With price cuts, layoffs, and foreign aid, can NIO turn the tide again?
Reporter Yan Liting
Edited by Gao Yulei
You can't step into the same river twice, but NIO can.
In the second half of 2023, after two consecutive months of declining sales, slowing revenue growth, and a sharp drop in stock prices, NIO finally began a difficult self-rescue. This kind of experience and feelings, the two founders Li Bin and Qin Lihong should be no stranger, in 2019 the company fell into the quagmire of the same poor management.
On November 3, NIO announced the start of layoffs, although Li Bin had said at the previous Tech Day that he would not lay off employees, but for NIO in urgent need of saving resources and improving efficiency, this is the best way. On November 21, NIO announced in-depth cooperation with Changan Automobile in the construction and sharing of battery swap networks and the research and development of battery swap models.
Li Bin, chairman of NIO, also mentioned at the exchange meeting with employees on November 20 that NIO is still in the process of negotiating with four or five brands in terms of cooperation with battery swap stations. NIO's current scale is not enough to absorb the service capacity provided by 2,300 battery swap stations, and they still do not see the possibility of rapid sales growth in the short term. How to revitalize battery swap assets has obviously become another must-answer question for NIO.
In the recent "Golden September and Silver October" sales season, new forces such as Ideal, Wenjie and Xpeng achieved growth, but NIO's sales declined for two consecutive months, and it did not achieve the set goal of monthly sales of 30,000 units.
In an internal letter announcing the layoff plan, Li Bin said that the next two years will be the most competitive stage in the industry, and NIO must optimize its organization and improve execution efficiency. He also tried to outline the decision-making context of the layoffs with a set of data, and emphasized that it was a difficult decision that the management took two months, more than 30 meetings, and finally took two weeks to make.
Organizational optimization, layoffs and cost reductions, and project contraction should be good news, but the capital market obviously has little confidence in NIO. On November 6, the first trading day after NIO confirmed its layoffs, its U.S. stock price fell 3.16% and hit a three-year low on November 13.
In another week, it will be the 9th anniversary of NIO, but the overall atmosphere seems to be back to the near-death state of 4 years ago. On November 17, Qin Lihong, president of NIO, broke his silence at the Guangzhou Auto Show, saying that the current market is still full of opportunities, "NIO will not go out of business, and it is unlikely to go out of business." ”
But there is no escaping the fact that when life and death are put on the table, the company is already very dangerous.
Missed the critical outbreak period, and NIO's sales fell behind
From a fundamental point of view, NIO, which was once regarded as a benchmark for new forces by the outside world, has long lost its former sharpness.
Reflected in sales, since the start of deliveries of the first model ES8 in June 2018, NIO's annual delivery scale has fallen off a cliff after entering the 100,000 mark. Looking back, 2020 was the fastest time for NIO to expand its scale, with a total delivery of nearly 44,000 vehicles this year, with a year-on-year growth rate of 113%.
Since 2021, NIO has successively broken out some capacity problems. Among them, in March of the same year, NIO's Hefei F1 factory stopped production for the first time due to a lack of cores, and half a year later, it was shut down again on the grounds of restructuring and production line upgrades, and the two times were suspended for nearly 20 days. In the second half of 2021, NIO's monthly deliveries began to fluctuate violently, and in July of the same year, it was overtaken by Li and Xpeng for the first time.
However, compared with peers such as Li and Xpeng, NIO is superior in the number of models, and with the comprehensive efforts of ES6, EC6, and ES8, NIO returned to the state of monthly sales of 10,000 units at the end of 2021. In 2021, NIO delivered 91,400 new vehicles, failing to meet the set target of 100,000 units for the first time, but the delivery growth rate remained at a high level of 109%.
The real inflection point came in 2022. This year is a big year for NIO's product replacement, the three new cars of the second-generation platform, ET7, ET5, and ES7 are ready to be launched in a centralized manner, and the previous preparations for the production end have been basically in place, among them, NIO's F1 factory plans to increase production to 60JPH in the middle of the year (20,000 units per month in two shifts), and the F2 factory with a planned production capacity of 60JPH is also planned to be put into production in Q3.
