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Figure 37 Sales, administrative and general expenses accounted for (%)
In terms of R&D expenses, Tesla’s R&D expenses remained stable, fluctuating between 300~350mn in a single quarter. After NIO reached its peak in Q4 2018, it has been declining, mainly due to its financial difficulties. The downward trend is obviously more significant than the decline in SGA fees.
Figure 38 R&D expenditure comparison ($MN)
Figure 39 R&D expense ratio (%)
In addition, the rental cost of NIO’s stores is very high. Based on the estimated rent of 40 NIO HOUSEs and Bloomberg’s disclosure of 43.3 million per year in 2020, the rent of NIO HOUSE alone will require 1.732 billion yuan.
Debt and cash flow
The two are going north and the other south in terms of asset-liability ratio. Tesla has gradually reduced its asset negative in the past three years./p>
Figure 42 Percentage of current liabilities%
Because of the capital-intensive nature of the automobile production industry, we value the proportion of interest-bearing bonds more than pure debt ratio and current debt ratio, because this is directly related to the company’s interest expenditure and debt service pressure. This proportion of Tesla has been maintained below 100%, and is slowly decreasing. The situation on Weilai cannot but make people worry about it. Even if Q1 and Q2 are expected to ease, the ratio is still above 300%, bringing heavy debt repayment pressure.
Figure 43 interest-bearing bonds account for% of invested capital
This is also confirmed by the quick ratio. Tesla’s quick ratio is slowly rising, while Weilai’s quick ratio has dropped from 4.67 in 2017Q4 to the current 0.27.
Figure 44 Conservative Quick Ratio
Debt repayment pressure is finally reflected in the multiple of interest earned. It can be seen that Tesla’s ratio has turned positive at the end of 2018, and the future ratio will continue to deteriorate. Of course, again, we can expect Q1Q2 to improve.