NIO President Qin Lihong: 2023 is the most critical 10 minutes of a football game

If the chaos of the new energy market is not in China, it will be much lost.

Wen 丨 Wu Xiaoyu

Editor丨Wang Hailu

Competitors Ideal and Xiaopeng believe that the new energy vehicle industry will only have single-digit players left after the fierce knockout competition. Li Xiang thinks there are 5, He Xiaopeng thinks it is 8, but NIO president Qin Lihong believes that there will be more than a dozen left.

He said that the automotive industry, unlike e-commerce, airlines and mobile phone industries, will not be monopolized by oligopolies. If you don't believe it, you can look at fuel vehicles, after a hundred years of competitive elimination, there are also "niche and characteristic" companies such as Ferrari and Porsche.

"Porsche sells more than 200,000 cars a year, but its profits are higher than the Volkswagen Group, which sells more than 10 million vehicles, and that's the charm of the automotive industry." Qin Lihong said.

Of course, the two companies did not exist independently, but were acquired by larger automotive groups. NIO has not positioned itself as a niche car company, in April this year, NIO founder Li Bin said in an interview with the media: "From the perspective of long-term competition, annual sales of 2 million vehicles is a life and death line." ”

Qin Lihong added that 2 million sales are in the global market. In the era of fuel vehicles, there are more than a dozen fuel vehicle companies with global sales of 2 million vehicles, "Why can't you do it in the era of trams?" ”

In the first quarter of this year, NIO, which has six products on sale, sold 31,000 vehicles, behind BYD, Tesla, Aion and Lili. In 2023, NIO aims to sell 240,000 vehicles, and the NIO brand broke even in the fourth quarter.

At the Shanghai Motor Show, NIO brought the new ES6 with the NT 2.0 platform. In the first half of this year, NIO will also deliver four new models: the new ES8, the facelifted ET7, and the EC7.

Qin Lihong said that at present, the ES8, ES6 and EC6 of the old generation of NIO platforms have been ordered, and the ET7 2022 model is also nearing the end, and the models on sale in May this year are basically only ET5 and ES7. In the second quarter, NIO was still in the replacement period of the first-generation platform to the second-generation platform. But he judged that in the third quarter, NIO's product sales would begin to climb.

Today, China is the most competitive market for new energy. In 2017, NIO participated in the Shanghai Auto Show for the first time, bringing its first production car, the ES8, and the concept car EVE. Of the 1,400 vehicles exhibited that year, new energy vehicles accounted for only 11%. This year it has exceeded 50%. Major car companies have launched their own new energy products, and the fuel vehicle booth is cold and deserted.

"At the 2019 auto show, everyone had mixed reviews for new energy, and this year it is basically new energy vehicles, and it has only been four years since everyone verbally said it to take action." Qin Lihong said.

But Qin Lihong believes that it is only a qualifying round now, and it will be eliminated like the World Cup group stage, but it does not need to win every game. In 2025, the final of smart electric vehicles will really begin.

"Now it's like the most critical 10 minutes of a football game, hold it, score a goal, the overall trend will be more active, but it's not the end of the industry this year and next year." Qin Lihong said.

The following are the main points of Qin Lihong's speech in interviews with media such as "Late Auto":

There is no company that does not reduce costs

At a face-to-face event for users this year, Li Bin said, "The operation in the first half of 2023 will determine the company's medium-term direction." If you don't do your job, 2024 could be 2019 again. ”

In 2022, NIO invested heavily in R&D and operation management, with a gross margin of 10.4%, returning to the level of two years ago. But unlike two years ago, NIO now has more than 40 billion yuan in cash on hand and is listed in three places. In 2019, NIO's cash flow was about 1.056 billion yuan.

"You don't have to worry about NIO's funds," Qin said. As for the general concern of the outside world, NIO's capital efficiency, Qin Lihong believes that automobiles are a long-term industry, and NIO must resolutely invest at this stage. He used an analogy: If the child in the family is seven or eight years old and you feel that his life is long and productive, you should pay him to go to the best school, not work, "it depends on your expectations for his future."

Of course, NIO is also trying to reduce costs, Qin Lihong said. In the past, Tesla did not use lidar because of the high price, and NIO invested in Tudatong to reduce the cost of lidar to several hundred dollars a piece. NIO bicycle manufacturing costs have fallen by 60% in the past 4 years.

He also mentioned several more nuanced points that illustrate that NIO is frugal. For example, he and Li Bin share an office, which is only one-third the size of a conference room; The company starts from Li Bin to the cleaner, the standards for business trips and hotel stays are exactly the same, and the entire company does not reimburse business class. He himself does not sleep well, has to fly business class on business trips, and pays hundreds of thousands of subsidized travel every year; Executives also want to buy a car in full, no discount. "Whoever wants to say that our family spends money indiscriminately, they can also take out their boss's treatment to dry." Qin Lihong said.

"There is no company that does not reduce costs, the difference is whether everyone talks about cost reduction." Qin Lihong said. High-end brands will not emphasize cost reduction, but about experience.

But where it thinks it needs to invest, NIO is also resolute. Qin Lihong said that the replacement of fuel vehicles by new energy vehicles first began in the 150,000-300,000 yuan market, and has not spread to more than 300,000 yuan. "If you want to receive more water when it rains heavily, you must first make the basin bigger", he used an analogy, the basin that NIO uses to receive heavy rain is "experience, word of mouth, brand", "at this stage, as long as the finance can hold it, it must be ced".