A sudden epidemic made NIO, which was ready to go on a big job, press the pause button. On April 9, 2022, NIO announced in the user community that its F1 factory in Hefei had been forced to suspend production due to the supply chain crisis caused by the pandemic. At that time, NIO's first second-generation model, the ET7, had just started delivery less than 2 weeks, and the official said that the car used a lot of new parts, and it was difficult to stock up in the early stage.
It is worth noting that long before the announcement of the suspension of production, NIO's supply chain was already showing signs of loosening. At the beginning of February, core chip manufacturers such as Bosch and UMC in Suzhou stopped production one after another due to the epidemic, among them, the day after UMC issued an announcement on the suspension of production, Qin Lihong said at an event, "I don't count the delivery target this year, the supply chain has the final say, and the output is as much as it is delivered." ”
The results in the first half of 2022 were poor, with NIO delivering less than 10,000 vehicles in five months, dropping to 5,074 units in April. Originally, the market expected that with the recovery of production capacity and the entry of the ET5 and ES7 new models into the market, NIO would usher in a violent rebound in Q3, but this hope was quickly disappointed. As soon as it entered July, NIO reported that the ET7 would reduce production by thousands due to the shortage of die castings.
Subsequently, Li Bin confirmed at the Q2 performance meeting in September that the second-generation model of NIO adopts integrated hollow casting aluminum technology, but the initial yield rate of integrated die-casting is not as expected, and this problem not only affects the ET7, but also affects the delivery of ET5 and ES7. In Q3 2022, NIO delivered a total of 2,514 ET5 and ES7 units, and the total delivery volume in a single quarter only increased by 26% month-on-month.
According to Li Bin's expectations, as a high-volume model of NIO, the delivery volume of ET5 will increase month by month in Q4, and achieve a monthly delivery volume of more than 10,000 by the end of the year. However, NIO got off to a bad start in Q4, with only 1,030 ET5 units actually delivered in October. At the beginning of November, Li Bin explained at the Q3 results meeting that the ET5 used a new EDS electric drive plant, which dragged down the production capacity of about 3,000 vehicles.
As a result, ET5, which has been on the market for nearly a year, is facing the problem of backlog of orders. Judging from the user's feelings, NIO's delivery has always been a big problem. From the perspective of production capacity, NIO has stopped production five times intermittently since it was first revealed in March 2021, and some analysts are even worried that this may evolve into a long-term structural problem.
It is undeniable that the epidemic is an important factor, but the core is still NIO's product strategy. First of all, Li Bin has always hoped to increase product sales through platform-based R&D, but compared with single-point breakthroughs, the efficiency in the early stage of platformization is low. Secondly, due to the high-end positioning of the model, NIO has been trying to equip it with the latest software and hardware to improve its product strength, which has also led to NIO becoming more dependent on the evolution of the supply chain.
For example, the EDS plant in ET5 is a typical example. The advantage of this factory is that it has a high degree of automation, and only needs more than 30 people to support the entire production capacity, but the initial production capacity is not stable, and NIO's solution is to build another EDS production line. According to Li Bin's prediction, this production line will complete the ramp-up by the end of November, and drive NIO to hit the monthly sales of 20,000 units in December.
Once again, the results disappointed the market. In Q4 2022, the single-quarter deliveries of ET5 have just exceeded 10,000, with the highest monthly deliveries of less than 7,600 units, while the total deliveries of NIO's 6 models are 40,052 units. Among them, the delivery volume in December reached a new high of 15,815 units, but it is also far from the target of 20,000 units. Later facts proved that NIO was not short of a month, but more than half a year.
It was not until July this year that NIO achieved its goal of selling 20,000 units per month, among which the first model to break 10,000 units in a single month was not the ET5, but the new ES6. Up to now, even after the launch of the sister model ET5T, the two models of the ET5 series have never achieved monthly sales of more than 10,000 units. Behind this poor outcome, capacity bottlenecks are obvious, but the impact of quality problems should not be underestimated.
In fact, the ET5 is not NIO's first problematic model. Since its delivery in March 2022, NIO ET7 has been frequently exposed to many problems such as vehicle failure, steering failure, abnormal noise in the car, and bulging seats. In the first half of 2022, NIO ET7 publicly broke out more than 7 nesting incidents. However, as with the aforementioned response to the outbreak, NIO has once again been slow to act.
