Li Bin still touched Musk

In November 2022, in an internal speech for NIO's 8th anniversary held at the Weilai Innovation Center in Caohejing, Shanghai, Li Bin explained to employees, "Others think that NIO invests a lot and spends a lot of money, but our money is spent where it should be spent... As long as wages can be paid, it is easy not to lay off people or cut businesses. ”

Compared with simple and crude layoffs, Li Bin attaches more importance to the improvement of systematic efficiency and believes in the power of "1+1>2". In his view, instead of forcing 80% of people to do 100% of the work, it is better to drive 100% of the people to do 150% of the work.

A year later, Li Bin took the initiative to break that promise. In an all-staff letter sent on the evening of November 3, Li Bin announced a 10% layoff, which started NIO's actions to further reduce costs and improve efficiency.

According to the financial report data, by the end of 2022, NIO had a total of 26,763 employees, and the 10% layoff rate means that nearly 2,700 people will be affected.

Previously, under Li Bin's promise not to lay off people easily, when Li Li and Xiaopeng were limited by the pressure of the external environment and contracted their establishment in 2022, NIO continued to expand its recruitment. This has also helped NIO become the car company with the largest number of employees among the new EV makers, compared to Li Auto's total number of employees at 19,396 and Xpeng's 15,829 at the end of 2022.

The sheer size of the staff has also directly led to an increase in NIO's sales, general and administrative expenses. In the second quarter of this year, NIO's related expenses in this regard were 2.86 billion yuan, 550 million yuan higher than Ideal, and nearly 1.3 billion yuan higher than Xiaopeng.

The move of being forced to bow to reality due to external pressure has already been staged on Li Bin once this year.

In the face of the price war started by Tesla, Li Bin has repeatedly emphasized on different occasions that NIO will not reduce prices. But in June this year, Li Bin still untied the battery swap rights from the price of the whole vehicle, and reduced the price of all Weilai models by 30,000 yuan.

With the help of price reduction promotions, NIO's sales finally returned to the 10,000 club in June, and exceeded 20,000 units in July and August. But along with the surge in sales, NIO has further expanded its losses. In the second quarter of this year, NIO's net loss was 6.06 billion yuan, an increase of 119.6% year-on-year and 27.8% quarter-on-quarter. As of the first half of this year, NIO's net loss has exceeded 10 billion yuan, reaching 10.93 billion yuan, an increase of 139.1% year-on-year. In contrast, Xiaopeng had a net loss of 5.14 billion yuan in the first half of the year, and a net profit of 3.24 billion yuan in the first half of the year.

According to the loss of up to 6 billion yuan per quarter, NIO's cash reserves of 31.5 billion yuan are only enough to last for more than a year. Li Bin, who wants to continue to stay on the table of new energy vehicles, is also time to use the knife on the team to achieve the purpose of reducing costs and improving efficiency.

What's more, Li Bin also predicted in advance that he hoped that NIO would reach breakeven in the fourth quarter of this year and achieve the goal of achieving full-year profitability in 2024. In order to successfully reach the end of profitability, layoffs and cost reduction may have become a means that Li Bin has to make at the moment.

What's worse is that the former "Wei Xiaoli", both in terms of sales volume and market value, has been replaced by "Li Xiaowei". In the latest updated October sales, Ideal, Xpeng, and NIO sold 40,422 units, 20,002 units, and 16,074 units, respectively. As of the close of Hong Kong stocks on November 3, the market capitalization of Ideal, Xiaopeng and Weilai was HK $278.7 billion, HK $111.9 billion and HK $108.8 billion respectively.

The weaker-than-expected car sales performance has exacerbated the pace of NIO's losses. In order to maintain the normal rhythm of the company's operation and survive the final moments of 2024 and 2025, which Li Bin said, NIO is still looking for external financing opportunities. In June this year, NIO received a strategic investment of about US$1.1 billion (about RMB 8 billion) from CYVH Holding, an investment institution in Abu Dhabi, United Arab Emirates.

Li Bin, who has experienced the life and death crisis in 2019, regards the company's operation in 2023 as particularly important, "If the work is not effective, 2024 may become 2019 again." ”

A

Whenever a crisis comes, it has become a routine operation for car companies to take employees under the knife. Before Li Bin, Musk was already familiar with the operation of "recruiting first and then cutting".

