The earnings report of Chinese EV maker Nio on Thursday will put the focus on its outlook.

• Nio, a Chinese electric-vehicle manufacturer, will release its fourth-quarter earnings and 2022 guidance following the closure of U.S. markets on Thursday.
• Since the start of 2022, Nio's stock has experienced a decline of approximately 32%.
• The company's 2022 guidance will be the primary focus of investors, despite their interest in the fourth-quarter results, amid rising inflation and ongoing supply-chain disruptions.

Despite capturing the attention of investors and rival automakers, Nio's electric vehicles have been hindered by supply-chain disruptions that have impacted their sales growth plans.

On Thursday, Wall Street analysts are likely to grill Nio's senior leadership about the impact of supply chain issues and rising commodity prices, such as nickel, on the company's future performance. Nio will release its fourth-quarter earnings after the U.S. markets close, and an earnings webcast is scheduled to begin at 9 p.m. ET.

Nio's American depositary shares have struggled in recent months due to the cooling of relations between the U.S. and China.

Nio's earnings report is unlikely to contain many surprises, as the company delivered 25,000 vehicles in the quarter, which is near the high end of its guidance range of 23,500 to 25,500. Investors will be interested in hearing about Nio's plans to expand its dealer network in China and begin sales in several new European markets.

Nio plans to expand its network of battery-swap stations, which is a key component of its innovative sales model. Customers can purchase a Nio without a battery pack at a discounted price if they subscribe to its battery-swap service.

While Nio is not widely covered by U.S. banks, four Wall Street analysts predict that the company will post an average loss of 2.97 Chinese yuan ($0.47) per share. On the other hand, eight analysts anticipate that Nio will report an average revenue of 8.682 billion yuan ($1.36 billion).

Supply chains and outlook

The analysts may ask about the costs and margins of the fourth quarter, but the true tale will likely be in the company's forecast for the current quarter and the entire year.

Nio, like other automakers, experienced production cuts in 2021 due to global semiconductor chip shortages. Despite these challenges, Nio has managed to maintain a monthly production rate of 10,000 to 11,000 vehicles. However, deliveries fell below this range in February due to factory shutdowns during China's Lunar New Year celebrations, resulting in just 6,131 vehicles delivered.

Edison Yu, a Deutsche Bank analyst, closely monitors Nio and its domestic competitors. In a March 20 note, he dismissed supply-chain concerns and predicted that the company's production output would significantly increase in the coming months.

By June, the manufacturing run-rate is predicted to increase to 15,000-20,000 per month, according to Yu. He added that a new factory, expected to be operational in the fall, will assist the company in increasing its production output to 30,000 per month by the first half of 2023.

Nio is expected to launch in 2022 and boost sales growth with three new models, including two sedans and an SUV. Production of the larger sedan, the ET7, began Thursday morning, as announced in a WeChat post.

Nio's margins may be affected by rising raw material costs, but the company plans to address this issue by using lower-cost LFP batteries in its standard-range models, according to Yu.

Nio continues to be viewed positively by Yu, who maintains a buy rating and a price target of $50.

Morgan Stanley analyst Tim Hsiao has revised his price target for Nio from $66 to $34 in a Tuesday note, citing recent challenges in the stock market. Despite these challenges, Hsiao believes that Nio's superior liquidity and revenue visibility will enable it to weather any economic downturn.