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NIO DAY为谁狂欢?

Who celebrates NIO DAY?

wallstreetcn ·  Dec 24 10:24

Head to the battlefield.

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Author | Chai Xuchen

Editor | Wang Xiaojun

Finally, Li Bin has presented NIO's "full package".

On December 21st, NIO's "Spring Festival Gala" NIO DAY arrived as scheduled. Since 2017, this has always been a big party between NIO and its users. XPeng Chairman He Xiaopeng brought glutinous rice balls to cheer for Li Bin, and former Volkswagen Group chief Diess also made an appearance to support. Together with over 0.02 million audiences on-site, they witnessed the most lively NIO DAY.

Coinciding with the tenth anniversary of NIO's founding, that night, the 800,000 yuan ET9 broke through the ceiling of domestic executive sedans; the third brand Firefly, which directly competes with Mercedes' Smart and BMW's Mini, also unveiled itself, becoming the absolute main character on stage.

The entire product portfolio of NIO has since been revealed.

Starting from 0.3 million to 0.8 million yuan targeting the high-end NIO; followed by LeDao entering the family market at 0.2 million to 0.3 million yuan; and then the Firefly targeting the global niche market, Chairman Li Bin has covered the mainstream Consumer market with three brands. Over a month ago, Li Bin boldly stated in an internal letter that next year he aims to double sales to 0.4 million units and turn a profit the year after.

It seems that the long-awaited comprehensive battle for NIO is about to begin. However, after the market opening on Monday, NIO's stock prices in Hong Kong and the USA experienced some fluctuations. This is because the market is currently volatile, while in the finals, Li Bin's NIO DAY seems to be drifting away from the mainstream market.

In NIO's view, the ET9 is the crystallization of ten years of technological accumulation, with a six-layer champagne tower standing firm on the body while speeding over speed bumps, a powerful chassis remaining stable even at 160 km/h experiencing a flat tire, self-developed intelligent driving chips installed, administrative screens, and first-class experiences in the rear seats, among other features. On-site, Li Bin listed nine elements of prestige to promote the ET9.

NIO's expectations to break through the BBA executive vehicle fortress rely on the ET9; however, unlike the Wenjie M9, Li Bin clearly stated that ET9 sales will not be very high, expressing in an interview with Wall Street news that he would be very pleased with monthly sales over a thousand. He also revealed that the limited edition of 999 ET9 units has already sold out, with sales expectations being met.

As for the briefly showcased high-end small car brand 'Firefly', Li Bin gave it a highly individualistic introduction and a striking design, pricing it at a pre-sale cost of 0.1488 million yuan, targeting the pure electric BMW MINI. NIO President Qin Lihong humorously remarked that this is a small car without a 'father flavor'. The main goal of Firefly is not domestic but to occupy a place in the global ten million level A-Class vehicle market.

However, the Firefly, which was established in August 2022, did not expect the radical changes in global market taxation on Chinese export electric vehicles over the past year.

From an industry perspective, its focus on the individuality Base overseas market at this time seems not to align with favorable timing. This is because Ideal and XPeng have experienced sweet results from implementing down-market strategies in the domestic market, allowing them to shine in the intense elimination matches. Meanwhile, LeDao, bearing the heavy responsibility of scale, is still struggling on the path to production.

'Ten years ago, Li Bin told me that the auto industry is not a winner-takes-all sector,' Qin Lihong expressed, citing NIO's rationale in response to industry share anxiety, firmly believing that there is no pure oligopoly in the auto sector, with the top players' share reaching at most 10-15%.'

In Qin Lihong's view, cars should not erase individuality, and they cannot be sold solely based on functionality and performance. He believes that diversity is the main melody, stating, "I believe improving efficiency and saving are always right, but even more important than that is what kind of brand NIO is; will our car owners be proud of it? This is a bottom line we must not overstep."

Clearly, in the decisive battleground that should compromise for the sprint, NIO still insists on its foundational color, methodically executing the previously set long-term vision of leading market perception: making charging and battery swapping available across all counties, developing its own chips, and now bringing together three brands.

Fortunately, NIO's counteroffensive is firmly taking shape, and Li Bin has set a 'Deadline' for the next two years to achieve profitability.

