The more setbacks, the more courageous the true heroes, and the courage to have a new life after knowing shame!
Author: Ip Man
Editor: Yang Aiguo
Wind product: Li Yu
Source: Rhodium Finance - Rhodium Finance Research Institute
The "local tycoons" in the Middle East made a move, but Tencent was leaving. Behind the dislocation of the largest institutional shareholder, what is the value background and development prospects of NIO?
On the evening of June 20, NIO announced that it had received a total of about US$1.1 billion in investment from Abu Dhabi investment institutions. Among them, NIO issued a private placement of US$738.5 million to Abu Dhabi investment institutions, and the final official delivery time is expected to be early July. At the same time, Abu Dhabi Investment Institution signed a share transfer agreement with a Tencent related party, and the former will purchase about US$360 million of NIO's shares from the latter.
According to the 2022 financial report, the multiple platforms controlled by Tencent hold a total of 164 million shares of NIO, with a shareholding ratio of about 9.7%. After the completion of the transaction, Abu Dhabi investment institutions will hold about 7.0% of the shares, surpassing Tencent to become the largest institutional shareholder.
01
The gross margin was 1.5%, and the loss reached a new high
When will the sales volume decline and scale effect come?
OLDCAI
For this transaction, the market has many positive comments. In addition to equity investment, the biggest focus is on the business level. Many public opinions believe that relying on the Middle East influence of Abu Dhabi investment institutions will open up incremental space for NIO to go overseas.
This is indeed a tempting topic.
At present, NIO's overseas degree is not high, and only Norway has a small business layout. In Germany, the Netherlands, Denmark, and Sweden, only rental services are available, not direct sales. More development is the power exchange business, citing China Securities News reported that NIO plans to increase its energy business in Europe, and it is expected that by 2025, NIO will build 1,000 exchange stations in overseas markets, and most of these exchange stations are located in Europe to serve markets such as Germany.
If we can open up new markets, it will undoubtedly be a major benefit. Especially for NIO at present, it is under the pressure of losses, gross margin and delivery volume. In the face of the imminent crisis, a new curve is urgently needed to boost morale both inside and outside.
By the end of 2022, NIO had cash reserves of 45.5 billion yuan. It seems to be rich, but it can't stand the aggressive loss: the income of the year was 49.2686 billion yuan, a year-on-year increase of 36.3%; The net loss was 14,437.1 million yuan, a year-on-year increase of 259.4%, setting a new high in the deficit.
From 2020 to 2021, the net profit attributable to the parent was -5.611 billion yuan and -10.57 billion yuan. The more you sell, the more you lose, it is certainly not a good signal, torture the profitability of the enterprise, the level of specialization and refinement, when will the scale effect come, and whether it will fall into the scale trap?
Entering 2023, there is still no improvement, with a loss of 4.804 billion yuan in the first quarter, compared with 1.803 billion yuan in the same period last year; the gross profit margin is 1.5%, which is a big change from 14.6% in the same period last year. Although the revenue exceeded 10 billion yuan for four consecutive quarters, reaching 10.68 billion yuan, a year-on-year increase of only 7.7%, lower than market expectations.
You know, in the same period, the revenue of ideal automobile reached 18.79 billion yuan, a year-on-year increase of 96.5%. The net profit was 930 million yuan, and it was the second consecutive quarter of profit. Although Xpeng's revenue was only 4.03 billion yuan, its loss was only 2.34 billion yuan. Once the three musketeers "big brother" has been worried about falling behind.
Not deliberate alarmism. As of the first quarterly report, NIO's cash reserves fell to 37.8 billion yuan. In just three months, it lost nearly 8 billion in cash. How much confidence is enough to burn money, and how long can it be burned?
Focusing on deliveries, which are the most important in the market, NIO recorded 31,000 units in the first quarter, up 20.5% y/y and down 22.5% m/m. Li Auto was 52,000 new vehicles, up 65.8% y/y. Among them, 20,823 units were delivered in March alone, a year-on-year increase of 88.7%. Xpeng Motors had 18,230 vehicles, down 47.25% year-on-year.
