Will Nio manage to outperform its Q1 losses and fulfill its ambitious expansion goals?

Chinese electric vehicle manufacturer, Nio, has revealed an ambitious growth strategy for the coming years, including the launch of a new sub-brand, Firefly, and the expansion of its existing Onvo sub-brand.

In the first quarter of 2024, Nio delivered a total of 30,053 vehicles, generating revenue of RMB 9.91 billion (USD 1.3 billion). The company's net loss for the quarter was RMB 4.9 billion (USD 675.7 million), but Nio's cash reserves stand at over RMB 45 billion (USD 6.2 billion).

Nio aims to increase monthly sales for its Onvo sub-brand to between 20,000-30,000 units, and for its main brand to achieve long-term monthly sales of 30,000 units with a gross margin exceeding 20%. To support this growth, Nio is building a third factory in Hefei, with a single-shift capacity of 100,000 units. This factory will produce both Nio and Onvo models.

The first car from Nio's third brand, Firefly, is expected to commence deliveries in the first half of 2025. Firefly will focus on producing high-quality, small-sized vehicles for the domestic market, at a price point of around RMB 100,000 (USD 13,790). Firefly's models will also be equipped with battery swapping capabilities and could share the same sales network as Nio's main brand.

Onvo, Nio's second sub-brand (previously codenamed Alps), will be launching a new family-oriented SUV that is expected to outsize the L60. Onvo will adopt an independent sales channel, aiming to build 100 direct-sale stores this year. Each Onvo store is expected to cost between RMB 1-2 million (USD 137,900-275,800) to build.

Nio's R&D expenses totaled RMB 2.86 billion (USD 394.4 million) in Q1 2024, with a year-on-year decrease of 6.9% and a quarter-on-quarter decrease of 27.9%. The third-generation swap stations can be adapted with some modifications.

Meanwhile, Li Auto's development of pure electric products has stalled amid recent setbacks, while BYD Auto has announced plans for new sub-brands in 2023 and 2024, including the premium brand Fang Cheng Bao and the brand Yangwang. However, it's unclear if BYD will follow exactly the same pattern as Nio’s Firefly.

Nio's main brand will have nine models next year, comprising existing models plus the upcoming ET9. All models will transition to Nio's third-generation platform. Vehicles sold under the Onvo sub-brand will be kept affordable for customers.

With its ambitious expansion plans, Nio is positioning itself for continued growth in the competitive electric vehicle market. The company's focus on innovation, quality, and affordability is expected to attract a broad customer base in China and beyond.