Two years ago, the accurately predicted elimination competition in 2024 is now foreseen by him again, stating that in ten years, five of the top ten global companies will have a Chinese face, and NIO strives to be one of them. In the next decade, can Li Bin and his NIO successfully navigate the cycles and remain at the final table?

The following is a transcript of the conversation with NIO Chairman Li Bin, NIO President Qin Lihong, and Firefly President Jin Ge (edited):

Question: What is the purpose of the layout planning for the three brands and 11 car models of NIO?

Li Bin: First, we still look at the pricing range of the brand. How many products are covered at each price segment really core depends on user demand. NIO targets the 0.3 million-0.8 million range, which has a much larger price difference compared to BBA; Ledaos targets the 0.2 million-0.3 million market; Firefly is a high-end small car brand, with 0.1488 million being the recent adjusted price of Mini.

As for high-end brands, everyone expects a certain degree of exclusivity and uniqueness, and it will be divided more finely. BBA has over 50 models sold in China, while NIO currently has nine; Ledaos aims for the mass market, hoping that every launch can achieve significant sales, which is the same thinking as Toyota and Tesla; Firefly only has one car, which makes operations simpler, and the main consideration is the purpose and demand of users buying cars in this price range, based on which we determine how many models would be the most efficient investment.

Question: After the ET9 is released, will there be internal competition with domestic brands like the Zunjie?

Qin Lihong: Zunjie is a product that is very much anticipated, but its value orientation differs from that of the ET9, including a complementary relationship with brands like Yangwang in the market. They target different groups, including the administrative flagship and extreme off-road. However, they are all attempts by Chinese brands in the high-end market.

This kind of complementarity represents a positive relationship of cooperation within competition. The release of the NIO ET7 is meant to challenge the stronghold of international high-end brands. In this market, the progress made by Chinese brands will be more challenging, which also proves their greater value.

Li Bin: The more high-end and specialized we go, the more important the consensus market becomes. I believe that these Chinese brands are collectively moving towards the high-end administrative market. The good thing is that it will make many users think that Chinese brands can indeed create administrative flagship products, and several companies can do this, which will shake the traditional BBA's monopoly position in the high-end flagship market.

Question: How does the ET9 achieve uniqueness?

Li Bin: As the price of the car rises, the proportion of emotional needs will increase. Each company will have its own principles and genes. We have repeatedly mentioned qualities such as purity, warmth, refinement, and futurism. Apple excels in this area; it's not just about scoring points or simply comparing pixels. If one tries to cater excessively, it can be quite difficult because without a firm stance, eventually no one will like you.

In the administrative flagship segment, we are considering how to incorporate a technology-driven and warm experience. The ET9 launch event largely conveyed this feeling. Not only the ET9, but NIO's products and services must be experienced to be truly felt. It's hard to perceive just by watching a video.

Question: Some believe that the ET9 is priced too low; what is its pricing logic?

Li Bin: Pricing itself is a form of positioning. If your product strength, technology, experience, and service can support a higher price, then of course, a higher price can be set. But I think it still needs to return to a basic logic. When consumers buy large displacement imported RBOB Gasoline luxury cars, actually half of the money goes to various taxes. It would not be right for us to earn this money, as it is responsible for the consumers.

The administrative flagships of Mercedes-Benz, BMW, and Audi are priced around 0.11 to 0.12 million USD in the USA market and around 100,000 Euros in the Europe market, which is approximately around 0.8 million RMB. We priced it at 0.788 million, and our initial version at 0.818 million, basically following this pricing logic.

Question: Will NIO have any special sales strategies for selling the ET9?

Qin Lihong: The time value of the ET9's customer base is very high; luxury is not a necessity. What they seek is an efficient and worry-free environment. My consumption aims to help save time and energy, so the rights include business travel services, exclusive drivers, etc. The demonstration of luxury is not the direction of the ET9, but social consensus cannot be neglected, such as how convenient it is for two people to converse in the car; how convenient it is for one person to rest.

Question: But now, brands that have ventured downmarket have succeeded; doesn’t NIO feel anxious?

Qin Lihong: Li Bin told me that the automotive industry is not a winner-takes-all industry. Normally, a car company's market share rarely exceeds 15%. Achieving a 10% share is already at the top 1-2.

