NIO's Vehicle Margins Improve But the Stock Still Lags: Here's Why

Core Insights - NIO Inc. has improved its vehicle margins to 12.3% in 2024 from 9.5% in 2023, despite a competitive EV price war in China [1] - The company aims for a 20% vehicle margin for its brand and 15% for its ONVO line by 2025 [2] - NIO's stock has declined by 28% year to date, indicating market challenges [4] Financial Performance - Quarterly vehicle margins showed steady improvement: 9.2% in Q1 2024, 12.2% in Q2, and 13.1% in Q3, driven by lower material costs [2] - NIO had $2.6 billion in cash and$1.56 billion in long-term debt at the end of 2024, with a high debt-to-capitalization ratio of 76% [5] - Vehicle deliveries decreased to 42,094 units in Q1 2025 from 72,689 units in Q4 2024 [5] Competitive Landscape - Li Auto delivered 92,864 units in Q1 2025, with a vehicle margin of 19.8% in 2024, showcasing its profitability [7] - XPeng delivered 94,008 units in Q1 2025, a 331% increase year-over-year, with a vehicle margin of 8.3% in 2024 [8] - NIO must enhance its product lineup and revenue streams to remain competitive in the EV market [6][9] Valuation Metrics - NIO trades at a forward price-to-sales ratio of 0.44, slightly above the industry average, and carries a Value Score of D [10] - Consensus estimates for NIO's EPS for Q1 2025 and Q2 2025 remain unchanged, but full-year estimates for 2025 and 2026 have declined [11]