20-F: NIO Inc. Files 20-F Report for Fiscal Year Ended December 31, 2024

NIO Inc. has filed its 20-F report with the SEC, detailing its financial performance and operational activities for the fiscal year ended December 31, 2024.

Summary

• NIO Inc., a Cayman Islands holding company, filed its Form 20-F annual report with the SEC for the fiscal year ended December 31, 2024.
• The report details the company's operations in China primarily through its PRC subsidiaries and, to a lesser extent, through VIEs.
• As of December 31, 2024, NIO had 1,953,174,559 Class A ordinary shares and 148,500,000 Class C ordinary shares outstanding.
• The company incurred net losses of RMB 14,437.1 million, RMB 20,719.8 million, and RMB 22,401.7 million for the years ended December 31, 2022, 2023, and 2024, respectively.
• NIO's PRC subsidiaries and VIEs are subject to restrictions regarding dividend payments, with restricted net assets totaling RMB 55,128.3 million as of December 31, 2024.
• The company relies on contractual arrangements with VIEs to operate in sectors with foreign investment restrictions, but these arrangements may not be as effective as direct ownership.
• NIO's ADSs may be prohibited from trading in the United States under the Holding Foreign Companies Accountable Act (HFCAA) if the PCAOB cannot inspect the company's auditor in China.
• The company is expanding its business internationally, which involves challenges such as adapting to local market conditions and complying with various regulations.
• NIO faces competition in the electric vehicle market from both NEV and ICE vehicle manufacturers.
• The company is developing new products under the NIO, ONVO, and FIREFLY brands to target broader market segments.
• NIO relies on Battery Asset Company for its Battery as a Service (BaaS) program, and any operational issues with Battery Asset Company could adversely affect NIO's business.
• The company is subject to cybersecurity, privacy, and data protection laws in China and other jurisdictions.
• NIO has granted a non-exclusive license to Forseven Limited to use certain of its smart electric vehicle platform technologies.
• The company is involved in strategic alliances, including partnerships with Changan Automobile, Geely Group, JAC Group, and Chery Automobile on battery swapping.
• NIO has a dual-class voting structure, which limits the influence of Class A ordinary shareholders and ADS holders on corporate matters.
• The company has granted share-based awards under its share incentive plans, which may result in increased share-based compensation expenses.
• NIO is subject to risks related to customer credit and may face challenges in managing credit risks related to auto financing arrangements.
• The company is exposed to inventory risks and may face challenges in managing inventory levels to meet customer demand.
• NIO is subject to product liability claims and may face challenges in defending against such claims.
• The company's financial results may vary due to the seasonality of its business and fluctuations in operating costs.
• NIO is subject to anti-corruption, anti-money laundering, and similar laws, non-compliance with which can subject the company to penalties and expenses.
• The company's business, financial condition, and results of operations may be adversely affected by natural disasters, health epidemics, and other outbreaks.
• The company is subject to risks related to the investment in NIO China, including potential redemption rights of the NIO China Strategic Investors.
• The company may issue additional equity or debt securities that may have an adverse effect on its shareholders or may otherwise adversely affect its business.
• The company maintains a considerable level of debt that are senior in capital structure and cash flow to its shareholders.
• The company is subject to the risk of a decrease in the residual value of used vehicles under its subscription offering.

Sentiment

Score: 4

Explanation: The document presents a mixed picture. While there's revenue growth, the increasing net losses and various risk factors weigh negatively on the overall sentiment. The company's reliance on external factors and regulatory compliance adds further uncertainty.

Positives

• The company is developing new products under the NIO, ONVO, and FIREFLY brands to target broader market segments.
• NIO has granted a non-exclusive license to Forseven Limited to use certain of its smart electric vehicle platform technologies.
• The company is involved in strategic alliances, including partnerships with Changan Automobile, Geely Group, JAC Group, and Chery Automobile on battery swapping.