There are two reasons. The automotive industry is a heavy asset industry, especially in terms of fulfilling delivery. Secondly, although cars are industrial products, they relate to lifestyle and social positioning, and differing from others is a necessity. Many companies prioritize scale and popularity, which I respect, but I sometimes feel that differentiation is the reason customers choose cars.

Cars cannot erase individuality; they cannot be sold just by discussing functionality and performance. The automotive industry is inherently not monopolistic; it is flourishing with diversity, whether it’s RBOB Gasoline cars, electric cars, or flying cars. In this scenario, it’s more important to do well in one's own field. This time at NIO DAY, 0.02 million people attended; it represents a kind of warmth and feeling, which is the greatest asset of NIO in 10 years, and ultimately it will reflect in the financial statements.

Li Bin: Evaluating a matter requires considering the time scale; conclusions drawn from different nodes and scales can be completely different. Recently, some have asked if Contemporary Amperex Technology will engage in battery swapping, and I think that's good; it would be problematic if only one company does it. Additionally, Solid State Battery and battery swapping do not conflict with each other. Sometimes you could say it's quite competitive, but keeping pace with one another is also good.

Question: But 2024 is highly competitive; how does NIO think about facing the elimination rounds?

Li Bin: This is a marathon on a muddy road. There were over 1,000 automotive companies in the USA a century ago, and in the end, only a few large groups remained. Globally, the top ten companies account for about 80%.

The concentration in the auto industry is not as high as in other technology companies. Considering the global regional distribution and industry characteristics, we believe that a considerable number of automotive companies will survive. From a global perspective, the concentration will not undergo a dramatic change, but the TOP10 may be reshuffled.

I believe that by 2035, five of the top ten companies globally will be Chinese companies, and China will account for 40% of the global market share. We must double our efforts and cannot be left behind.

Question: Leado expects next year's monthly sales to reach 0.02 million vehicles. If the external competitive landscape changes next year, how will this expectation be maintained?

Li Bin: We will ask ourselves two questions. The first is: based on your product, technology competitiveness, and pricing, what will the upper limit of the product and price be in the target market?

For example, for the Leado L60, if it has the Tesla label, can swap the battery, is cheaper, and has higher efficiency and better space, the upper limit of how much it can sell is a consideration. The ET9 has not claimed much in the Chinese target market. This is akin to talent; how much can be achieved depends on brand influence, execution capability, sales service network, and internal management. This is something we can improve upon, and it's the goal for the team.

We believe that as long as the upper limit of the Lepido product is brought to a reasonable level, achieving 20,000 units is possible. Twenty thousand units only correspond to about 30-40% of the Model Y in China; it is not an unrealistic target.

Question: Among Global automotive brands, there is almost no single model; how did Firefly consider this?

Li Bin: From the perspective of fundamental business and product logic, we have always hoped to think a bit deeper before taking action. The business planning for Firefly is relatively long; of course, there have been some changes now compared to the initial project launch, mainly due to external factors.

The goal for Firefly is to be delivered in Europe now. The increase in tariffs at the end of 2023 and into 2024 was indeed unexpected, and even considering the impact of tariffs, the product capability is still very strong. We have adjusted our market rhythm accordingly; in Europe, we will cooperate more with local partners to quickly establish a sales and service network. In terms of service facilities and infrastructure, a single product will have a very high dissemination efficiency.

Question: Our multi-brand strategy is aimed at scale; isn’t it contradictory if Firefly may not be a volume car?

Li Bin: Firefly is designed as the best high-end compact car for Global users. The success or failure of the product definition primarily depends on the anchored market, including region, price range, and user demands. There are over 10 million compact cars globally, with over 4 million in Europe, which is a substantial proportion, but domestically it is much smaller (1.3 million units). This is related to the differences in usage habits, scenarios, and user preferences across regions.

There are also many compact cars priced at several ten thousand yuan in China. We position this car from a higher perspective. The product capability of Firefly is much stronger than that of Mini, and it has the opportunity to expand this market a bit more. We will accelerate the pace of Firefly entering the global market because it has only one model, making it easier to open the market compared to NIO and Lepido.

Question: In such a price range, how do we make the Firefly compact car not seem "low"?

