(Bloomberg) -- Nio Inc. is “very confident” of meeting its target of doubling sales to 250,000 electric vehicles this year, Chief Financial Officer Steven Feng said, prompting the Chinese automaker’s shares to surge in Hong Kong.
“We are very confident to achieve our sales target in 2023,” Feng said in an interview with Bloomberg Television on Wednesday. That will be achieved with new models, expanding the company’s charging and battery-swapping network, and unlocking autonomous driving technologies, he said.
Nio shares jumped as much as 8.6% in early Hong Kong trading, taking their advance in the past two days to about 18%.
Meeting the quarter-million sales goal will be a milestone for Nio, which delivered 122,486 cars in 2022. While that was up 34% from a year earlier, it missed the company’s original target because sales were hampered by China’s now-abolished Covid restrictions. However, it now faces intensifying competition in China, where a price war has broken out as domestic EV makers like BYD Co. and major international brands like Volkswagen AG and Ford Motor Co. seek to bolster sales.
The price cuts show the country has too many automakers, Feng said. The discounting was sparked by Tesla Inc., which first lowered prices in October, and then cut more deeply in January. Chinese automakers such as Nio and Xpeng Inc. followed suit, as well as major international brands like Volkswagen AG and Ford Motor Co.
“We expect the industry to go through some profound consolidation,” Feng said. “It’s almost consensus that China now has too many automakers, but we have no plan to buy anyone.”
The China Association of Automobile Manufacturers on Wednesday urged automakers and local governments to end the price war, saying it’s not a long-term solution, and the automobile market should return to normal order as soon as possible.
Nio earlier this month posted a wider-than-estimated 5.8 billion yuan ($843 million) fourth-quarter loss as marketing and promotional expenses climbed. The carmaker also reported an annual net loss of 14.4 billion yuan on revenue of 49.3 billion yuan. Gross margins in the fourth quarter dropped to 3.9% from 13.3% the three months prior due to a production platform switch and Covid disruptions.
Feng said the company is “confident” about breaking even at the group level next year. “Strong revenue growth together with tightened spending are the key to improved profitability,” he said.
Despite this week’s gains, Nio’s shares in Hong Kong and the US have plunged more than 50% in the past 12 months. Worth almost double Ford Motor Co. when its market value peaked at almost $100 billion in early 2021, Nio is now valued at less than a third of the US auto company.
--With assistance from Andy Clarke.
(Adds industry group comment in 7th paragraph.)
©2023 Bloomberg L.P.
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