Many problems reappeared after the delivery of the ET5, such as car engine problems, steering wheel failure, abnormal noise in the car, etc. In addition, the NIO ET5 also broke out a lot of new problems, such as the camera was broken centrally, and the door handle was washed by the car wash. At the beginning of January this year, three months after the start of delivery, NIO finally announced a recall of nearly 1,000 vehicles, citing the risk of short circuit in the event of a frontal collision.
In this regard, Qin Lihong reflected at a media communication conference at the end of 2022 that NIO underestimated many issues such as the epidemic, there was also a gap between the past strategic concept and the implementation situation, and globalization also encountered many obstacles other than economic factors. He also said that there should be no luck at any time, and if it is not a fluke, NIO can avoid many low-level mistakes.
Entrepreneurship is an extreme race of life and death, and the car with a very high bargaining chip is even more so, often some seemingly very low-level mistakes determine the fate of the key intersection. In 2022, at the time of the transition between the old and the new, NIO finally failed to burst its potential, with an actual annual delivery volume of 122,500, only 82% of the performance target, and the delivery growth rate plummeted to 34%, underperforming the market for the first time.
How can NIO recover the hesitation during the change of formation?
Building a car is a scale game, and 100,000 units is a key threshold on the road to scale evolution.
Tesla took the lead in making a positive demonstration. On the eve of mass production of the first Volkswagen model, the Model 3, Tesla also experienced a hellish production capacity bottleneck, but after the beginning of 2017, the 100,000 delivery threshold was also broken. In 2020, with the entry of the Model Y into the market, Tesla's annual delivery scale expanded to 500,000 units, and in 2022, it further bucked the trend to 1.31 million units.
In 2022, the annual delivery volume of Li Auto will be 133,200 units, a year-on-year increase of 47%, which is comparable to NIO in terms of scale and growth rate, but the latter's new cars L9, L8, and L7 have quickly climbed to more than 10,000 units after starting delivery, and the cumulative delivery volume in the first 10 months of this year has exceeded 280,000 units.
According to the current progress, Li Auto will not only successfully cross the threshold of 100,000 units, but also achieve a positive evolution with an annual output of 300,000 units. On August 8, Li Xiang, the founder of Li Auto, said at the Q2 performance meeting that in the first half of this year, Li Auto was not greatly affected by the price war, and was confident that it would exceed the annual delivery target of 300,000 vehicles and achieve 100 billion revenues.
The benefit of such an evolution is to make a profit in advance. Compared with Tesla, which only began to make a profit when the annual delivery scale was about 500,000 vehicles, the ideal of focusing on the high-end market has compressed the profit scale to 100,000 vehicles per year. Since Q4 last year, Ideal has continued to make profits. In the first three quarters of this year, Li Auto's cumulative net profit exceeded 6 billion yuan, almost equaling the losses in the past five years.
The mistake at the key intersection led NIO to a completely different situation. In the first half of this year, NIO was still mired in product replacement, with cumulative deliveries only slightly increasing by 7% year-on-year to 54,600 units. Due to the fierce market competition, NIO is almost in a situation where there are no cars to sell, and in Q2 this year, NIO's single-quarter delivery volume was only 23,500 units, a year-on-year decrease of 6% and a month-on-month decrease of 24%.
It's hard to keep costs down with such a scale of delivery. In Q2 this year, NIO's cost of sales was 8.68 billion yuan, down only 3% year-on-year, and in the same period, the quarterly average price of battery-grade lithium carbonate, which is a key cost item for electric vehicles, was 254,600 yuan, down 46% year-on-year. Previously, Li Bin had clearly pointed out that for every 100,000 yuan drop in the price of lithium carbonate, NIO's gross profit margin will increase by 2 points.
However, under the influence of insufficient scale and price reduction promotions, the above-mentioned gross profit improvement chain has also failed. In Q2 this year, NIO's gross profit margin was 1%, down 12 percentage points year-on-year, while the gross profit margin of finished vehicles was 6.2%, down 10.5 percentage points year-on-year. In addition, marketing, R&D and other expenses are still expanding, and affected by this, in Q2 this year, NIO's single-quarter loss exceeded 6 billion.
If you miss a key exit on the highway where you are building your car, should you accelerate to the next exit or slow down to change lanes?
