Li Bin (left) and Qin Lihong (right) interviewed by the media (provided by the company)
At a media communication meeting on December 14th, Qin Lihong, the co-founder and CEO of NIO, who has always played the role of NIO spokesperson, handed over the venue to Li Bin, the founder, chairman, and CEO of NIO. Faced with various controversies and doubts in recent days, Li Bin spent two hours answering 140 questions raised by the media, covering everything from layoffs, losses, sales performance to battery swapping layout, product planning, and brand strategy.
As the industry races into the later stages of the qualification round, NIO also has to exert its ability to squeeze the bottom of the box and join the wave of internal competition. In Li Bin's view, the industry will enter the later stage of the qualification competition in the next two years, and competition will become increasingly fierce; NIO needs to survive first, prepare the following products, and ensure technological advantages.
The key to NIO's survival is to have a targeted approach. He admitted, "Priority business for 2024: first, investment in technology, second, construction of sales service system, and third, development of nine models of three brands."
Replacing the battery is not a burden, it's a moat
In November this year, NIO announced the signing of battery swapping cooperation agreements with Changan Automobile and Geely Holding. NIO will cooperate comprehensively with two car companies in multiple fields such as battery replacement standards, battery replacement technology, battery replacement service network construction and operation, research and development and customization of battery replacement models, and significantly expand its social circle.
Since its inception, the battery swapping mode has been regarded as a supplementary energy model with heavy asset investment. Therefore, when NIO, which was recently established, announced that battery swapping would be the main mode of energy replenishment, the industry became skeptical of this business.
Li Bin spoke frankly about this. He believes that the battery swapping business has three obvious characteristics. Firstly, it has a strong network effect, but it requires a certain volume to achieve the convenience of energy replenishment. Secondly, the investment in battery swapping layout is large and the return period is long, which requires time from infrastructure construction to system interconnection; The larger the scale, the higher the cost, which is a significant test for the financial situation of the enterprise. Based on the first two characteristics, opening up cooperation for battery swapping has become an inevitable choice for NIO. However, before opening up the battery swapping system to the outside world, NIO needs to first clarify its internal business logic, which is the third characteristic of battery swapping business, which is "internal before external".
"The biggest advantage of battery swapping is that it is a distributed network, and we can operate it very flexibly. Some are specifically designed for NIO brand users, while others are shared with other brands. Of course, there are high requirements for operational details, such as matching between vehicles and stations, battery BMS (management system)... many things require technological breakthroughs, so this is a technical activity."
In June of this year, NIO lowered the prices of all models while also canceling the basic right of free battery swapping. The accumulation of profit performance that has not been converted to positive results inevitably raises doubts both inside and outside the industry.
At this communication meeting, Li Bin responded positively to this issue, stating that the battery swapping service itself has limited compensation, and the main source of compensation is the electricity bill. At present, battery swapping stations can be maintained and monitored remotely, and the operating costs are not as high as expected. However, it will take several years for the battery swapping business to achieve profitability.
According to data released by NIO, as of December 14, 2023, it has built a total of 2269 replacement power stations worldwide, and will continue to build, open, and invest in the future.
According to Li Bin, recently, an asset investment company specializing in battery swapping has reached a cooperation agreement with NIO. The former will build battery swapping stations and join NIO's battery swapping network, while NIO will charge a fixed rent and share the benefits between the two parties.
"Actually, I don't want to just talk about battery swapping. The energy service system that can be charged, swapped, and upgraded is NIO's moat without any problems."
The monthly delivery of 20000 units is the benchmark, and there will be no "price war"
During the year, NIO's delivery volume dropped to a low of 6000 units in the second quarter and reached a peak of 20000 units in July. In the first 11 months of this year, NIO delivered approximately 142000 new cars, a year-on-year increase of 33.1%; As of the end of November, NIO has delivered a total of approximately 431600 new cars.
Delivery of Weilai in the first 11 months of 2023 (screenshot of Weilai official account)
At the communication meeting, some media asked Li Bin about the decrease in the delivery volume of the main brand NIO after reaching its peak. Li Bin replied that the surge in delivery volume in July was due to the concentrated increase in accumulated orders in the early stage, which could be a bit misleading. In recent months, the number of lock orders at NIO has been continuously increasing.
In Li Bin's eyes, optimizing sales performance is the key antidote for NIO to boost sales, rather than blindly lowering prices.
