NIO Reports Rising Q2 Cost Pressures, Vehicle Costs Up Over RMB 10,000—Stands Firm Against Price Cuts for Volume

NIO held its Q1 2024 earnings media briefing on May 23. Founder, Chairman, and CEO William Li stated that starting in Q2, NIO is facing increased cost pressures compared to Q1, with average per-vehicle costs rising by approximately RMB 10,000, and some models seeing increases of up to RMB 15,000. This is primarily due to rising prices of raw materials such as memory chips, lithium carbonate, copper, and aluminum. Li noted that the current pressure remains manageable, and the company plans to address it through higher sales volume, stable pricing, reclaiming certain discount incentives, and supply chain cost reductions. He pointed out that Q2 will see higher expenses related to new vehicle launches and market entries, compounding the impact of rising costs and creating overall operational pressure. However, he emphasized that the industry’s bigger challenge isn’t “lower sales caused by price hikes,” but rather “inability to boost sales even after cutting prices.” Regarding the pricing strategy for the Onvo L80, Li clearly stated that NIO will not simply resort to price cuts to drive sales growth. He illustrated this by noting that a RMB 10,000 price reduction per vehicle would require selling three to four times more units—from an EBIT perspective—to offset the lost profit. Therefore, the company prefers to accept a “reasonable sales volume” rather than sacrifice profitability for scale. On the sources of delivery growth in Q2, Li projected that NIO’s average monthly deliveries will exceed 40,000 units going forward. The increase will mainly come from the start of Onvo L80 deliveries, the launch of the refreshed L60 in June, incremental contributions from the ES9, and the gradual ramp-up of L90 deliveries. Both the L80 and L90 represent net-new volume additions, while the refreshed L60 will also contribute incremental deliveries. Meanwhile, ES8 sales are expected to remain stable.