NIO is consistently identified as one of the most promising EV plays, albeit suffering from a number of idiosyncratic factors, including a sizable cash burn problem for the foreseeable future as well as China’s zero-COVID policy continuing to act as a dampener on the company’s production cadence. Against this backdrop, NIO has now reported its deliveries for the month of June 2022. To wit, the company delivered 12,961 units in the pertinent period, including 1,684 units of the ES8 electric SUV, 5,100 units of the ES6 mid-sized electric SUV, 1,828 units of the EC6 electric crossover, and 4,349 units of the ET7 electric sedan. Moreover, NIO has now delivered 25,059 units in the entire Q2 2022, recording an increase of 14.4 percent relative to the pertinent period of 2021. Year to date, the company has delivered 50,827 EVs. Based on the current production run rate, NIO is slated to deliver 128,593 units in FY 2022. Meanwhile, Morgan Stanley has issued a short-term tactical bullish call on NIO shares: NIO now boasts of a rich product portfolio consisting of four electric SUVs – the ES8, ES6, EC6, and ES7 – along with the ET7 and the ET5 electric sedans. In fact, Deutsche Bank recently highlighted the company’s “product supercycle” in an investment note. NIO is currently ramping up the maximum production capacity of its Heifei plant to 300,000 units. Additionally, the company’s NeoPark facility, which will have the capacity to produce another 300,000 units per annum, is also expected to come online in H2 2022. Nonetheless, due to supply chain bottlenecks and lost production due to COVID-mandated lockdowns, Deutsche Bank now expects NIO to deliver 160,000 units in 2022 (down from the previous forecast of 170,000 units) and 320,000 units in 2023. The company’s monthly production cadence is expected to increase from 7,000 units in May to 25,000 units by the end of 2022.
— Grizzly Research (@ResearchGrizzly) June 28, 2022 Of course, NIO recently became the target of a short-seller. To wit, Grizzly Research has now published a report, alleging that the EV player uses accounting tricks to inflate its revenues and margins – an assertion that NIO has firmly denied. Basically, the short-seller believes that the company is pulling forward revenue by collecting the entirety of its subscription-based battery revenue upfront instead of recognizing this income stream over the life of the subscription (around 7 years). As a refresher, Weineng is a financing entity formed jointly by NIO, CATL, Hubei Science & Technology Investment Group and Guotai Junan International. The entity provides financing for NIO’s Battery-as-Service (BaaS) facility which allows users to purchase NIO’s EVs without a battery, with eligible users paying only a monthly subscription fee to rent batteries. For its part, NIO has termed this report “without merit”: Moreover, Deutsche Bank has also now come out in support of NIO: Hence, we do not view this is as a controversial practice and suspect others likely take a similar approach (sometimes referred to as a “battery bank”).