Negatives

• The company incurred net losses of RMB 14,437.1 million, RMB 20,719.8 million, and RMB 22,401.7 million for the years ended December 31, 2022, 2023, and 2024, respectively.
• NIO's PRC subsidiaries and VIEs are subject to restrictions regarding dividend payments, with restricted net assets totaling RMB 55,128.3 million as of December 31, 2024.
• The company relies on contractual arrangements with VIEs to operate in sectors with foreign investment restrictions, but these arrangements may not be as effective as direct ownership.
• NIO's ADSs may be prohibited from trading in the United States under the Holding Foreign Companies Accountable Act (HFCAA) if the PCAOB cannot inspect the company's auditor in China.
• The company is expanding its business internationally, which involves challenges such as adapting to local market conditions and complying with various regulations.
• NIO faces competition in the electric vehicle market from both NEV and ICE vehicle manufacturers.
• NIO relies on Battery Asset Company for its Battery as a Service (BaaS) program, and any operational issues with Battery Asset Company could adversely affect NIO's business.
• The company is subject to cybersecurity, privacy, and data protection laws in China and other jurisdictions.
• NIO has a dual-class voting structure, which limits the influence of Class A ordinary shareholders and ADS holders on corporate matters.
• The company has granted share-based awards under its share incentive plans, which may result in increased share-based compensation expenses.
• NIO is subject to risks related to customer credit and may face challenges in managing credit risks related to auto financing arrangements.
• The company is exposed to inventory risks and may face challenges in managing inventory levels to meet customer demand.
• NIO is subject to product liability claims and may face challenges in defending against such claims.
• The company's financial results may vary due to the seasonality of its business and fluctuations in operating costs.
• NIO is subject to anti-corruption, anti-money laundering, and similar laws, non-compliance with which can subject the company to penalties and expenses.
• The company's business, financial condition, and results of operations may be adversely affected by natural disasters, health epidemics, and other outbreaks.
• The company is subject to risks related to the investment in NIO China, including potential redemption rights of the NIO China Strategic Investors.
• The company may issue additional equity or debt securities that may have an adverse effect on its shareholders or may otherwise adversely affect its business.
• The company maintains a considerable level of debt that are senior in capital structure and cash flow to its shareholders.
• The company is subject to the risk of a decrease in the residual value of used vehicles under its subscription offering.

Risks

• The automotive market is highly competitive, and NIO faces significant challenges in competing in the industry.
• NIO's ability to develop and manufacture vehicles of sufficient quality and appeal to customers on schedule and on a large scale is still evolving.
• NIO has not been profitable, and only generated positive cash flows from operations in certain periods.
• NIO has limited experience in independent manufacturing, and any delays in manufacturing or production ramp-up could have a material adverse effect on its business.
• Rising international political tensions, including changes in U.S. and European international trade policies, may adversely impact NIO's business and operating results.
• The unavailability, reduction, or elimination of government and economic incentives could have a material adverse effect on NIO's business.
• NIO's current or future vehicles may not perform in line with customer expectations.
• NIO may face challenges in providing its power solutions.
• NIO's services may not be generally accepted by its users.
• NIO is dependent on its suppliers, many of whom are single-source suppliers.
• NIO relies on Battery Asset Company to provide Battery as a Service, and any operational issues with Battery Asset Company could adversely affect NIO's business.
• NIO may need to defend itself against patent or trademark infringement claims.
• NIO is a Cayman Islands holding company with no equity ownership in the VIEs, and investors in NIO's ADSs are not purchasing equity interests in the VIEs.
• If the PRC government deems that NIO's VIE arrangements do not comply with PRC laws, NIO could be subject to severe penalties or be forced to relinquish its interests in those operations.
• NIO's holding company in the Cayman Islands, the VIEs, and investors of NIO face uncertainty about potential future actions by the PRC government that could affect the enforceability of the contractual arrangements with the VIEs.
• NIO relies on contractual arrangements with the VIEs and their shareholders to hold a controlling financial interest over each VIE, which may not be as effective as direct ownership in providing operational control.
• The shareholders of the VIEs have conflicts of interest with NIO, which may materially and adversely affect NIO's business and financial condition.
• Changes in China's economic, political, or social conditions or government policies could have a material and adverse effect on NIO's business and results of operations.
• Risks and uncertainties regarding the interpretation and enforcement of laws and quickly evolving rules and regulations in China could result in a material adverse change in NIO's operations and the value of its ADSs.
• The PRC government's significant authority in regulating NIO's operations and its oversight and control over capital raising activities conducted overseas by China-based issuers could significantly limit or completely hinder NIO's ability to offer or continue to offer securities to investors.
• The PRC government's significant oversight over NIO's business operation could result in a material adverse change in NIO's operations and the value of its ADSs.
• The approval of or the filing with the CSRC or other PRC government authorities may be required in connection with NIO's future offshore listings and capital raising activities.
• NIO may be adversely affected by the complexity, uncertainties, and changes in PRC regulations on internet-related business, automotive businesses, and other businesses carried out by its PRC subsidiaries and the VIEs.
• The PCAOB had historically been unable to inspect NIO's auditor in relation to their audit work performed for NIO's financial statements, and the inability of the PCAOB to conduct inspections of NIO's auditor in the past has deprived NIO's investors with the benefits of such inspections.
• NIO's ADSs may be prohibited from being traded in the United States under the HFCAA in the future if the PCAOB is unable to inspect or investigate completely auditors located in China.
• NIO adopts different practices as to certain matters as compared with many other companies listed on the Hong Kong Stock Exchange.
• If NIO changes the listing venue of its securities, you may lose the shareholder protection mechanisms afforded under the regulatory regimes of the applicable securities exchange.
• The trading prices of NIO's listed securities have been and are likely to continue to be volatile, which could result in substantial losses to investors.
• If securities or industry analysts do not publish research or reports about NIO's business, or if they adversely change their recommendations regarding NIO's Class A ordinary shares and/or ADSs, the market price for NIO's Class A ordinary shares and/or ADSs and trading volume could decline.
• NIO's dual-class voting structure will limit the holders of its Class A ordinary shares and ADSs to influence corporate matters, provide certain shareholders of NIO with substantial influence, and could discourage others from pursuing any change of control transactions that holders of NIO's Class A ordinary shares and ADSs may view as beneficial.