In April, NIO delivered 6,658 new vehicles, up 31.2% y/y and down 35.8% m/m. 6,155 units in May, down 7.6% month-on-month, while Li Auto delivered 28,277 units in the month, up 146% year-on-year, and delivered more than 20,000 units for three consecutive months.
Industry analyst Guo Xing believes that the automotive industry is too demanding on scale, especially the new forces in car manufacturing, and the scale effect determines the core profit level. For NIO, which is mired in losses, sales fell month-on-month, gross profit margin in the first quarter reached a new low, the pressure can be described as self-aware, and the crisis is imminent. How to break the bottleneck of growth is not waiting.
Li Xiang once said that if the total sales of the ideal L9, L8 and L7 cars drop to five or six thousand units a month, the gross profit margin of the ideal car will become negative.
Indeed, the new energy vehicle industry is in the ascendant, and NIO, which is in a period of rapid development, needs to spend money in many places, and without the corresponding sales support, the sustainability and stability and development stamina will be greatly reduced.
According to Sohu Technology statistics, in 2022, the three companies of Wei Xiaoli burned a total of 22.8 billion yuan of R&D funds, of which NIO burned the most ruthlessly, with R&D investment as high as 10.836 billion yuan, accounting for more than 20% of the 49.269 billion revenue of that year.
In the first quarter of 2023, NIO invested 3,075.6 million yuan in R&D, 74.6% year-on-year. Coupled with the above losses, the financial pressure of enterprises should not be underestimated.
On the other hand, Li Bin said during the New Energy Vehicle 100 Forum in April this year that NIO will build 1,000 substations this year. By the end of 2022, NIO had built a total of 1,305 exchange stations.
Needless to say, NIO's rapid attack cannot hide the thirst for funds and the urgency of new increments.
02
Put down the high-end figure
The whole series of price reduction, sales "big counteroffensive"?
OLDCAI
Of course, for the new forces of car manufacturing, the crisis has existed since the day of its birth. It is in the process of being born to death again and again that the ability to change is cultivated.
Taking 2022 as an example, in the face of soaring lithium carbonate prices and intensified industry competition, NIO, Xiaopeng, and Ideal have all started major adjustments and iterative upgrades of organizational structures and product architectures.
Taking the ideal of selling big in 2023 as an example, August 2022 has just experienced an iterative crisis. The delivery volume in the month was only 4,571 units, down 51.54% year-on-year and 56.14% month-on-month. Thanks to the decisive adjustment of the model, explosive growth after suffering pain.
Naturally, NIO cannot sit still. Big moves are staged in turn, such as the following "three axes".
Just after the above-mentioned quarterly report, Li Bin, who had shouted "NIO will never reduce prices", raised the banner of "price reduction".
On June 12, the company announced that "the price of all models will be reduced by 30,000 yuan" and terminate the free power replacement rights to new users.
According to official sources, the rights and interests of the first owner of the newly purchased car are adjusted to 6 years or 150,000 kilometers of warranty for the whole vehicle; Free battery replacement is no longer a standard car benefit, new users can flexibly choose to charge at home or pay for energy replenishment at the charging station, and NIO will launch flexible charging and swapping service packages in the future.
Taking the NIO ET5 model as an example, the highest price is 328,000 yuan, and the battery leasing scheme is as low as 228,000 yuan, and many consumers call it "real fragrance".
The strength was huge enough that some public opinion complained that Li Bin was "slapped in the face" for breaking his word. You know, at the Shanghai Auto Show just two months ago, Li Bin and Qin Lihong vowed that "NIO will not participate in the price war, and NIO's pricing pursuit is in one step." ”
Perhaps, there is more helplessness and urgency. After all, bread is more practical than decent.