For different companies and different time nodes, there may be different solutions to this matter. For example, Xpeng Motors, which suffered a setback in the G9 listing in the second half of last year, chose the latter. From organizational structure, strategic planning, product research and development, to sales system, Xpeng has carried out drastic changes under the pressure of the industry's price war. During this period, the company's losses continued to expand, and the gross profit margin fell into negative value.
In the first half of this year, the adjusted Xpeng Motors gradually stepped out of the sales corner. In Q2 of this year, driven by P7i, G6 and other replacement products, Xiaopeng Motors delivered 23,200 vehicles in a single quarter, a month-on-month increase of 27%, and in July, it re-stood on the 10,000 monthly sales mark, and in October, it once again broke through the 20,000 monthly sales mark. In Q3 of this year, Xpeng Motors' cash flow has also entered a positive cycle.
NIO is a more complex case, not only has more models than Xpeng, its service model is heavier than Xpeng, its overseas layout is deeper than that of Xpeng, and its self-developed front is longer than that of Xpeng. According to Li Bin's disclosure at the Science and Technology Day in September, at present, NIO has carried out self-research and development in 12 core areas such as intelligent driving, chips, and batteries, and has R&D centers in 6 countries and 13 cities around the world.
According to the data disclosed by the official on many occasions, NIO has more than 400 people in the battery team, about 600 people in the mobile phone team, 800 people in the chip team, and the overall R&D personnel has exceeded 11,000 people, an increase of about 1,000 people compared with the end of last year. According to the current scale of nearly 30,000 people, NIO's size is nearly twice that of Xpeng, and the difficulty of change may be several times that of Xpeng.
In addition, unlike Xpeng Motors' consistent high-tech image, NIO has always been a high-tech game. Among them, the layout of the battery swap station is similar to the logic of infrastructure, with a large scale and a long cycle. Therefore, compared with the loss of efficiency, NIO is more difficult to tolerate the slowdown, and a surgery that hurts the muscles and bones is likely to trigger a chain reaction such as valuation collapse and cash flow fracture.
As the supreme leader, Li Bin saw the problem early on, but he wanted to hedge it with speed and systematic efficiency. In November last year, he said in an internal speech on the 8th anniversary that NIO spent a lot of money that did not create value, but to reduce costs and increase efficiency cannot rely on simple and crude layoffs and business cuts, but to improve the cost and efficiency of the overall situation and the whole life cycle through large-scale and refined operations.
He believes that systematic thinking is the key differentiator between NIO and other companies. He also said that many of the things NIO has done around systematic capacity building are crucial to rushing into the rim race, and NIO will continue to maintain its own rhythm. In terms of organizational construction, Li Bin also said that he would not easily lay off employees and reduce salaries, but hoped to "maintain 100% of the people and complete 150% of the work".
At the same time, Li Auto had a completely different thinking. In December last year, Li Xiang issued a letter to all employees, saying that from the 0-1 stage, speed is efficiency, from the 1-10 stage, quality is efficiency, when the enterprise reaches the scale of 100 billion level of revenue, any bad major decision, any low-quality delivery of products, will cause a devastating blow to the company.
With the issuance of this all-staff letter, Ideal launched a matrix organizational reform for the scale of 100 billion revenue. According to Li Xiang, organizational upgrading is the most important examination question for enterprises to enter a larger scale and more difficult stage, more than 90% of the failed enterprises are not business problems, business problems are just the appearance, the essence is actually organizational ability and scale expansion, industry changes can not be adapted.
This seems to be the true portrayal of NIO. In 2022, from the production capacity at the beginning of the year and three consecutive shutdowns, to the frequent nesting of new cars and the accidental fall of test vehicles in the middle of the year, to the unfavorable ramp-up of the new factory at the end of the year and the substandard delivery volume, NIO's troubles on the business side have never stopped. In addition, there are interns who have exposed the problem of internal sexual assault, all of which are difficult to explain with low-level mistakes.
At the beginning of 2023, Li Bin took stock of NIO's 8 major problems in the past year in his New Year's letter to employees. In fact, from responding to the fluctuations of the supply chain, to the fluctuations of the demand side, to the user feedback mechanism, the internal communication mechanism, and the digital support system, the eight major problems listed by Li Bin all point to a common crux: NIO's management has gone wrong.
