NIO plans to list on the Singapore Exchange The intensification of competition in the high-end market is facing challenges

The author | Caijing New Media Wang Jingya Editor| Pan Xi

As for the reasons for going to Singapore to list, on May 7, a relevant person from Weilai said in an interview with Caijing New Media that Singapore is an important international financial center, and listing here can expand investor groups such as Asian institutions. At the same time, after the listing of NIO in Singapore, it can further increase global trading time and liquidity, provide investors with an alternative stock trading location, and then protect the interests of investors.

What should not be ignored is that this year is undoubtedly a crucial year in the development process of NIO, and the production capacity is still recovering. At the same time, as bmw and other major traditional fuel vehicle brands accelerate the layout of the new energy industry, the new energy market will gradually shift from the blue ocean to the red ocean, and Weilai, which focuses on the high-end new energy market, will also face the challenge of intensified market competition.

Risk aversion Supply chain challenges to be solved

Just on May 4, the U.S. Securities and Exchange Commission (SEC) included 88 Chinese stocks, including NIO, on the grounds that they could not inspect the audit papers of these companies.

Kang Yuqing, founder of lens company research of third-party research institutions, believes that "the advantage of Weilai's listing in Singapore this time is that it has more tools to resist geopolitical majeure risks." Singapore is a potential market with relatively little risk and a certain degree of internationalization, but there is still a gap between the degree of internationalization, liquidity and influence of the Nuremport Exchange at this stage. ”

Guo Yuqing further said that WEILAI chose to introduce listing without financing, the procedure is simpler, faster and cheaper, and it also provides more financing and stock circulation channels for WEILAI. However, the listing of the three places faces the supervision of the three places, and the cost of compliance is relatively higher, but in terms of risk aversion, the increased cost is almost negligible.

It is worth noting that whether from the perspective of its own development or from the perspective of the market, for Weilai, this year is undoubtedly a crucial year in its development process. On the one hand, NIO's investment in research and development will double in 2022; on the other hand, NIO will deliver or release three important models of ET5, ET7 and ES7 within the year.

However, Weilai, which is "not short of money", is difficult to get rid of the supply chain crisis. Affected by the suspension of production by supply chain partners in Jilin, Shanghai, Jiangsu and other places, the Weilai Hefei plant stopped production for about a week in April, and the production capacity is still recovering. Or affected by this, in April 2022, the number of new cars delivered by NIO fell by 28.56% year-on-year and 49.18% month-on-month to 5074 units.

In fact, this is not the first time that WEILAI has encountered a capacity crisis. In March last year, Weilai announced that due to the shortage of semiconductor chips, the company decided to suspend production at the Hefei Jianghuai Automobile Plant for five days from March 29, 2021. In May of the same year, WEILAI once again had delivery problems due to the supply chain.

Excluding the impact of the epidemic, WEILAI may also have shortcomings in supply chain control. Zhang Xiang, dean of the New Energy Vehicle Technology Research Institute of Jiangxi New Energy Technology Vocational College, believes that in general, the way for car companies to control the industrial chain is to train 2-3 suppliers in the same parts and components products. For example, large car companies such as Toyota have adopted the form of backup from multiple suppliers. New car-making forces are generally established for a short time and have a small volume, resulting in the inability to carry out supplier backups.

"Secondly, the larger the order volume, the more car companies have priority procurement rights in the supply chain. For example, international suppliers who have monopolized chips and key electronic control systems will give priority to large customers when supplying. In addition, the brand awareness of car companies determines their right to speak in the negotiation process with suppliers. For example, most of Tesla's more than 100 core suppliers have entered Shanghai, and the Ningde era is even only one road away from tesla factories. The situation for NIO is exactly the opposite of Tesla, where 80% of its suppliers are located in the Yangtze River Delta region, but the factory is in Hefei. Zhang Xiang further analyzed.

Blue Ocean Turns to Red Sea High-end market competition is fierce

More importantly, WEIlai has been focusing on the high-end new energy market, but as bmw and other major traditional fuel vehicle brands accelerate the layout of the new energy industry, the new energy market will gradually shift from the blue ocean to the red ocean.

Taking the Beijing market as an example, Caijing New Media noted that since the Spring Festival in 2022, the new energy vehicle brands on the road have become more and more diverse, including many traditional luxury brands such as BMW.

Although Li Bin has expressed the hope to change the market structure of luxury cars from "BBA" to "NBA", for Weilai, it has both opportunities and challenges to compete with traditional luxury brands for the new energy market.

According to the data of the Association of Passenger Vehicles, in 2021, the sales of high-end brand passenger cars in the Chinese market increased by 20.7% year-on-year to 3.472 million units, which was 14.2 percentage points higher than the growth rate of passenger cars.

"Although from the perspective of sales, the high-end car market seems to be about to peak, but the Chinese market is in the stage of increasing purchases, which means that consumers who have purchased medium and low-end models in the past are very likely to choose high-end models." It is predicted that during the 14th Five-Year Plan period, the absolute value of China's high-end cars will reach 5 million, so there is still room for growth in the high-end car market. Zhou Lijun, president and chief analyst of E-Car Research Institute, analyzed.

However, from the perspective of the car company, Weilai and BBA have their own advantages. Zhang Xiang believes that the research and development capabilities, production capacity, marketing capabilities and service capabilities of car companies determine whether car companies can stand in the market for a long time. There is no doubt that BBA's anti-risk ability, car-making ability, and marketing network construction have more advantages than Weilai, but BBA stays more in the stage of oil to electricity, and from the perspective of software and platform, Weilai is slightly better.

Zhou Lijun said that in the new energy market, Weilai may have more market advantages than BBA. He believes that BBA's new energy thinking is almost all derived from fuel vehicles, and in order to take care of the profits of fuel models, the price of new energy vehicles is generally higher. In addition, most of the consumers who choose to buy BBA models are exchange users, and when this part of the owners choose to buy vehicles, most of them are purchased by female users in the family, whether it is the appearance or interior, Weilai and other new car-making forces are undoubtedly more popular with female users.

So, in the face of internal and external challenges, can WEILAI achieve profitability in 2024 as Li Bin said? Zhang Xiang analyzed in an interview with Caijing New Media: "If you refer to Tesla, Weilai can only achieve profitability when the market has more than 500,000 vehicles and annual sales reach about 400,000 vehicles." Judging from the current sales volume of Weilai, there is still a certain gap from profitability. ”

However, in Zhou Lijun's view, if the ideal is used as a reference, the sales volume of the year reaches 100,000 or it can achieve profitability. However, due to the large initial investment of Weilai, from the theoretical point of view, the annual sales volume of 100,000-200,000 or its break-even point.