Nio Earnings: In-Line Quarter, but With Decent Vehicle Margin Recovery

Nio’s third-quarter revenue was at the low end of its guidance. Vehicle margin, although declined 5 percentage points year over year to 11% due to product mix change and price promotions, staged 5 percentage points’ recovery from last quarter, benefiting from larger volume and lower battery costs. With lower vehicle selling prices and rising operating expense assumptions, we increased our net loss forecast for 2023-25 and reduced our fair value estimate to USD 12.50 per ADS (HKD 96.30 per share) from USD 13.30 per ADS (HKD 103.00 per share). Our fair value estimate implies a forward 2024 price/sales ratio of 2 times.