Future Outlook

The company expects to continue making significant investments in research and development, power network, sales and service network, manufacturing facilities as well as marketing activities to rapidly develop and expand its business.

Industry Context

The electric vehicle industry is rapidly evolving, characterized by rapidly changing technologies, evolving government regulation and industry standards and changing consumer demands and behaviors.

Comparison to Industry Standards

• The automotive market, particularly the market in China, is highly competitive.
• NIO's vehicles compete with both NEV and ICE vehicles, especially those targeting the midto high-end segment.
• Many of NIO's current and potential competitors have significantly greater financial, technical, engineering, manufacturing, marketing and other resources than NIO does, and may be able to devote greater resources to the design, development, manufacturing, promotion, sale and support of their products.
• NIO's competitive advantage as a leading and early-moving EV company will be compromised if its competitors achieve higher production and sales volumes, offer more favorable pricing, or introduce new products at a faster pace than NIO does.
• If NIO's competitors introduce new vehicles or services that successfully compete with or surpass the quality or performance of NIO's vehicles or services at more competitive prices, NIO may be unable to satisfy existing customers or attract new customers at the price levels that would allow NIO to generate attractive rates of return on its investment.

Legal Proceedings

• Several shareholder class action lawsuits have been filed against NIO and certain of its directors and officers.
• One action commenced during the aforementioned time period remains pending, under the caption In re NIO, Inc. Securities Litigation, 1:19-cv-01424, in the U.S. District Court for the Eastern District of New York (E.D.N.Y.).
• The plaintiffs in this case allege, in sum and substance, that NIO's statements in the registration statement and/or other public statements were false or misleading and in violation of the U.S. federal securities laws.
• The Court denied NIO's motion to dismiss in August 2021, and granted plaintiffs motion for class certification in August 2023.
• The plaintiffs served their motion for partial summary judgment on NIO on September 30, 2024.
• On January 30, 2025, NIO served on the plaintiffs its opposition to their motion as well as its cross-motion for summary judgment.
• Separately, between August and September 2022, two complaints were filed against NIO, its CEO and its CFO in the federal district court for the Southern District of New York (S.D.N.Y.), in the actions captioned Saye v. NIO Inc. et al., Case No. 1:22-cv-07252 (S.D.N.Y.) and Bohonok v. NIO Inc. et al., Case No. 1:22-cv-07666 (S.D.N.Y.).
• Relying on a short seller report, these complaints allege that certain of NIO's public disclosures between August 2020 and July 2022 contained false statements or omissions in violation of the Exchange Act.
• On December 14, 2022, the court consolidated the two actions and appointed a lead plaintiff.
• Briefing on NIO's motion to dismiss was completed on July 31, 2023.
• The Court's decision on the motion to dismiss is pending.

