From the perspective of third-quarter performance, $NIO(NIO.US) performed below expectations.

Although the gross margin for automobiles improved slightly due to cost reductions, barely meeting market expectations, the average selling price of vehicles continued to decline this quarter. The low-priced model, the L60, was only delivered at the end of September, which had no impact on the average selling price for the third quarter.

However, the average selling price of vehicles in the third quarter was only 270,000 yuan, lower than the market expectation of 276,000 yuan and the implied average selling price of 282,000 yuan from Nio's previous revenue guidance. This reflects Nio's increased promotional efforts for its main brand, which aligns with what Dolphin Jun learned about Nio ramping up promotions for the Nio brand starting in September.

On the expense side, although Nio had previously communicated that due to the increase in stores for the L60 and increased marketing investments, selling and administrative expenses would continue to rise in the third quarter, the 4.1 billion yuan in selling and administrative expenses still exceeded market expectations by about 200 million yuan, resulting in operating losses that were worse than market expectations.

Looking at the guidance for the next quarter, the sales guidance of 72,000 to 75,000 vehicles is also below the market expectation of 78,000 vehicles, implying an average monthly sales of 25,500 to 27,000 vehicles in November and December. With the L60 expected to contribute an average monthly sales of about 8,000 vehicles over the next two months, this implies that the monthly sales of the Nio brand will decline from the previous steady state of 20,000 vehicles to around 17,500 to 19,000 vehicles.

Even more disappointing is the revenue guidance for the next quarter, which implies that the average selling price of vehicles will continue to decline by 28,000 yuan to 242,000 yuan, still below the market expectation of 258,000 yuan. In terms of model structure, the impact of the low-priced L60 ramping up production in the fourth quarter has already been factored into the market, but the selling price guidance remains below expectations, reflecting Nio's further increase in promotional efforts for the Nio brand, consistent with what Dolphin Jun learned about the increased promotional efforts in November.

However, despite Nio's increased promotional efforts for the Nio brand, combined with the implied decline in monthly sales of the Nio brand in the sales guidance, such performance during the traditional peak sales season of November and December is clearly below expectations. On one hand, this reflects a decrease in the order volume for the Nio brand, and on the other hand, it indicates that price reductions are still not leading to an increase in sales for the main brand.