In order to speed up income to support the family, NIO is continuing to settle down.

Recently, NIO's second brand, Le Dao Auto, was officially released. Previously, the brand had been in the works for a long time: the name code went from the rumored “Alps” to “Dabie Mountain” to the current name Gedao.

In terms of positioning, Ledao targets the mainstream home user market and forms a certain brand separation from NIO, which is positioned at the high-end. Its first model, the Ledao L60, has been unveiled and pre-orders are open. The pre-sale price starts at 219,900 yuan. In terms of market competition, the car's ambition is not small. It directly targets Tesla Model Y. Li Bin, founder, chairman, and CEO of NIO, said bluntly, “Compared with the Model Y, our pre-sale price is 30,000 yuan cheaper than it.”

In order to better define household products, Li Bin hired Ai Tiecheng, who participated in the establishment of Shanghai Disney, to take the helm of Ledao Auto. However, there are strong enemies targeting the home market cake, such as the ideal car that has branded its products as a “family dad car.” As the ideal continues to go deeper into the all-electric circuit, head-on competition is unavoidable.

Li Bin is not worried about this. In a media interview at the May 16 Ledao brand press conference, he said, “Everyone's market is here. If you don't compete with him, you will also compete with others. Ideals don't compete with us; they also compete with others. I think it's definitely a good thing for consumers; there are more choices.”

With the release of Ledao, NIO officially entered the multi-brand strategy stage. Li Bin admits that it was not something he wanted to do long for a long time. He initially chose to start in the high-end market because of the slow transformation of BBA and other companies in this market. The plan for Le Dao has been around for a long time. “Actually, it was a matter of course; it wasn't a whim.”

The first model had the front side of the Tesla Model Y

As far as NIO is concerned at this stage, it needs a popular model that can move fast to reverse the situation where monthly sales are hovering around 10,000 units.

In April of this year, NIO delivered 15,620 new cars, up 134.6% year on year and 31.6% month on month. In the first quarter of the past year, NIO delivered 1,055 vehicles, 8,132 vehicles, and 1,1866 vehicles, respectively.

Li Bin once joked at a media conference in April last year, “If we continue to sell 10,000 vehicles every month, I'll have to find a job with Qin Lihong (CEO of NIO).” Unexpectedly, NIO's subsequent deliveries fluctuated to several thousand vehicles. Li Bin laughed, “Now I can't even find a job.”

Although NIO later proposed major measures such as price cuts and subsidies, in the car market competition where the price war intensified, it was not obvious that this measure stimulated the increase in scale. Looking at it now, if we want to break the sales volume and scale situation, Ledao may be a breakthrough.

In terms of positioning, Ledao targets a wider range of home users and targets the 200,000 yuan price range. Li Bin once said during an interview at the Beijing Auto Show, “In the 200,000 household market, there is an opportunity to produce a single model with monthly sales of 560,000 vehicles, even if it is pure electric.”

In this price range, Tesla's market influence should not be underestimated. In 2023, Tesla delivered more than 1.81 million electric vehicles worldwide, while the Model Y sold 1.2 million units, making it the single most sold model in the world. Also, according to Auto Home data, the Model Y sold more than 60,000 units in December of last year.

And Ledao's first model, the Ledao L60, is positioned as a family smart electric mid-size SUV, directly targeting the Tesla Model Y.

In terms of body size, Li Bin stressed that compared with the Model Y, the Ledao L60 completely surpassed it. According to reports, the body length of the Ledao L60 is 4828 mm, the width is 1930 mm, and the wheelbase has reached 2,950 mm. In terms of price, Li Bin said, “Compared with the Model Y, our pre-sale price is 30,000 yuan cheaper than it.”

As for the current pre-sale situation of the Ledao L60, in Ai Tiecheng's words, it “far exceeds expectations.” Li Bin went even further to “Versailles”: the numbers definitely surpassed our expectations, and they are still very positive. “We haven't put much effort into it. We've just launched the brand, the store hasn't opened yet, and everything hasn't been done on a large scale.”

“I won't sell one car and lose another”

However, at present, the car market is becoming more and more competitive. As a new brand, there is still a test of how Ledao can stand out and even take the lead later.

