NIO Aims for Profits in Q4, BYD Factory News in Brazil & Mexico

NIO Profitability?

NIO’s got a big target in mind. It is aiming to finally achieve profitability in the 4th quarter of this year. Naturally, that’s a huge deal for the company. Tesla’s stock price soared in 2019 when it finally achieved profitability, and I think most investors assume startup car companies like NIO — and Tesla back before 2019 — are more likely to go bankrupt than achieve profitability. So, the fact that NIO has a target for when it becomes profitable is already a big deal.

It’s also notable that we’re not that far away from the target. It’s already the 3rd quarter of the year, so the target is just next quarter. NIO has to be confident that it can achieve its goal. “Chinese electric vehicle maker Nio said it is confident to ‘turn profitable’ in the fourth quarter of this year, as the company sees delivery volumes stabilizing, margins improving and a global expansion strategy taking shape under a new partnership-led model,” ChinaDaily writes.

“We delivered around 24,925 vehicles in June, and the momentum is clearly building,” said NIO founder and CEO Li Bin. “We’re confident about hitting our fourth-quarter profitability target. The teams are executing better, the product mix is improving, and the cost structure is getting more efficient.”

The company is launching three new vehicle models in the second half of this year. The first was just launched today, the ONVO L90. It’s an exciting new SUV with a compelling pitch. Read more about it here: “NIO Looks to Shatter 3-Row SUV Market with ONVO L90.” Before the launch, Li proclaimed that the L90 would “redefine the family SUV segment.”

Regarding global expansion, he also wrote: “We realized that globalization in this industry can’t be rushed. It needs deep local roots. That’s why we’re changing our approach — Nio provides the products and service systems, and our partners handle market execution.”

BYD Factory News — Good & Bad

BYD is already profitable. It’s the EV giant of the world now, selling by far the most full electric vehicles (BEVs) and also selling a large number of plugin hybrids. It keeps growing and growing and growing, even from a high base. While it has come to dominate the top sellers list in China, it increasingly needs to expand worldwide in order to grow its volumes. So, how is that going? We’ve got some good and bad news in that regard.

Starting with the bad news, a long planned BYD factory for Mexico is now off the table. It has been postponed indefinitely due to Donald Trump’s trade war. It seems this was a workaround that was going to allow BYD to sell some cars in North America, but with strong opposition to anything China, and EVs as well by the way, the company is delaying any movement forward on the Mexico plant.

On the good news side, BYD has begun producing electric vehicles at its new factory in Brazil. Production began on July 1, with the first model coming off of the production line being the BYD Dolphin Mini. I can’t wait to see how many EVs BYD can sell in Brazil with local production, and what it does to the overall auto market there!