When things go badly, there is often a new turnaround. Since this New Year's letter, Li Bin, who has always resisted subtraction, has also released a streamlining signal. He said that in 2023, the work tasks will increase a lot, but the resource investment will only increase slightly, and NIO must tap the potential from the inside to comprehensively sort out and optimize the inefficient organizations, inefficient teams, inefficient processes, and inefficient projects.
At the same time, the pressure from the escalation of the price war in the rim has increased sharply. In April, Li Bin said at a media conference that if NIO still sells 10,000 per month this year, he and Qin Lihong will have to look for jobs. In order to take off the hat of "Wei 10,000", Li Bin began to move seriously, and broke the development framework that has been firmly adhered to many times such as service, sales, and pricing, trying to seek change.
It seems that Wei Xiaoli has embarked on the same path again, but the road of change after the change of time does not necessarily lead to the same end.
Make up the required courses NIO began to do subtraction
Perhaps only now has NIO realized what it means to be stronger than people, and subtraction is also an entrepreneurial topic that must be learned.
In this round of forced adjustments, NIO has swung the first knife of change to the heaviest service area. In April this year, NIO announced that it would adjust the free battery swap policy, reducing the number of free battery swaps for new users to 4 times per month, and home charging piles will no longer be given away for free. In June, NIO once again announced that it would unbundle value-added services such as battery swapping from vehicle sales, and the sales threshold for all new cars was reduced by 30,000 yuan.
In addition, the free trial of the autonomous driving service NOP+ has also been upgraded to the official version and started a paid subscription, with a monthly subscription fee of 380 yuan.
At the Q1 results meeting on June 10, Li Bin also disclosed that NIO will slow down some fixed asset investment, postpone some R&D projects, and slow down the development of some overseas markets. Among them, the self-developed battery project, which was originally regarded as indispensable, has also been downgraded. In mid-July, NIO confirmed that it would postpone the mass production of its self-developed batteries and slow down the procurement of some equipment from battery factories.
With the entry of new ES6, ET5 T and other products into the market, NIO has also begun to take the initiative to cater to the price war. On June 15, NIO aligned the price of the ET5 T three-box with the ET5 hatchback. You must know that ET5 is the price gatekeeper of NIO's main brand, and this operation is equivalent to forcing ET5 to continue to reduce prices. In August, NIO launched a cash reduction of 24,000 yuan for ET5 in the name of clearing inventory.
As the last car of this round of generational switching, on September 15, the entry price of the new EC6 was also reduced to 358,000 yuan, including the impact of the 30,000 yuan price reduction brought about by the unbundling of rights, and the overall reduction of 38,000 yuan compared with the old model.
The effect of these adjustments was immediate. In July, NIO's monthly deliveries hit a new high, and exceeded 20,000 for the first time to reach 20,462 vehicles. Among them, the number of deliveries of the new ES6 also exceeded 10,000 for the first time. At this year's Q2 performance meeting, Li Bin also revealed that in August, the number of sales leads and test drives of NIO hit a record high, and the number of test drives could reach about 10,000 every weekend.
With the gradual saturation of high-tier cities, if NIO wants to continue to climb the sales level, it must look for increments from the sinking market, and NIO's channel sinking is insufficient.
Li Bin disclosed that about half of NIO's sales come from Jiangsu, Zhejiang and Shanghai, while in central provinces such as Anhui, most of its sales come from provincial capitals, and the contribution outside the provincial capital is less than 20%, while BBA's contribution outside the provincial capital is as high as half in the same period. He believes that this is related to the fact that NIO has fewer contact points such as stores and battery swap stations in the sinking market, and that the problem that can be solved quickly in the short term is sales.