"Next year (competition) will indeed become more intense, mainly by converting sales into sales. Although the number of user consultants has increased, there is still some time needed for user consultant training and many aspects. If we judge a user consultant as' proficient 'based on a standard of about six months, now (NIO user consultant team size)" There are only 3000 people. In the second quarter of next year, it is estimated that the vast majority of colleagues will become 'familiar', so we are still very confident in the sales improvement after the second quarter of next year
Based on the current product layout and competitiveness, Li Bin revealed that NIO should set a delivery volume of 20000 units as the baseline, return to the baseline first, and then move upwards, while maintaining a market share of over 40% in the pure electric vehicle market of over 300000 yuan. "In the future, there will be many new entrants entering and they will also seize some market share, and we hope that the market share can be stabilized."
In Li Bin's eyes, 2024-2025 will be two years of explosive growth in the high-end pure electric market. He believes that in the past two years, due to various reasons such as lagging infrastructure construction, the market growth of extended range and plug-in hybrid models has been better than that of pure electric models. However, with the promotion of energy supplement system construction, pure electric models will receive more attention. "In November 2023, we sold more than 3000 units in Shanghai, which is 1000 more than BMW and nearly twice as much as Audi. We do have quite a few battery swapping stations in the Yangtze River Delta, and it can be seen that once the infrastructure and brand prices are established, the popularity of (products) is very fast."
When asked by the media about the big tricks for selling cars in 2024, Li Bin bluntly stated: still this logic, there are no big tricks. For Li Bin, focusing only on the high-end pure electric market, not engaging in a "price war", ensuring product leadership, technology leadership, and service meeting user expectations is the underlying logic of NIO's sustained development.
The MPV model has been approved, and the second brand is based in the home market
For the performance in 2024, Li Bin's requirements are very simple: he hopes to achieve an increase in gross profit and a narrowing of losses in 2024. And all of this is based on the improvement of the company's operational efficiency.
In November this year, Li Bin issued a letter to all employees, clearly stating that NIO will reduce the number of positions by about 10%, and the specific adjustments will be completed in the same month. One stone stirred up a thousand waves, and for a while, various negative rumors about NIO were rampant. Some netizens even compared NIO with Weima and Aichi, which were exposed to have business problems earlier this year.
At the media communication meeting, Li Bin responded positively to the issue of layoffs, stating that the current management does see the agility of the restructuring organization, but the statement that "NIO is going to launch a new round of layoffs" is incorrect. NIO is more inclined to continuously optimize its organization and efficiency, rather than making adjustments on a grand scale.
While reducing costs, NIO also needs to open up, which means achieving an increase in delivery volume. The second brand (codenamed Alps), expected to be launched next year, will also shoulder the responsibility of boosting sales and helping NIO improve its gross profit margin.
"The reason why we are launching a new brand now is not because we are suffering heavy losses, but rather because all our investments have to be realized, and all our intelligent investments have to be realized, that's just that simple." Li Bin bluntly stated that NIO took many detours in the early stages of product planning, with inaccurate product definitions and inadequate product planning, resulting in NIO losing thousands of units in sales, "This is the tuition we pay. With the next generation of products, we will have a clearer understanding of who they are selling to and why they are buying them."
For the second brand, Li Bin's definition is "based on the home market, efficiency oriented". Compared to the main brand NIO, the product planning of the second brand is also more "simple and rough": safe, comfortable, spacious, with a longer battery life and lower usage costs. In terms of efficiency, Li Bin revealed that the second brand only has three cars in its lifecycle, and hopes to do all three cars well.
"Regarding the launch time of our second brand, although the VB car (development, verification, and trial production sample car) has been offline for a long time, we are not in a hurry. According to the previous practice of VB cars being offline and arriving at the press conference relatively quickly, we have decided to wait for a moment, let everyone take a look first, and finally do this. This method is definitely better. We will enter again when everyone is exhausted, otherwise the price will be reduced now and there will be no water splashes."
During the Guangzhou Auto Show, the first pure electric MPV models under the Ideal and Xiaopeng brands, the Ideal MEGA and Xiaopeng X9, were successively unveiled, attracting widespread attention. After the actions of two of the "Wei Xiaoli" brothers, both inside and outside the industry naturally turned their attention to NIO. Li Bin revealed that the MPV model under NIO has been approved, but it's not that fast. Since it's already late, it's better to take action later.