In the second quarter, the main products completed the platform switch

At the Shanghai Auto Show, NIO brought the new ES6. Compared with the old model, the biggest change of the new ES6 is to switch to the NT 2.0 platform, equipped with the Banyan intelligent cockpit system, the roof is equipped with lidar, and the side fenders will be equipped with cameras, and the intelligent driving assistance ability is improved. In addition, the car has optimized the interior space, with 75mm more headroom in the rear.

The old ES6 is the best car NIO has ever sold. According to data from the China Automotive Center, in 2022, this car sold about 42,000 units, surpassing the BMW iX3 (about 27,000 units), and is the first in the number of 300,000-400,000 pure electric vehicles. The new ES6 is expected to be available in late May, and no final pricing has been announced yet. In December last year, NIO released the ES8 of the NT 2.0 platform, which starts at 530,000 yuan, which is 80,000 yuan more expensive than the old ES8 (starting at 450,000 yuan).

Qin Lihong said that the price positioning of the NIO brand is 300,000-600,000 yuan, and the cheapest car is ET5 (328,000-386,000 yuan), and there is currently no cheaper than it, and there will not be at least three or four years in the future.

At last year's Chengdu Motor Show, Qin Lihong set a goal for the ET5, "ET5 surpasses the BMW 3 Series within one year." From January to March this year, NIO ET5 sales were 5795 units, 6471 units, and 6437 units, respectively; The BMW 3 Series has 7759, 8868 and 13924 units, respectively. The goal has not yet been achieved. To this, Qin Lihong responded: "ET5 has not yet reached the time when sales resume, and it is still climbing sales. ”

His sales target for another sedan, the ET7, is not as high as the ET5. "ET7 can be successful if it can first establish itself between BBA and second-tier luxury brands." He said.

In the March earnings call, Li Bin expected that the current product portfolio can support the monthly sales target of 30,000 vehicles. ET5, ET5 Touring Edition, and ES6 with relatively low positioning, with a target monthly sales of 20,000 vehicles; ET7, ES7, ES8 with higher positioning, with a total target monthly sales of about 8,000-10,000 vehicles; The EC6 and EC7 coupe SUV products focusing on the niche market sell 1,000-2,000 units per month.

In the first quarter of this year, NIO sold about 31,000 vehicles. In the second quarter, NIO will deliver the new ES6 and the new ES8 and EC7 released at the end of last year, and also revamped the ET7. Qin Lihong believes that NIO's most important work during this period is to ensure that "each product is released on schedule, on time and with high quality, and meets expectations in production, logistics and quality". In this way, in the third quarter, the new product can successfully complete the climb, and the sales of the second-generation product matrix return to the normal level.

Hybrid is excessive, hydrogen energy is still in the laboratory

At the beginning of this year, NIO said that it would add 1,000 substations in 2023, accumulating more than 2,300 substations. At the Shanghai Auto Show, Li Bin announced that NIO will add 200 new substations every month from June.

In order to cooperate with this plan, NIO urgently added a replacement plant in Hefei. NIO now has a total of three substation assembly plants in China to meet the supply. "Although the cost is high, if you don't do it at all, there will be more problems." Qin Lihong said.

Qin Lihong once again emphasized the significance of NIO's layout of power stations. He believes that in the next 20 years, the ultimate product will be pure electric vehicles. "In the short term, some companies that choose hybrid are the idea of brand transition, and some hope to be based on subsidy policies, not the product of the market. Hydrogen energy is still in the laboratory stage and cannot be commercialized on a large scale. ”

As for the business model of the replacement station, Qin Lihong calculated an account: NIO will not put a battery in every exchange station, and even if it is full of batteries, the cost of a single mobile replacement station is more than 3 million yuan. According to the fixed cost allocation, 8 years, a day is more than 1,000 yuan. NIO serves an average of more than 50 orders per substation.

"If this is an independent third-party company, if we want to purchase services from it, it will be profitable in minutes, but we are now subsidizing it with marketing expenses, it is not a simple loss, we have created a low-cost and more cooperative service facility in the system." Qin Lihong said.

At the high end of the market, creating blockbusters is not the right strategy

Qin Lihong said that car companies are still playing the qualification stage, and there are still opportunities to make mistakes. Around 2025, the century-old brand will be awakened and competitive products will be launched, and the intelligent technical route will be relatively determined, and smart electric vehicles will enter the countdown to the finals.

"I don't know how many are left in the end, but I think it must be double digits, and there must be more than a dozen." Qin Lihong said.

Just like the fuel vehicle market, among more than a dozen car companies, there will be some very niche and characteristic companies, such as Ferrari, Porsche, as well as Mercedes-Benz, BMW, Audi, Volvo, and even Cadillac, all of which "have their own positions" and "make yourself pure, there will always be people who like you." ”

NIO is positioned in the high-end automobile market, Qin Lihong believes that creating explosive models in this market is not a correct strategy, because it is not in line with the consumer psychology of the high-end market of automobiles, and the high-end market needs to have appropriate diversity. At this point, NIO's product strategy is to unify the vehicle technology platform and find differences in materials and details.

He proposed that the high-end market has a 3×2 matrix: "3" refers to products, services and user communities, and "2" refers to original, advanced spiritual connotations, and better experience. He believes that the products and services that NIO makes today are the deconstruction of high-end brands.

On the basis of this thinking, he believes that sales are not the only criterion for judging the success of a product. "A car should get its fair share, not that there must be more than a number of vehicles to be good, and how many below to be called bad."