Nio reports a more comprehensive first-quarter loss as Covid shutdowns in China interfere with deliveries

June 13, 2022: -Chinese electric-vehicle maker Nio lost $281.2 million in the first quarter, more comprehensive than the $68.8 million it lost a year ago, as it ran to keep speed with intense demand between China’s current Covid-related shutdowns.

Nio’s shares decreased about 9% in early trading Thursday as investors digested the decline in gross margin. They rebounded somewhat to end the day at $18.80, down nearly 7.5%.

CEO William Bin Li said that growing commodity costs have continued to squeeze margins during the company’s earnings call. But he hopes Nio’s gross margin to start to recover in the third quarter as offsetting cost cuts take hold.

Nio said its new factory, the company’s second, has started pre-production builds of the upcoming ET5 sedan in September. The company also approved plans to launch a unique upscale, five-passenger SUV, the ES7, with deliveries starting in August.

Nio delivered 25,768 vehicles in the first quarter, up from 20,060 a year ago. According to the company, the second-quarter deliveries are on pace to reach between 23,000 and 25,000 cars, suggesting a powerful June. Covid-19 shutdowns and supply-chain issues limited Nio’s total deliveries in April and May to just more than 12,000.

Demand has remained strong through China’s most recent pandemic disruptions, yet. Li said Nio “achieved an all-time high order flow” in May.