• China-based electric-vehicle maker Nio reports fourth-quarter earnings and 2022 guidance after U.S. markets close Thursday.
• Nio’s stock has fallen about 32% since the beginning of 2022.
• While investors will be interested in the company’s fourth-quarter results, their primary focus will be on the company’s 2022 guidance amid rising inflation and ongoing supply-chain disruptions.

Nio's sleek and powerful electric vehicles have captured the attention of investors — and rival automakers — around the world, but they haven't always been able to power past the supply-chain disruptions that have played havoc with the Chinese company's ambitious sales-growth plans.

Wall Street analysts on Thursday will likely ask Nio's senior leadership some tough questions about how those supply-chain issues, and the recent rapid price increases affecting key commodities, such as nickel, are likely to play out in coming months. The automaker reports its fourth-quarter earnings after the U.S. markets close. An earnings webcast is scheduled to begin at 9 p.m. ET.

Though Nio was once among the meme-stock high flyers, its American depositary shares have had a rough time over the past several months as relations between the U.S. and China have cooled.

Nio's earnings report isn't likely to hold a lot of surprises. The company delivered just over 25,000 vehicles in the quarter, near the high end of its guidance range of 23,500 to 25,500. Investors will be listening for updates on Nio's efforts to expand its dealer network in China and to begin sales in several new European markets.

They will also be looking for details on Nio's plans to expand the network of battery-swap stations that are the backbone of the company's innovative sales model. Buyers can opt to purchase a Nio without a battery pack, at a substantial discount, if they subscribe to its battery-swap service.

Nio isn't widely covered by U.S. banks, but four Wall Street analysts said in a Refinitiv survey they expect Nio to post a loss of 2.97 Chinese yuan ($0.47) per share, on average. Eight analysts said they expect Nio to report revenue of 8.682 billion yuan ($1.36 billion), on average.

Supply chains and outlook

Those analysts will likely have some questions around the fourth quarter's costs and margins, but the real story will probably be in the company's guidance for the current quarter and the full year.

Nio, like many other automakers, was forced to reduce production at times in 2021 due to supply-chain disruptions, including a global shortage of the types of semiconductor chips used in autos. In recent months Nio has been able to work around those supply-chain issues and maintain a production rate between 10,000 and 11,000 vehicles a month. Deliveries, however, dipped below that level in February, to just 6,131, because of factory downtime around China's Lunar New Year celebrations.

Deutsche Bank analyst Edison Yu watches Nio and its key domestic competitors closely. In a March 20 note, he brushed off supply-chain worries and said that he expects the company's production output to rise significantly over the next several months.

"We see the [manufacturing] run-rate increasing to 15,000-20,000 per month by June," Yu wrote. After that, he said, a new factory — expected to be up and running in the fall — will help the company ramp up its production output to 30,000 per month by sometime in the first half of 2023.

Assuming it plays out that way, that sales growth will get a boost from the three new models — two sedans and an SUV — Nio is expected to launch in 2022. Production of the larger of the two sedans, a tech-packed model called the ET7, began Thursday morning, Nio announced in a WeChat post.  

Yu said he thinks rising raw material costs will put pressure on Nio's margins over at least the next few months, but he notes that the company has a plan to address that by using lower-cost lithium iron phosphate, or LFP, batteries in its standard-range models.

Yu remains bullish on Nio with a buy rating and a price target of $50.

Morgan Stanley analyst Tim Hsiao is also still bullish on Nio, but he cut his bank's price target to $34 from $66 in a Tuesday note, reflecting the stock's recent slide. Hsiao wrote that "elevating macro headwinds and severe supply challenges" will make the near term challenging for Nio but he feels that its "superior liquidity and revenue visibility" have it well-positioned to ride out any economic downturn.