The latest data released by the Passenger Association reflects the fierce competition in the industry. From June 1 to 18, the NEV market retailed 320,000 units, up only 1% y/y and 5% m/m. Since the beginning of this year, the cumulative retail sales in China have reached 2.741 million units, a year-on-year increase of 35%; Passenger car manufacturers sold NEV units to 308,000 units, down 8% y/y and up 7% m/m.
The slowdown in growth has allowed practitioners to collectively "go down". Taking Beijing as an example, when you purchase the M5 Extended Range Edition, you can enjoy up to 20,000 yuan in Chongqing subsidies, 10,000 yuan in replacement subsidies, 13,000-18,000 yuan in price reductions, and other coupons and gift packages worth 7,000 yuan. At the end of May, Wuling Hongguang announced a price reduction, of which the MINI EV Easy Model was priced at 29,800 yuan, the original price was 32,800 yuan, and the entry version fell back to less than 30,000 yuan. Geely opens the June Car Purchase Festival, Haval opens the 618 Energy Festival.....
In the face of this wave of promotion, it seems that it is not difficult to choose between watching coldly or joining the Red Sea for NIO, whose sales have continued to decline. It is not surprising to put down the high-end figure.
In addition to the ET5 layout of 200,000-300,000 yuan, the starting price of the new ES6 has also been reduced to 338,000 yuan, which will compete head-on with the ideal L7 Pro, and if the ES6 chooses battery rental, the lowest price will be reduced to 268,000 yuan, which is a benchmark with the 263,900 yuan Model Y rear-drive version.
At the same time, product iteration accelerates. In late May, the NIO ES6 was officially launched. The NIO ES8 and ET5 Travel Edition will be available in June, and the NIO EC6 will be available in July. Qin Lihong said that NIO is expected to start a "big counteroffensive" in sales in the third quarter of this year.
Obviously, a hand-to-hand fight is inevitable. However, whether it can counterattack as desired still needs to be tested by the market.
03
Power exchange commercialization ambition A big gamble?
OLDCAI
The topic returned to the adjustment of power exchange rights, Li Bin explained that "it was originally a package, and now it can be a single point".
Industry analyst Guo Xing believes that this sentence is a good explanation for NIO's purpose of canceling the binding of rights, from the perspective of consumers, the more bundled items a product, the more difficult it is to sell, because the customer group is limited to a small range. In the future, if NIO wants to reduce the cost of power replacement and stimulate more people to replace electricity, it must quickly expand the stock and reduce the price with scale.
Indeed, looking at the new energy vehicle circle, NIO is a more special one. According to data from the Ministry of Industry and Information Technology, by the end of 2022, a total of 1,973 exchange stations had been built nationwide, with NIO accounting for nearly 70%.
On June 9, at the World Power Battery Conference, Xin Guobin, vice minister of the Ministry of Industry and Information Technology, said that it is necessary to study and compile a battery replacement technology standard system and promote the unification of battery size, power exchange interface, communication protocol and other standards.
According to Yiou Auto news, it is rumored that the relevant departments have entered the inspection process for the national substation standards, and the China Automotive Center has organized relevant reviews, and there are four shortlisted enterprises, and NIO is among them.
In the view of industry analyst Yu Shengmei, the current construction of substation stations is separate, scattered and chaotic characteristics are obvious, after the establishment of the national standard, the industry is expected to enter the fast lane, who has the first-mover advantage, who can be the first to eat the commercial dividend.
According to NIO's official disclosure data, NIO's power exchange service exceeded the 20 million mark, NIO's 0-10 million power exchange took 1,506 days, 10 million-20 million times took 273 days, and the average daily power exchange service provided by the power exchange station exceeded 45,000 times.
With scale and service experience, NIO is undoubtedly holding an incremental new blue ocean, and canceling the binding of power exchange rights and interests is planning a big chess game for commercial monetization.
However, whether it can share the feast as desired, or even use this to turn over the performance, there is still a question mark.