Related Party Transactions

• In 2022, 2023 and 2024, NIO provided sales of goods to its affiliates, including Wuhan Weineng Battery Assets Co., Ltd. and its subsidiary, Blue Horizon Limited and its subsidiaries, Shanghai Weishang Business Consulting Co., Ltd. and Hefei Chuang Wei Information Consultation Co., Ltd. and NIO received total sales of goods of RMB3,105.9 million, RMB1,457.9 million and RMB9,918.3 million (US$1,358.8 million), respectively.
• In 2022, 2023 and 2024, NIO provided property management, administrative support, design and research and development services to its affiliates, including Wuhan Weineng Battery Assets Co., Ltd. and its subsidiary, Forseven Limited and its affiliate, Blue Horizon Limited and its subsidiaries, Nanjing Weibang Transmission Technology Co., Ltd., and Beijing Weixu Business Consulting Co., Ltd., and NIO received total service income of RMB122.7 million, RMB167.2 million and RMB306.5 million (US$42.0 million), respectively.
• In 2022, 2023 and 2024, NIO received marketing and advertising, research and development, and maintenance services from Tianjin Tengyi Information Technology Co., Ltd. (formerly known as Tianjin Boyou Information Technology Co., Ltd.), Kunshan Siwopu Intelligent Equipment Co., Ltd., Xunjie Energy (Wuhan) Co., Ltd., Wuhan Weineng Battery Assets Co., Ltd and its subsidiary, Jianglai Advanced Manufacturing Technology (Anhui) Co., Ltd., Shanghai VTA Technology Co., Ltd., Beijing Welion New Energy Technology Co., Ltd, and Zhejiang Weilai Xinneng Private Equity Management Co., Ltd. (formerly known as Ningbo Meishan Free Trade Port Weilai Xinneng Investment Management Co., Ltd.) and paid a total service fees of RMB145.3 million, RMB250.0 million and RMB153.8 million (US$21.1 million), respectively.
• In 2022,

Stakeholder Impact

• The document contains information relevant to shareholders, employees, customers, suppliers, and creditors.
• Shareholders are impacted by the financial performance, risk factors, and corporate governance aspects.
• Employees are affected by the discussion of compensation, benefits, and labor laws.
• Customers are impacted by the discussion of product quality, service offerings, and warranty policies.
• Suppliers are affected by the discussion of supply chain management and supplier relationships.
• Creditors are impacted by the discussion of debt levels, covenants, and the ability to meet financial obligations.

Next Steps

• The company intends to determine the amount of service fee and payment method based on the working capital needs of Shanghai NIO and Beijing NIO, and settle such service fees accordingly in the future.
• The company intends to determine the amount of service fee and payment method based on the working capital needs of Anhui NIO AD and Anhui NIO AT, and settle such service fees accordingly in the future.
• The company intends to determine the amount of service fee and payment method based on the working capital needs of NIO China and Anhui NIO DT, and settle such service fees accordingly in the future.
• The company plans to expand its charging and battery swapping network to better satisfy its users demand.
• The company plans to develop its power network both independently and in cooperation with business partners.
• The company expects to introduce new vehicle models under each of its NIO, ONVO and FIREFLY brands, which will require it to consistently enhance its production capacity.
• The company plans to periodically perform facelifts or refresh existing models.
• The company is working towards the completion of the remaining portion of the previously announced investment transaction in NIO China.
• The official launch of the firefly vehicle model is expected in April 2025.

Key Dates

Keywords

NIO Inc, 20-F, Annual Report, Financial Results, Electric Vehicles, VIE Structure, Risk Factors, Corporate Governance, Share Capital, PCAOB, HFCAA, China, Regulations, ADS, Ordinary Shares