How NIO Makes Money

NIO generates most of its revenue through sales of electric vehicles but has not yet been profitable

Reviewed by David KindnessReviewed by David Kindness

NIO Inc., whose name in Chinese translates to “Blue Sky Coming,” is a high-end smart electric vehicle (EV) producer based in China. The company designs and manufactures premium EVs that incorporate leading edge technologies for assisted and intelligent driving, electric powertrains, and batteries.

It also offers EV charging solutions and other services, including insurance, maintenance, roadside assistance, and an enhanced data package.

NIO EVs turn in a superior performance in 0-100 km/h and braking distance. Each of its various battery packs, including the Standard Range, Long Range, and Ultra-Long Range, work with every EV model and support the different driving styles of consumers.

NIO is committed to designing and delivering to its customers innovative products with the highest safety and quality standards. In 2023, the company delivered 160,038 vehicles: 92,186 premium smart electric SUVs and 67,852 premium smart electric sedans.

Key Takeaways

• NIO makes premium smart electric vehicles and provides charging solutions and other services.
• Vehicle sales generate the majority of the company’s revenue.
• The company has not achieved profitability since its inception.
• NIO delivered 160,038 EVs in 2023.
• It plans to start selling EVs in the U.S. in 2025.

NIO’s Industry

NIO (NIO) operates in the Auto Manufacturers industry within the Consumer Cyclical sector.

The company differentiates itself with its groundbreaking innovations, such as its battery swapping technologies, Battery as a Service (BaaS), and its proprietary NIO assisted and intelligent driving technology, and its subscription services.

NIO sells its products and services in China, Norway, Germany, the Netherlands, Denmark, and Sweden. It intends to expand sales into other markets throughout the world.

It has focused on assisted and intelligent driving since its inception and its proprietary technologies are its backbone. NIO Adam is its super computing platform and NIO Aquila is its super sensing system that’s equipped with high performance sensors.

NIO has also developed a user community that welcomes and engages people through offline and online platforms. These include NIO Houses, NIO Spaces and the NIO app.

Competition

NIO vies for sales in the highly competitive, always evolving mid to premium EV market. It expects this competition to intensify as the number of players grows.

It feels that its competitive advantages are its well-positioned products, proprietary software and hardware technologies, battery swapping, and other power solutions. So is the emphasis it places on a solid user experience and user community.

Competitors include SAIC Motor Corp. (600104) and Dongfeng Motor Corp. (DNFGF). Some traditional Chinese automakers, like BYD Co. (1211) and Geely Automobile Holdings Ltd. (GELYF), have also entered the EV market.

NIO also competes with Li Auto Inc. (LI), XPeng Inc. (XPEV), and international rivals such as Tesla Inc. (TSLA).

Note

NIO is the sixth largest electric vehicle company in the world based on market cap. By the same measure, it is the 35th largest automobile company in the world.

NIO’s Financials

As of June 2024, NIO’s market capitalization was $9.03 billion.

NIO’s 2023 annual report reported the company’s financial results for the 2023 fiscal year (FY) ended Dec. 31, 2023. Additionally, on June 6, 2024, the company announced financial results for the quarter ended March 31, 2024.

Although a Cayman Islands holding company headquartered in China, NIO issues shares that are publicly traded on U.S. stock markets. Thus, it is required to report its financial results to the U.S. Securities and Exchange Commission (SEC).

NIO uses the Renminbi (RMB) as its reporting currency, but provides U.S. dollar amounts as well (converted at a rate of RMB 7.0999 to U.S. $1.00 in effect on Dec. 29, 2023).

NIO operates as one reportable segment. However, it breaks down its revenue into the categories of Vehicle Sales and Other Sales. Vehicle Sales revenue is generated from the sale of EVs. Other Sales revenue is derived from parts, accessories, after-sales vehicle services, and power solutions.

Revenue

For FY 2023, total revenue was $7.83 billion, an increase of 12.9% over the previous year. For the first quarter of FY 2024, total revenue was $1.37 billion, a decrease of 7.2% from the previous year’s first quarter.

Vehicle Sales

For FY 2023, Vehicle Sales revenue was $6.93 billion, an increase of 8.2% over the previous year. For the first quarter of 2024, revenue was $1.16 billion, a decrease of 9.1% from the previous year’s first quarter.

Other Sales

For FY 2023, Other Sales revenue was $895 million, an increase of 69% over the previous year. For the first quarter of 2024, revenue was $211 million, an increase of 5.2% over the previous year’s first quarter.

Operating Income

For FY 2023, the operating loss was $(3.19) billion, a 44.8% greater loss than that in 2022. For the first quarter of FY 2024, the operating loss was $(747) million, a 5.5% greater loss than that in the previous year’s first quarter.

Net Income

For FY 2023, the net loss was $(2.91) billion, a 43.5% greater loss than that in 2022. For the first quarter of FY 2024, the net loss was $(718) million, a 9.4% greater loss than that in the previous year’s first quarter.

History and Leadership

NIO Inc. was founded by Bin Li and Lihong Qin in 2014 as Nextev Inc. It changed its name to NIO Inc. in July 2017.

The company is headquartered in Shanghai, China. Its North American headquarters is San Jose, Calif.

Li is the company’s board chair and has been CEO since 2018. Qin has been a director and the company’s president since the company’s inception. Xin Zhou is the chair of the Product Committee and executive vice president. Ganesh Iyer has been with NIO since 2016 and is the CEO of NIO U.S.

Recent Developments

In June 2024, NIO announced that it delivered 20,544 new vehicles in May, a 233.8% increase in deliveries year-over-year. The total was represented by 12,164 premium smart electric SUVs and 8,380 premium smart electric sedans. The total of all deliveries since inception was 515,811 as of May 31, 2024.

What’s the Value of a Share of NIO?

On June 20, 2024, a share of NIO was trading at $4.31.

Does NIO Pay Shareholders Dividends?

No, it doesn’t. Thus far, it has never made a profit and has never declared or paid cash dividends. In fact, it doesn’t plan to for the foreseeable future. The company will invest future earnings in itself to continue operating and growing its business.

Does NIO Sell Cars in the U.S.?

Not yet. But it intends to do so in 2025.

The Bottom Line

NIO is a pioneering EV automaker established in 2014 and located in Shanghai, China. It sells high-end, smart vehicles as well as EV power solutions, parts, accessories, and services. It differentiates itself from its competition with its battery innovations, proprietary assisted and intelligent driving technology, and subscription services.

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