The B-side of scale is the cost. Shen Fei, senior vice president of NIO Energy, said that at least 90% of NIO's 1,000 new replacement stations in 2023 will be third-generation replacement stations.
According to Sohu News, the cost of a second-generation replacement power station is about 3 million yuan. Qin Lihong once said that the cost of the third-generation replacement station and the second-generation is basically the same. It is estimated that if all 1,000 replacement stations are completed, the construction cost alone will require 3 billion, and the operation and maintenance costs are by no means a small number.
You know, in 2022, NIO only built more than 500 new exchange stations, and the sales, general and administrative expenses increased by 3.66 billion yuan that year.
According to Cheyun.com, based on NIO's 1,300 exchange stations, a cumulative number of more than 650,000 vehicles is required to make a profit. As of the end of May, NIO's cumulative delivery of new cars was 333,410 units, and there was still nearly half of the gap. If the number of exchange stations is expanded to more than 2,000, the number of holdings exceeds one million before it is likely to be profitable.
In Li Bin's words, the power exchange mode is a new model, and consumer education is needed in the early stage to let more people understand the benefits of power replacement.
Obviously, NIO's cancellation of the binding of power exchange rights and interests and the expansion of thousands of power exchange stations are also a bet and have to be. Through the impulse of price reduction, to support the basic market of power exchange business. Just looking at the above sales, the challenge is self-evident. If the sales volume does not fight back as hoped, the already stressed financial data may be even more ugly.
In addition, there are some uncertainties to guard against. For example, the announcement of the national standard for power exchange has been delayed, resulting in NIO's capital chain continuing to bear risks. Or NIO is not selected into the national standard, then the replacement station transformation fee will also be a large amount.
The enticing vision is also a big gamble.
04
Sink to "grab" the market Far water and near thirst
OLDCAI
In the end, it is the relationship between source and flow. The number of orders paid for automotive products and market influence are the keys to the success or failure of everything.
As we all know, NIO has always positioned itself at the high-end, and the first mass-produced SUV model, the ES8, was priced as high as 448,000 yuan when it was first launched; it locked its competitors as BBA.
However, how long this high-end style can last is a question mark.
Subsidies withdrawn, price wars intensify, new brands are entering, traditional fuel vehicles are awakening, and new energy vehicle companies seem to be blooming, but they are actually cooking oil. NIO carries the weight forward, and challenges come from all directions.
Since December 2022, Tesla has sunk and lowered prices again, undoubtedly tightening the price "strings" of all new forces. In October 2022, the sales of Nezha, Wenjie, Extreme Krypton and other post-wave sales all exceeded NIO. In particular, the latter two have sprung up in the mid-to-high-end market, causing a lot of pressure on NIO.
Since August 2022, Zeekr has become the sales champion of Chinese brand pure electric models priced at more than 300,000 yuan for three consecutive months. A total of 71,941 units were delivered throughout the year. In May 2023, Zeekr delivered 8,678 new vehicles, a year-on-year increase of 100% and a month-on-month increase of 7.1%, with a cumulative delivery of 109961 units, ranking the champion of China's luxury pure electric brand delivery. Extreme Krypton 001 even delivered 6,223 units, winning the sales of more than 300,000 pure electric models.
In addition to upgrading the products of new forces and improving the cost performance, the awakening and catching up of traditional car companies such as FAW, Dongfeng, SAIC, Changan, GAC, and Geely can also be called surging, all of which have launched their own high-end new energy brands, and the price war has become more decisive.
Taking BYD as an example, the ultimate cost performance, comprehensive product matrix, superimposed capacity advantages, and self-developed cost advantages of the three core parts make it stand out.
Industry analyst Liu Ruiling believes that Tesla's rapid sinking is a typical scale effect play. Quickly make profits with brand, channel, technology and cost advantages, and build high barriers. Extreme Krypton and Qianjie also used cost-effective and high-end to break through the food sharing market in product upgrades, which made NIO's high-end layout encounter challenges.
