Deutsche Bank Stays Bullish

NIO has experienced problems with metal casting parts, EDS assembly, and silicon carbide supply in the past few quarters. Moreover, most recently, it had issues with delivery logistics. Nevertheless, analysts at the bank consider that operational frustrations covering the Chinese automaker will end. This will happen particularly in the context of Li Auto (NASDAQ: LI) and Xpeng (NYSE: XPEV) meeting/beating estimates and Zeekr tending to surpass its overall 2022 target which was at the start of last year.

The company’s current problems directed to 4Q22 deliveries of 40K, below initial guidance of 43K-48K, and December left at just 15.8K, below anticipations of ~20K. Deutsche Bank considers this reflects concern about management’s ability to execute. It has ambitions to launch two other auto brands and extend meaningfully into Europe.

New Technology Involved

Deutsche Bank analysts noted that at the core, the company needs to be more assertive in deploying new manufacturing process technology and merely not concentrating enough on supply chain risk mitigation. It is undefined if this is a structural or personnel problem (or both). However, they think the management team is conscious of these shortcomings and would expect better performance in 2023.

The analysts expect to handle all outstanding operational bottlenecks by the end of the first quarter.

Shares of NIO are higher by 3.08% in premarket trading on Tuesday.