries in March next yearLi expressed high hopes that LeDao would initiate the next phase of the company's growth, with the LeDao L60 already exceeding initial order expectations in its production plan extending into the first quarter of next year.

Simultaneously, NIO continues to broaden its international outreach strategiesOn October 4, NIO announced plans to launch operations in the Middle East and North Africa, aiming for a full rollout in the UAE by the fourth quarter of 2024. Additionally, on November 15, the company revealed its expansion into Azerbaijan, planning to commence product deliveries in the second quarter of 2025, further accelerating its globalization strategy.

NIO also signed an agreement in early October with CYVN Holdings, an Abu Dhabi investment institution, to establish a technology research and development center in Abu Dhabi, bolstering its global research and development footprint

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CYVN Holdings has been a strategic investor in NIO, having invested a total of $3.3 billion in previous rounds of financingWith backing from the government-affiliated “patient capital,” NIO also received a substantial infusion of 3.3 billion yuan from three existing shareholders connected to the Anhui government, complementing NIO's commitment of 10 billion yuan for new shares in NIO China.

These various signals suggest that NIO is at a critical juncture, entering a rapid growth phase characterized by robust operational expansionWith continuous growth in its battery swap network and the introduction of unique models like NIO and the rapidly selling LeDao, NIO is building a diverse branding strategy that combines distinct positioning and complementary advantages.

After ten years of diligent development, NIO’s long-term vision is progressively materializing, revealing a comprehensive operational strategy underpinned by technological innovation and market responsiveness.

From its inception in November 2014, Li Bin set forth a multi-brand strategy for NIO that has been part of its foundational ethosHe emphasized that this strategy was not a spur-of-the-moment decision but rather a well-considered plan laid out from the beginning, showcasing NIO’s enduring commitment to innovation and adaptability.

To actualize this objective, which once seemed distant and perhaps impractical, NIO emphasized strategic foresight and placed supreme value on patience and resilienceTheir approach has also been recognized as a classic strategy among renowned automotive companies, which often introduce high-end models first before offering lower-priced variants to the marketLi has repeatedly asserted that launching a high-end brand like NIO affords the company the critical time and resources needed to innovate effectively.

To eliminate concerns surrounding range anxiety and enhance the charging experience for users, NIO has constructed over 2,700 battery swap stations worldwide, establishing itself as the leading company in battery swap infrastructure

The company has provided more than 58 million battery swap services, and by adhering to its “power coverage” plan, NIO aims to establish charging and battery swap facilities in every county across China by 2026.

As the only electric vehicle manufacturer investing fully in the battery swap infrastructure, NIO's journey has not been without its challengesAt times, the company has found itself on the defensive due to financial losses and increasing scrutinyDuring NIO Power Day 2023, President Qin Lihong noted that the company often faced ridicule regarding its ambitious battery swap vision and initiatives.

In response to the skeptics, Li Bin articulated a compelling argument: “Companies that do not invest for the future may experience short-term advantages but will inevitably cede long-term opportunities.”

Another key focus of investment for NIO has been in innovative technology research and developmentSince 2016, the company has invested over 53 billion yuan, yielding numerous industry-leading technological achievementsAt the NIO Innovation Technology Day in July this year, Li Bin proudly announced that their first self-developed intelligent driving chip—a significant milestone for the industry—has successfully gone into production.

The “God's Eye” chip, as it is known, utilizes state-of-the-art 5nm automotive-grade processes and is equipped with more than 50 billion transistors, offering performance levels surpassing four flagship chipsAdditionally, they introduced the SkyOS, the first full-domain operating system developed and mass-produced by a Chinese auto manufacturer, tailored for the AI era.

Reflecting on its decade-long journey, NIO has strategically invested in battery swap networks and technological advancements, effectively establishing a competitive moat that continuously fortifies its operational capabilities in support of multi-brand growth.

Taking the second brand, LeDao, as an example, the SkyOS full-domain operating system has been integrated into LeDao’s first model, signifying NIO's technological prowess

Li revealed that 60% of customers purchasing LeDao vehicles were motivated primarily by the battery swap feature.

In an era where automobile market segmentation is distinctly accentuated and consumers are increasingly pursuing personalization, NIO's innovative multi-brand strategy appears prescientMany internationally renowned automotive firms, including BMW with MINI and Toyota with Lexus, have adopted similar multi-brand approaches.

With the official rollout of the multi-brand strategy, NIO is reaping the rewards of extensive technological accumulated advancements over previous yearsThe seamless exchange between battery swapping and BaaS (Battery-as-a-Service) models creates a healthy, sustainable cycle: battery swapping leads to increased sales, while the battery rental system makes car pricing more competitiveThis, in turn, supports the launch of new models and enhances market presence, unlocking further commercial value.

Li Bin noted that NIO currently operates around 800 battery swap stations in the Yangtze River Delta region alone, which contributes to the region accounting for half of the company’s total sales nationwideHe concluded that with such a dense network, battery swap stations create significant network effects that, once established, can dramatically enhance the company’s market share.

Empowerment through battery swap network construction has opened opportunities for societal collaboration, leading NIO to pursue a “Charging Partner” model to enhance infrastructure development through partnerships with social capitalNotably, in May, NIO Energy secured a strategic investment of 1.5 billion yuan from a government-backed fund in Wuhan, expanding its battery swap network collaborationsSince last November, the company has also established battery swap alliances with eight other automakers, fostering a cooperative industry environment.

Having navigated through periods of uncertainty and improvement, as well as completed earlier phases of development, Li Bin confidently states, “NIO is ready,” as it gears up for the impending growth surge in 2024 and 2025.

As NIO gears up for the upcoming year, the NIO Day on December 21,2024, in Guangzhou, is set to unveil the third brand, "firefly," which is targeted for the premium city car segment and draws parallels to BMW’s MINI

Alongside LeDao, firefly will also benefit from shared battery swapping services and existing sales channels.

In a report by Guosheng Securities, projections indicate that starting next year, both LeDao and firefly brands will present globally-focused products, extending NIO’s market footprint.

NIO’s upcoming NIO Day has embraced the theme “Together & Further.” The entire NIO Group is set to embark on a robust growth phase as all three brands—NIO, LeDao, and firefly—prepare to enter the competitive arena, covering a price range from 150,000 to 800,000 yuan.

With such a promising roadmap laid out, the question remains: how will NIO shape its future?

The performance of its once-questioned rivals, namely Tesla and BYD, may offer insightBoth companies have transitioned into rapid growth phases after over a decade of persistence, and with NIO pursuing a similar trajectory, it could chart an impressive growth curve ahead.