Zhang Yi, chief analyst of iMedia Consulting, said that the relatively low sales volume makes NIO's bargaining power not strong, which largely hinders the further expansion of scale. From the perspective of its vehicle costs, marketing costs, and market competition, whether in 2024 or 2025, it is difficult to make a profit, and Li Bin's confidence may not be enough.
Indeed, the real volume is still in the low-end market. The high-end market is divided and difficult to produce, and NIO wants to achieve scale effects and fight for profits through high-end positioning, and the difficulty can be imagined.
Fortunately, NIO is already sinking. In addition to the above-mentioned price reduction and new promotion, it also subdivides low-end brands.
According to the enterprise investigation, on May 12, 2023, Shanghai NIO Automobile Co., Ltd. applied for the registration of a number of "NIO Firefly", "Firefly NIO" and "NIO Firefly" trademarks.
According to CaiLian News Agency, NIO's new plant will be located in Anhui Chuzhou Economic Development Zone, and will put into production NIO's third brand product "Firefly", which is expected to be delivered as soon as 2025.
In contrast, Alps is moving faster, and Li Bin said in the first quarter of 2023 earnings call that Alps will start deliveries at the right time in the second half of 2024 as originally planned.
It is reported that "Alps" focuses on the 200,000-300,000 price market, and "Firefly" further explores the 100,000-200,000 market. At that time, Firefly, Alps and NIO will complete the full coverage of the low, medium and high-end markets.
Li Bin said that the shipment expectation set for Alps is as high as 50,000 vehicles / month, which is more than several times the current monthly sales of NIO, and Alps will also share NIO's replacement power station.
Obviously, NIO is also holding back a big move, putting down its high-end body to play the cost-effective card, so as to reverse sales and regain the glory of a brother.
However, from the above time, some distant waters are difficult to quench near thirst. At least in 2023, NIO will still be pale in the low-end market, which also means that it is difficult for its sales to counterattack in the short term.
Don't forget that the market and competitors are not idle. For example, Xpeng Motors, 72 hours after the Xpeng G6 opened pre-sale, more than 25,000 people booked users. At the same time, it shouted that the third quarter will usher in the first sales inflection point after strategic and organizational adjustments.
05
From 1 to 100
Fighting a tough battle, tying a hard village, you and I are dark horses
OLDCAI
Of course, true warriors often face challenges head-on. Being able to think of danger in times of peace, self-denial, and self-renewal represents a kind of hope in itself.
Focusing on NIO, from the price reduction of the whole series, product iteration, to the commercialization of battery replacement, to the sinking of the brand and the enrichment of the matrix, the fighting spirit of not admitting defeat, the strategic determination to fight a tough battle, and the practical resilience of finding opportunities in a crisis are worthy of admiration.
In the view of rhodium finance, after years of market experience, unremitting technical investment and industrial chain cultivation, NIO, Ideal and Xiaopeng have basically formed the ability of platform car manufacturing, and have their own advantages in intelligent driving systems, sensors, chips, algorithms and other aspects. After completing the advancement from 0 to 1, and from 1 to 100, the flywheel effect often shows an accelerated state, which is why Wei Xiaoli's new models continue to come out, product iteration accelerates, and the brand matrix is increasingly full.
From this point of view alone, you chase me to catch up, and the tug-of-war has just begun. The rivers and lakes are still undecided, and the lead and lag behind are all dynamic.
But to start a new game in the changing situation, this period of turbulent reshuffle is also a period of cruel clearance, and it is a real watershed in strength. The so-called slow step by step, a turn is an era, especially the precision of the company's practical operation and strategic forward-looking. Compared with NIO and Li Bin, who have temporarily shown their decline, there is not much possibility of trial and error, and you are cautious and looking for opportunities in danger.
The more setbacks, the more courageous the true heroes, the courage to have a new life after knowing shame, 2023 is undoubtedly a critical year.
This article is the original of Rhodium Cai