In June 2022, Musk announced in an email that Tesla would cut 10% of its jobs because Tesla "has seen overstaffing in many areas."

At that time, due to the impact of supply chain price increases and the epidemic, Tesla's domestic sales in April 2022 were only 1,512 units, a year-on-year decrease of 94.15% and a month-on-month decrease of 97.70%.

Before announcing the layoffs, Tesla had experienced a round of large-scale expansion of its workforce in order to quickly ramp up production capacity. According to Tesla's annual report, as of December 31, 2021, Tesla and its subsidiaries had 99,290 full-time employees worldwide, compared to 70,757 at the end of 2020. This means that Tesla hired a total of 28,533 employees in 2021, and the number of employees skyrocketed by 40.3%.

Tesla is not the only NEV company to lay off employees in 2022. The domestic ideal and Xiaopeng also began to optimize the team's "winter" mode at that time, and the news of the contract for fresh graduates was successively exposed.

In 2021, new energy vehicle companies are still engaged in a "war for talents", when Xiaopeng offered fresh graduates a pre-tax salary of 12-16k, a starting salary of 13, and a maximum salary of 15; NIO's year-end bonus is between 2~50,000 yuan, and all employees, including fresh graduates, hold shares.

Under the large-scale expansion, the number of Li Auto employees increased from 4,181 at the end of 2020 to 11,901 at the end of 2021; The number of XPeng employees has skyrocketed from 5,084 at the end of 2020 to 13,978.

NIO, the only car company that did not report large-scale layoffs at the time, is still hiring people against the trend, with its total number of employees growing from 7,763 at the end of 2020 to 15,204 at the end of 2021, and further doubling to 26,763 in 2022.

After more than a year of strength, in the face of the gradually increasing loss figures, Li Bin also had to start touching Musk to cross the river.

B

Before the layoffs, NIO had already launched a cost reduction plan in many aspects.

In September this year, "Late Auto" broke the news that in addition to the main brand of NIO, in addition to adhering to the direct sales model, it is trying to introduce a dealer model into its sub-brand Alps to share the cost of store construction and operation.

This is not the first time NIO has tried to open up franchises. In 2019, when the capital chain was broken, in order to save costs, the main brand of NIO launched a co-creation partner plan, which briefly tested the water with the car owner as a franchisee, that is, the car owner funded the construction of the NIO space, and NIO dispatched personnel to operate it on its behalf.

At the end of 2020, when NIO survived the crisis and ushered in a new life, Li Bin stopped the above plan, and all the NIO spaces funded by car owners were taken over as direct sales.

In addition to channel cost reduction, NIO has also been reducing manufacturing costs with the help of self-developed and localized substitution of parts: in LiDAR, NIO has successfully reduced the cost of LiDAR to several hundred dollars a piece by investing in Tudatong. According to Qin Lihong, president of NIO, the manufacturing cost of NIO bicycles has dropped by 60% in the past four years; In the chassis domain controller, through the self-developed program, Li Bin once revealed that it can save 2,000 yuan for a single car.

In addition, Li Bin also picks out the cost of the details involving the administrative office. In an internal speech on the eighth anniversary in November last year, Li Bin disclosed a detail, after seeing that his and Qin Lihong's office was more than 20 square meters, "Why do I say I have such a big office?" We're going to convert it into a conference room and find a small office that we share. ”

Within NIO, from Li Bin to the cleaners, business trips and hotel stays are all standard, and the company does not reimburse business class. Qin Lihong, who doesn't sleep well, needs to pay hundreds of thousands of yuan to subsidize travel every year in order to take business class on a business trip.

In the all-staff letter announcing the 10% layoff, Li Bin deliberately emphasized the need to "improve resource efficiency, postpone and reduce project investment that cannot improve the company's financial performance within three years." ”

The NIO mobile phone project, which was just unveiled in September this year, will undoubtedly be one of the targets of Li Bin's reduction plan. According to Li Bin's statement in an interview, when NIO has 5 million car owners, and half of them are willing to buy NIO mobile phones, NIO is likely to make money on mobile phones.

As of October this year, NIO's cumulative sales were less than 500,000 units, and it is almost an impossible task to accumulate 5 million car owners within three years.

