NIO seems to have been brought back to reality overnight.

On June 20th, NIO announced that it had signed an agreement with CYVN Holdings, an investment institution under the government of Abu Dhabi, United Arab Emirates, and the "Middle Eastern tycoons" were planning to invest $1.1 billion in NIO; on August 1st, NIO's monthly deliveries exceeded 20,000 units for the first time, a sequential growth of 91.1%, making it the biggest dark horse in the new energy vehicle market in July.

At that time, the market generally believed that NIO would emerge from the doldrums and return to high growth. However, the semi-annual report published by NIO brought it back to reality.

In the second quarter of this year, NIO's operating income was 8.77 billion yuan, a year-on-year decrease of 14.8%, and a sequential decrease of 17.8%. Based on this calculation, the unit price of NIO's vehicles in the second quarter was 305,000 yuan, with an insufficient recovery strength, significantly lower than market expectations. Due to the insufficient recovery in vehicle prices, the gross margin of the whole vehicle was also only 6.2%, which was also lower than market expectations. In addition, the overall gross margin of the company was only 1%, indicating that NIO still has too much on its plate and does not care about cost control.

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Of course, the most important issue is the net loss.

In the second quarter of this year, NIO's net loss was 6.06 billion yuan, equivalent to a loss of 257,000 yuan for each vehicle sold. The loss is not narrowing but expanding, once again setting a new record for its own losses.

In the first half of this year, NIO's cumulative loss amount was 10.8 billion yuan, which is 2.4 times that of the same period last year. We can compare it with peers; in the first half of this year, Xiaopeng Motors' loss amount was 5.14 billion yuan, while Li Auto made a profit of 3.223 billion yuan.

Obviously, as the former leader of the "NIO-Xiaopeng-Li Auto" trio, NIO is no longer worthy of such a title!

There is also the third quarter guidance.NIO's third-quarter sales guidance is between 55,000 and 57,000 units. Given that July sales have already exceeded 20,000 units, this calculates the monthly sales for August and September to be between 17,000 and 18,000 units, which is lower than the market's previous expectations.

It should be noted that NIO has no plans to release new vehicles in the next year, and its second brand, Alps, is not scheduled to launch its first vehicle until the second half of 2024. This raises the question: if the third-quarter sales for this year do not meet expectations, then what will drive the growth in sales going forward?

Regarding the decline in sales, NIO's William Li attributed the reason to a lack of sales personnel and further explained:

"Starting from July, we have begun to comprehensively enhance our sales capabilities, aiming to achieve a monthly order lock of 30,000 units in sales capacity. By the end of September, we will complete the construction of this sales capacity, and from October, the results of the sales capacity building will begin to be gradually realized."

As a result, NIO has started to recruit from Mercedes-Benz and BMW and has offered irresistible sales commissions!

On this point, let's discuss our views:

Among the "NIO-Xiaopeng-Li" trio of new car manufacturers, the focus for Li is to improve organizational capabilities, for Xiaopeng Motors it is to comprehensively reduce costs, and for NIO, it is to enhance sales capabilities.

Although sales do play a very important role, relying on increasing sales outlets and personnel to boost sales volume, not to mention how much the sales cost will increase, it is worth questioning whether this path is viable, as evidenced by the current state of AITO, which is far from thriving.

In addition, the sharp decrease in cash on hand requires special vigilance!

As of the end of June 2023, NIO's cash on hand was 15.97 billion yuan, while at the end of 2022 and the first quarter of this year, the figures were 23.155 billion yuan and 17.726 billion yuan, respectively. It can be observed that NIO's cash is decreasing at a visibly rapid pace.Finally, let's talk about the upcoming smartphone release from NIO.

According to NIO, the launch of their smartphone is intended to enhance the competitiveness of NIO's vehicle lineup by better matching the mobile device requirements for their car models. The introduction of the smartphone is not meant to compete with smartphone manufacturers, but rather to use the phone as a medium to provide the best experience for NIO car owners.

However, our questions are:

If the product power of this phone is not strong, and it is merely a device priced at a few thousand yuan with the sole purpose of connecting with NIO cars, how can they persuade consumers to purchase it, would it be given away for free? If the product power is strong, then the statement "not competing with smartphone manufacturers" becomes a false proposition. With the sales target limited to NIO car owners, how can the significant R&D and other investments offset the losses?

The last company to do something similar was Gree Electric Appliances, but unfortunately, the general consumer, Gree air conditioner users, Gree employees, and dealer staff do not seem to have a very high opinion of that phone.