Regarding the advantages of music, Ai Tiecheng said, “From a strategic point of view, we are very focused.” In its view, firstly, this brand targets mainstream home users, without considering whether to sell a little more expensive or bargain a little more; secondly, on the first day of defining the product, the price reduction of the Tesla Model Y was taken into account several times. “We need to make a late-stage model and think clearly about our expectations for the next few years.”

Li Bin also emphasized focus. “They (the music team) are always reminded to focus. Otherwise, sometimes they'll get their rhythm distorted by the outside world. The main thing I do is go back to 'being happy with the family and being good at home' and don't be fooled by me. How about the shape and acceleration after two days, don't fix that.”

In addition to helping the company sell more cars, the arrival of the new brand can help NIO have better hematopoietic ability and thus get out of the loss situation is also the focus of attention from the outside world.

According to financial reports, NIO's revenue for the full year of 2023 was 55,617.9 billion yuan, an increase of 12.9% over the previous year. However, the net loss for the same period was 20.7198 billion yuan. R&D is still NIO's largest expenditure. In 2023, R&D investment exceeded 13.4 billion yuan, an increase of 23.9% over the previous year.

In terms of gross margin, NIO Auto's gross margin in 2023 was 9.5%, a decrease of 4.2 percentage points from 13.7% in 2022; the comprehensive gross margin was 5.5%, a decrease of about 5 percentage points from 10.4% in 2022.

Li Bin stressed at the earnings conference at the time that the NIO brand pays more attention to gross profit margin and will not participate in price wars to exchange price for volume. “NIO will face competition from Tesla, such as some start-ups, private enterprises, etc. This kind of competition is good for users, but it does present some challenges for enterprises. In the end, companies with better comprehensive capabilities will win.”

However, although Ledao is positioned at a lower end than NIO, Li Bin revealed that the former has good gross profit performance, and along with investment in early R&D, it is now time to monetize.

“We don't want to sell one car and lose another; (happy) we have to earn money to support our family. It's definitely a good thing that many people can earn money to support their families. There is definitely investment in the short term, and some of this investment has already been reflected in the investment of the past few years.” He also admits that there is no idea of splitting up the channel and listing it independently.

The third brand positioning is equivalent to BMW MINI

It is worth noting that after the release of Ledao, NIO's third brand is also coming soon.

Qin Lihong revealed in a group interview, “The third brand is fast; I can meet everyone within a year.” According to the previous plan, the three NIO brands focus on the high-end market, the mainstream mass market, and the entry-level market, and are priced at around 300,000 yuan, 200,000 yuan, and 100,000 yuan respectively.

“It's still too early to say that the third brand is positioned, but that doesn't mean a cheap car. We're not going to make a car with a few gross margins, and we'll guarantee that this car has a reasonable financial return.” Li Bin said, “You can understand the significance of being a MINI for BMW, but it's definitely cheaper, or the meaning of Smart for Mercedes-Benz.”

With the arrival of another brand, how NIO coordinates the development relationships between many brands is also critical.

Officials say that NIO is not thinking about doing more brands now. “We thought this way when discussing the company's long-term development vision in 2014 and 2015. We need to start with the high-end market.”

Why start with the high-end market? Li Bin explained, “Because of the high-end market, companies like BBA are slow to transform. So if you go to this field first, others won't be very optimistic about us. Others will think you can't do it. Any competitor thinks you can't do has a better chance. Anything you think you can do is a little more difficult. There is a certain window.”

And with the advent of multiple brands, Qin Lihong believes that moderate internal volume is a good thing. “Maybe everyone is going to be under some pressure. But your pressure doesn't come from within; it comes from outside. If pressure can be perceived from within in advance, it will undoubtedly increase the sense of urgency and level of the entire company. All in all, I think it's also good for consumers. The core is also our division of brands, which needs to be clear enough and deep enough.”

Furthermore, regarding the statement “Ledao is NIO's decisive battle,” Li Bin said that while Ledao is very important to NIO's development, it is not a “decisive battle.” They think a “marathon” is more appropriate as an analogy. The release of Music Dao is a milestone in NIO's development process, but it is only an acceleration along the way; there is still a long way to go.