An internal letter from Li Bin confirmed that the news of NIO's layoffs was true, and the layoffs were 10%.
It was sad news, but NIO's share price rose in response, which is a good thing in the eyes of the capital market.
NIO has built the most successful high-end brand among Chinese car companies, and it is the success of NIO that has given more independent car companies confidence in the market segment of more than 400,000 people, and NIO's "user-oriented enterprise" and super service experience are unique innovations in the world.
In the economic contraction period of pervasive price wars and cold investment, price and cost have become the core competitiveness of car companies to tide over the difficulties, and even leading brands like NIO, which have been holding high and high, have had to lay off employees.
Whether it is the capital market, industry insiders or ordinary shareholders who eat melons, almost all think that NIO should have been like this a long time ago, Li Bin's pattern is too big, Weilai's layout is too grand, and the cost is too high has always been his Achilles' heel, and now he finally knows that it has changed. Recently, the recent incidents of NIO car owners using free battery swaps to pick wool make people sigh that the quality of some car owners is really not worthy of NIO's spoiling of car owners.
According to the financial report, NIO had a net loss of 10.9 billion yuan in the first half of the year, a year-on-year increase of 139%. From its listing in 2018 to 2022, NIO has accumulated a net loss of more than 58 billion yuan in five years. I don't know how much wool is in the loss.
NIO is good at everything, but it is too money-burning.
Spending money is a science, and saving money is also a science, some people say that if Li Bin can save money like Zhu Jiangming, Weilai will be invincible.
In the smart electric vehicle track, Tesla and BYD are the masters of cost control, and Leap is the next rising star. "Smart electric vehicles also abide by Moore's Law, and after 10 years, 50,000 yuan can buy a smart electric car. During the China Electric Vehicle 100 Forum (2023), Zhu Jiangming, founder, chairman and CEO of Leapmotor, once caused controversy.
It should be noted that Zhu Jiangming is an engineer, and he was the CTO of Dahua before founding Leap, and he does not have the habit of running trains with his mouth.
The cost confidence of Leapmotor comes from the strategy of "global self-development + vertical integration", which controls the self-manufacturing and supply chain system of core value components such as vehicles, electric vehicles, controllers, and chips in its own hands, firmly controls the pricing power, and can independently and continuously OTA, and the cost is controllable in the whole life cycle.
Leap started by relying on the T03, a small car with a range of 400 kilometers and a price of 60,000 or 70,000 yuan, which is quite competitive in 2020. The latest example is that on September 20, Leapmotor launched the C01 and C11 extended range versions, C01 is a medium and large sedan with a length of more than 5 meters, with a pure electric range of up to 316 kilometers and a price of only 145,800-169,800 yuan, and C11 is a medium-sized SUV with a length of more than 4.7 meters, with a maximum pure electric range of 300 kilometers and a price range of 149,800-175,800 yuan.
These two cars have the longest pure electric range among the plug-in hybrid and extended range models, and the price has entered the range of traditional cars of the same level of independent brands. The pure electric version of these products has also achieved the same price of oil and electricity, such as the C11 pure electric version, with a cruising range of 600+, equipped with 22 intelligent driving assistance, 8155 chip triple screen cockpit and other configurations, the price range is still 15-200,000 yuan, a proper "price butcher".
You know, because of the battery cost, mileage requirements and other reasons, smart electric vehicles are difficult to compete with traditional cars below 200,000 yuan, Leap not only brought the price of pure electric cars to less than 200,000 yuan, but also increased the pure electric range of the same price to more than 300 kilometers in history.
In the third quarter of 2023 financial report disclosed by Leap in October, the company's gross profit margin turned positive for the first time during the period, at 1.2%, achieving the goal of positive gross profit ahead of schedule. The single-quarter sales revenue was 5.656 billion, a year-on-year increase of 31.9%, and the single-quarter sales volume was 44,325 units, an increase of 24.5% year-on-year, hitting a new quarterly high, and the net cash generated by operating activities continued to flow in.
In the first half of 2022, the second half of 2022, and the first half of 2023, the gross profit margin of Leaprun will be -26%, -8.1%, and -5.9% respectively, which shows the trajectory of Leaprun in operation in the past two years, with gross profit margin continuing to increase and profitability continuing to increase. The positive gross profit means that the company has begun to have the ability to self-hematopoiesis and enters the next new stage of development.
