The new ES6 becomes Weilai's hope, but it faces production capacity and price challenges

In the recently released financial report for the first quarter of 2023, NIO showed the difficulties of declining sales and financial pressure. NIO's first-quarter revenue grew only 7.7% year-on-year, lower than market expectations, while its net loss expanded by 66%. The company's gross profit margin and automobile business gross profit margin also dropped to 1.5% and 5.1% respectively.

Weilai originally planned to achieve breakeven in the fourth quarter this year, but currently, this goal is difficult to achieve. In the earnings conference call, NIO CEO Li Bin said that the timetable needs to be delayed and they hope to achieve breakeven within the next year.

Nio’s delivery volume has also seen a significant decline. Deliveries in the first quarter dropped 22.5% from the previous quarter to 31,000 vehicles. In the competition with Xpeng and Lideal, Nio lagged behind these two companies in terms of delivery volume. NIO's main delivery force has also changed from last year's ES8, ES6 and EC6 to ES7, ET5 and ET7, which has caused NIO's gross profit margin to drop to 1.5%. Compared with Lideal and Xpeng, NIO's gross profit margin is also relatively low.

# According to the editor’s understanding, the difficulties faced by Weilai have been traced before. Among the major new car-making forces, as of 2022, except for Nezha and Ideal, NIO's delivery volume ranks at the bottom, and will continue for several months. NIO expects delivery volume in the second quarter of this year to be between 23,000 and 25,000 vehicles.

NIO hopes that the new ES6 will turn the situation around. Since delivery began in June 2019, ES6, NIO's second mass-produced model, has been the main delivery model. Currently, the new ES6 still has production capacity issues, and the delivery cycle is about 5 weeks. In addition, the price range of the new ES6 does not have a clear advantage compared with its competitors.

Nio expects its revenue to continue to decline in the second quarter and faces delivery pressure. Analysts believe that NIO's demand is lower than expected and market competition is fierce. Especially when demand in the high-end pure electric vehicle market is weak, NIO is facing sales difficulties.

NIO is doing its best to deal with these challenges, but more measures need to be taken to restore the growth trend. For Weilai, this is a critical turning point. They need to adjust their strategies, improve product competitiveness and find new growth drivers.

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