Nio Earnings: Revenue in Line but Vehicle Margin Missed; Near-Term Pricing Pressure Remains

Nio’s fourth-quarter revenue was at the high end of its guidance. Vehicle margin, however, missed the company’s previous guidance of around 15%, despite gaining 5 percentage points year over year to 12%, benefiting from lower battery cost and inventory provision in the prior year quarter. With lower vehicle margin and selling price, as well as rising operating expense assumptions, we increase our net loss forecast for 2024-25 and reduce our fair value estimate to USD 9.10 per ADS (HKD 70.10 per share) from USD 12.50 per ADS (HKD 96.30 per share). Our fair value implies a forward 2024 price/sales ratio of 1.7 times.