Why does Leaprun achieve product "price butcher" and gross profit margin at the same time?
The core cheat is "global self-research + vertical integration".
To what extent is self-developed and vertical?
The core system and components of Leapmotor are divided into three modes: one is outsourcing, and the large components are only battery cells, interior and exterior decorations, the second is "self-research + outsourcing production", mainly the chassis, automotive electrical and electrical parts, and the third is "self-development + self-production", covering all other core components.
Global self-development is a unique term of Leaprun, which is different from the full-stack self-development claimed by other car companies, according to the definition of Leaprun, the general car is assembled from more than 20,000 parts, including hardware + software, and only hardware + software can be called global self-development.
Compared with full-stack self-development, full-scale self-development can achieve greater freedom in functional design, so as to achieve a balance between functional diversity, stability and vehicle cost. Compared with full-stack self-development, it is more difficult to develop in the whole domain, so there are very few car companies that have achieved it at present. Looking at the global new energy vehicle companies, only BYD, Tesla, and Leap have the ability to develop their own products in the whole field.
Leapmotor is able to develop itself in the whole field because of the increasingly strong electronic and electrical attributes of smart electric vehicles, and Dahua Co., Ltd., the parent company of Leaprun, has more than 20 years of accumulation in the field of intelligent IoT. From the perspective of Leaprun, a smart electric vehicle is a large-scale electronic and electrical product, which can integrate various sensors and ECU orderly systems in the car through a variety of communication methods and wiring harnesses to complete the sharing and matching of hardware, computing power, and functions. At present, the electronic part of the vehicle accounts for 47%-65% of the cost, and this advantage of Leapmotor further reduces the cost.
As one of the top 2 companies in the global security field, Dahua's various cameras and the ECU and software system behind them can empower Leapmotor. This self-developed and self-made has been extended to components and systems such as vehicle lighting.
In addition to "global self-research + vertical integration", Zhu Jiangming is an engineer, understands technology and products, and personally established Dahua's supply chain system in the early days of Dahua's establishment, and his understanding of the supply chain is much deeper than that of the founder of the new force from cross-border car manufacturing and marketing.
Zhu Jiangming put forward unique ideas and requirements from his perspective and understanding in the process of technology development such as CTC battery chassis integration and four-leaf clover central integrated electronic and electrical architecture.
The supply chain system of global self-development, vertical integration, and the first-in-command, coupled with the downward trend in upstream lithium battery prices and the implementation of internal cost reduction measures, have created a large space for cost optimization. Zhu Jiangming recently said that from September last year to the present, the cost of materials for a single vehicle has dropped by more than 3,000 yuan, and the manufacturing cost of a single vehicle has dropped by more than 1,000 yuan. Judging from the financial report, the cost of a single vehicle that directly helped Leapmotor was reduced to 126,000 yuan, a year-on-year decrease of 4 percentage points.
From 2019 to 2022, the R&D investment will be 358 million yuan, 289 million yuan, 740 million yuan, and 1.411 billion yuan respectively, with a total of about 3 billion yuan in four years. In the first three quarters of 2023, the cumulative R&D investment will be 1.297 billion yuan, with an average monthly R&D investment of 144 million yuan, which is only 1/7 of NIO's average monthly investment of 1 billion yuan. It is difficult to measure the technical achievements in numerical proportions, but it is an indisputable fact that the capital utilization rate of Leap is higher.
This is especially true in terms of the total amount of financing, public information shows that before the IPO, Leapmotor has reached a total of 7 rounds of financing, with a total financing amount of only about 7 billion yuan, plus 6.279 billion Hong Kong dollars raised by the IPO, which is much lower than other new forces, but Leapmotor has achieved that its technology has been recognized by the industry, and with the rise in sales, the business indicators are becoming healthier and healthier, and the gross profit margin turned positive for the first time in the third quarter, and the sales volume in October ranked third among the new car-making forces, moving forward step by step.
2023 will not be a friendly year for new EV manufacturers and all car companies, as the price war has put increasing pressure on the entire industry, and the focus of competition has shifted from product innovation and technological innovation capabilities to cost control capabilities. Under heavy pressure, many new power companies have exposed news such as layoffs and anti-corruption in the supply chain.
The more times like this, the more prominent the advantages of the "global self-development + vertical integration" model are. NIO's innovation in the high-end field is unparalleled, and Li Bin's humble and gentlemanly character is also a clear stream of new forces.