As early as April last year, when Li Bin confirmed that he would launch a Weilai mobile phone, the alphabet list had analyzed and pointed out in the article "To be a fan mobile phone, Li Bin will only repeat Luo Yonghao's mistakes" that if he only wants to make mobile phones for Weilai car owners, Li Bin will not succeed. Throughout history, most of the companies that position themselves small and beautiful, or do not regard mobile phones as core products, have failed, such as Hammer and Meizu, and the latter such as Lenovo and Gree.

C

In addition to shrinking investment in edge business, Li Bin also deliberately emphasized in his internal letter that it is necessary to "ensure long-term investment in core and key technologies and maintain the leading edge of technology and products". The increasingly fierce competition in the core technology of autonomous driving has also forced Li Bin to use limited resources on the cutting edge.

Since the beginning of this year, domestic car companies are engaged in a fierce competition around the navigation assisted driving of urban NOA (Navigate on Autopilot): Huawei announced that it will promote urban NOA to 45 cities, Xpeng to 50, and Ideal has shouted a radical goal of 100 cities.

At the internal strategy meeting at the end of September, intelligent driving was mentioned to an unprecedented height by a group of executives of Ideal. Li Xiang even self-reflected at the strategy meeting, believing that the investment in intelligent driving was too late, and it should be fully invested half a year in advance, that is, from the middle of last year, rather than the beginning of this year.

In the face of the battle for NOA cities between Huawei, Li and Xiaopeng, NIO seems to be a beat slower. In the 2019 capital chain crisis, NIO once suspended the research and development of intelligent driving systems. By November 2020, NIO restarted its self-development of intelligent driving. As for the Kaesong plan, NIO only gave a vague statement that it will promote the city's NOA to dozens of cities in the second half of the year.

In order to speed up the catch-up, Li Bin has internally increased the priority of the city's NOA, according to the "LatePost" news, Li Bin even lowered the priority of the low-end brand Firefly project for a time, "The senior management believes that it is difficult to carry out two heavyweight projects at the same time." ”

It's not just new players that are paying attention to autonomous driving. Traditional car companies are also increasing their resource investment. In June this year, Han Bing, head of BYD's intelligent driving business, said that the navigation assistance driving function that does not rely on high-precision maps will be an opportunity for BYD to overtake in high-end intelligent driving.

Two months after Han Bing's words, in August this year, some media broke the news that BYD had given up its autonomous driving cooperation agreement with Baidu and turned to internal independent development.

The more direct factor that prompted many car companies to pay special attention to the implementation of urban NOA capabilities this year comes from the real feedback from real car buyers.

Xpeng G6

This year's popular models have the blessing of high-end intelligent driving capabilities: Xpeng G6, which was delivered in July, has a maximum proportion of 70% of users choosing the high-end version of intelligent driving; The new M7 was launched and delivered in September, and the proportion of users choosing the high-end intelligent driving installation package was also maintained at about 70%.

For NIO, which is also accelerating the implementation of high-end intelligent driving capabilities, Li Bin also needs to solve the test of transforming technology into sales.

At a "face-to-face" meeting this year, an employee asked: "What should I do if the company's sales are sluggish, the stock price has been cut in half, and the money earned from working every day is not enough to lose money in the stock market?" Ask Brother Bin to give me strength! ”

Li Bin's response was, "If sales increase, everything will turn around." ”

At the 2022 annual financial results meeting, Li Bin looked forward to the monthly sales performance that NIO is expected to achieve in the new year: ET5, ET5T, and ES6 are the main sales, and the synthetic target sales volume is 20,000 units per month; The ET7, ES7 and ES8 will sell 2,000 to 4,000 units per month each, and the combined sales target is 8,000 to 10,000 units per month. The niche EC7 and EC6 models are about 1,000 to 2,000 units per month. Through the three product portfolios, NIO will achieve its goal of selling 30,000 vehicles per month.

Whether the injection of autonomous driving capabilities can help Li Bin touch the threshold of 30,000 vehicles as soon as possible is still full of unknowns.

Resources:

"Li Bin talked about these 32 key issues in 3 hours: Weilai will definitely be ridiculed by the group when making mobile phones" Tencent Technology

"Li Bin's internal speech: NIO is not qualified to wait and see, let alone shrink" Auto later

"Li Auto Strategy Meeting: Avoid Huawei's Edge and Plan 2028" 36 Krypton

"Stealing Huawei, Li Bin is a Step Slow" Lunch Finance