CEO William LI:
“…In the fourth quarter of 2021 we delivered 25,034 ES8, ES6 and EC6 representing an increase of 44% year over year.
2021 was a year full of challenges for NIO and the global auto industry. By overcoming the pandemic, semiconductor shortages, supply chain volatilities and many other difficulties we have continued to lead the premium smart electric vehicle market in China with a total delivery of 91,429 new vehicles in 2021 representing a strong increase of 109.1%.
In January 2022 NIO delivered 9,652 vehicles increasing by 34% year over year. In light of the Chinese New Year holiday NIO delivered 6,131 vehicles in February 2022 representing a growth of 10% year over year. During the holiday we adjusted the production lines to prepare for the delivery of ET7 in late March 2022.
Although user demand and order momentum remains strong, production and delivery have been affected by COVID and the volatility of the supply chain production capacity. We expect total delivery in the first quarter of 2022 to be between 25,000 to 26,000 vehicles.
We will start the delivery of ET7, the first product on NT2 on March 28, 2022. In early March we kicked off the test drive of ET7 nation-wide. Users who test drove ET7 have spoken highly about the product. The test drive to order conversion rate exceeds our expectations which gives us great confidence towards the competitiveness of NT2.
In 2021 the battery electric vehicle market maintained a faster than expected up-trend. According to China Passenger Car Association the retail penetration rate of battery electric vehicles grew from 5.9% in January to 18.6% in December last year. In Tier 1 and Tier 2 cities in China such as Shanghai, the penetration rate of battery electric vehicles witnessed a more prominent growth.
In Shanghai, among the sales of all ICE and electric SUVs priced above RMB350,000 NIO enjoyed a market share of 23% with its sales ranked at the top in 2021. We believe that this EV growth trend will also gradually expand to Tier 3 and Tier 4 cities in the future.
In terms of gross margin, benefitted from the increase of revenue per vehicle and the cost optimization brought forward by the 75kWh LFP NCM hybrid battery. The vehicle gross margin reached 20.9% in Q4 2021 and 20.1% for the full year 2021 respectively.
Currently the whole industry is confronted with the pressure of cost increases. We are paying close attention to the dynamics in the supply chain and are working closely with other partners to enhance efficiency in order to reduce the impact to the vehicle gross margin.
On a separate note, NIO started to be listed, by way of introduction, on the Stock Exchange of Hong Kong under Stock Code 9866 from March 10, 2022. The listing in Hong Kong marks another milestone in the history of NIO and enables us to serve more investors in the future.
Next, I would like to share some recent key highlights of our R&D and operations.
In 2021 we started to step up our investment in R&D with the overall non-GAAP R&D expenses exceeding RMB4.1 billion in 2021. We have sped up the development of new products and increased our investments in full-stack autonomous driving and other core technologies.
Investment in R&D is of a critical importance for near to long-term competitiveness. Starting from this year, we will be able to see part of the fruitful results from last year’s R&D investment and efforts.
In 2022, we plan to deliver three new products based on NT2 with ET7 being the first.
The mass production of ET7 is well on track. The product itself has led the industry in various aspects including computing power for autonomous driving.
At the NIO Day on December 18, 2021, we unveiled ET5, a mid-size smart electric sedan. As a perfect combination of NIO’s supercar DNA and the concept of design for AD, ET5 is equipped with NAD NIO autonomous driving and PanoCinema, panoramic digital cockpit enabled by AR and the VR technologies.
It comes as standard with 100 configurations for comfort, safety and smart technology. After the launch, ET5 has attracted a wider and more diversified user base and received more orders than our expectations. The delivery of ET5 is expected to start in September this year.
Soon we also launch ES7 our first SUV model on NT2 which is positioned as a mid-large premium five-seater SUV and expected to start delivery from the third-quarter of this year….”