Li Bin: We are making breakthroughs in two areas, one is the administrative flagship, and the other is in small vehicles. There is a difference of about 600,000 to 700,000 between these two, which feels a bit split. But if everyone looks at their commonality, which is the relationship between safety, design philosophy, and user benefits. For example, we talked about the firefly yesterday, discussing agility, ingenuity, and trust. As you can see, although we haven't talked much, at least through some demonstrations in real scenarios, we let everyone know we have achieved that.

Yesterday, everyone indeed had some discussions about the lighting, but our light is meant to express this angle. From a philosophical perspective, this light is called "Trio", which I think is quite interesting.

Qin Lihong: I think safety is a technical value judgment, how each company ranks it. Moreover, what we conveyed consistently yesterday was originality. People will always have different opinions about designs; however, we can proudly say we are a purely original high-end small vehicle.

Question: How do you view the design controversy surrounding the firefly?

Li Bin: In terms of design orientation, we need to consider the preferences of global users. This vehicle was designed by the Munich design center, and a friend asked me if there is a Plan B last night. Indeed, everyone has different ideas, which is completely understandable. However, we visited users in 17 countries, and it's very clear that the designs of European small vehicles can be quite diverse at times.

Jin Ge: The comments from everyone did not exceed our expectations. The firefly was officially initiated in May 2022, and from the day the design concept was born, I knew it would definitely be a topic that needs time to settle; your first look, then a second and third look, will feel different. Our original intention in design is to outline the DNA using the simplest elements, aiming to create a high-end small vehicle that is globally born but originates from China.

Qin Lihong: It is a vehicle with an attitude and a brand without any paternalistic flavor; we are looking for this attitude, which can resonate and echo with people.

Question: As a global model, what is the sales target for the firefly?

Li Bin: The Firefly in China will definitely only have one model, and it is somewhat difficult to cover the global market with just one model. From the perspective of the Firefly, we will consider the development of various models according to the needs of different regions, but not too many, probably 1-2 models for each market. This is because the cost structure of the Firefly can support us in making multiple models.

Question: Has there been any consideration for the Firefly to join Contemporary Amperex Technology's battery swap ecosystem?

Li Bin: The Firefly is different from NIO's battery packs; however, there is certainly potential for more collaboration in the battery swap ecosystem. Building it will undoubtedly be faster and more efficient. We established a battery Asset Management company with Contemporary Amperex Technology four years ago, and we have had extensive discussions on battery swapping, technical routes, asset management, standards, and many other aspects over the past few years.

Question: After the launch of the ET9 and Firefly yesterday, did the order volume meet expectations?

Li Bin: The first edition has already sold out. With the price of the ET9, users need to experience it before making a final decision; the orders for the Firefly definitely exceeded expectations, and I estimate we will need to ramp up production capacity by the time it’s launched.

Question: Has NIO learned any experiences from competitors and traditional car manufacturers over the past ten years?

Li Bin: Starting from user perception and experience, domestic peers have done very well with clearly observable experiences, which is an area where we need to improve. For example, we directly made a 50-liter big Refrigerator for the Le Dao L60; the ET9 includes an executive screen, executive desk, and executive Refrigerator. We have integrated true user scenarios and brought them to perfection.

Question: Are there any specific measures regarding improving efficiency?

Li Bin: This year at NIO, we launched the "Mining Action," encouraging colleagues at every level to save as much as possible, essentially achieving our goals. Additionally, we will gradually establish an internal decision-making system for ROI. ROI is not just for large financial decisions or big projects; we hope to evaluate the returns on every small matter. For this NIO Day, we have eliminated many projects.

Qin Lihong: I believe that improving efficiency, increasing productivity, and saving are always right, but even more important is what kind of brand NIO represents. Will our owners feel proud of that? This is a bottom line we cannot overstep.

Li Bin: Taking NIO Day as an example, from 2017 to now, even when the company was on the brink in 2019, we continued. We neither deceive ourselves nor underestimate ourselves, which is precisely what sets NIO apart from other companies.

Many things we do are quite unique and reflect our own thoughts. Of course, some people accept it, while others do not, as this is actually part of the cost of innovation; sometimes you have to be ahead of others.

The translation is provided by third-party software.


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