Under the past funnel marketing strategy, NIO has been trying to build brand effect to attract potential users. To this end, NIO has built a super community with stores and apps as the fulcrum, and set up a first-level department in the organizational structure that is on a par with products, technology, finance, etc., the user service department, which is managed by Qin Lihong and is said to have more than 10,000 people. In addition to increasing the sales team, NIO is also continuing to make additions in the construction of battery swap stations with heavy capital investment. In February this year, NIO announced that it would increase the number of new battery swap stations from 400 to 1,000. On April 10, NIO launched the third-generation battery swap station, and further clarified that 90% of the new battery swap stations this year will be third-generation stations, and the second-generation stations will not be expanded in the later stage. In order to boost market sentiment, NIO has also tried to explain the long-term logic of heavy capital investment. On September 21, NIO held the first Science and Technology Open Day, and Li Bin also stood in front of the stage as CTO for the first time, showing off a wave of NIO's technical muscles, and released the phased results of full-stack self-development: vehicle operating system Tianshu SkyOS, LiDAR chip "Yang Jian", mobile phone NIO Phone, and route wishlist of urban pilot assisted driving. However, Li Bin also admitted in the post-conference interview on Science and Technology Day that NIO has not yet established a complete organizational system, resulting in too slow to respond to changes in the external environment. He said that the most efficient time for NIO was in 2020, and from the end of last year to the first half of this year, NIO did not do well enough in many places, "We have learned lessons and are already correcting." ”
Specifically, NIO has deployed a lot of product experts who are responsible for reception and test drives, and they do not directly sell to customers. Li Bin said that compared with the new forces with higher sales in the market, NIO's sales staff is only half of that of its peers. Since July, NIO has vigorously expanded its recruitment, and he expects to expand to about 5,000 people in order to achieve a sales capacity similar to that of its peers, that is, to sell 30,000 vehicles per month.
According to Li Bin's plan, NIO will complete the sales layout at the end of September, and gradually contribute to the sales results from October, and then, from the headquarters to the region will have a special team responsible for the sales performance of each car, NIO's overall goal is to hit the monthly sales of 30,000 units, and "5566" is the sales pillar, and the steady-state monthly sales target is 15,000-20,000 units.
IN THIS REGARD, SHEN FEI, SENIOR VICE PRESIDENT OF NIO ENERGY, HAS REPEATEDLY SAID THAT THE ADDITION OF 1,000 BATTERY SWAP STATIONS IS VERY STRESSFUL FOR THE ENERGY TEAM, BUT QIN LIHONG HAS THREATENED AT NIO POWER DAY IN JULY THAT WEILAI'S STATION CONSTRUCTION PLAN FOR THIS YEAR WILL BE COMPLETED ONE MONTH AHEAD OF SCHEDULE. As of November 18, NIO has invested in the construction of 2,103 battery swap stations, with more than 800 new ones.
This is a comprehensive technical review of NIO's 9 years of car manufacturing, and it is also a positive response to the R&D investment of 3 billion yuan per quarter. On the eve of the opening of the event, Weilai also launched a round of $1 billion convertible bonds, Li Bin also ridiculed during the warm-up, friends are persuading him to save some money, but Weilai will stick to the existing technology investment.
Narrowing window of opportunity NIO's killer feature is the independent listing of the battery swap business
Judging from the current situation, compared with Xpeng and Ideal, which are nearing the end of organizational change, NIO's change has come too late.
First of all, with the continuous improvement of the penetration rate of new energy, the growth rate of domestic electric vehicles has gradually slowed down. According to the statistics of the China Automobile Association, in the first 10 months of this year, domestic new energy vehicle sales were 7.28 million, a year-on-year growth rate of 38%, a decrease of 71 percentage points in the same period last year, of which, in October, domestic new energy vehicle sales were 956,000, and the year-on-year growth rate further decreased to 34%.
At the same time, the shrinkage of fuel vehicles has led to the entry of traditional car companies, and the competitive environment of the entire market has been deteriorating. The price war between car companies has escalated several times this year, and for NIO, today's high-end market is dominated by new forces such as Ideal and Wenjie, and traditional luxury brands such as BBA continue to cut prices to pursue.
In addition, as competition in the mass market intensifies, more and more car companies are trying to explore and seek greater profit margins. Among them, the most typical is BYD, whose Denza and Equation Leopard both focus on the 300,000-600,000 range where NIO is located, the former has taken the lead in launching the N7 and N8 benchmarks against ES6 and ES8, and the latter is replicating NIO's service system and user community.
Consolidating in such a hostile external environment is a risk in itself. Compared with Xiaopeng and Ideal at the end of the gradual end of organizational change, if you work backwards from Li Bin's layoff letter, NIO only began to plan organizational changes in September, and it took 2 months for internal discussions and decision-making, and the official landing was in November, but the changes are not achieved overnight, and it will take time for actual consolidation.
According to Li Bin, there are two main logics for NIO's change. The first is to improve the efficiency of the organization, and the specific method is to merge the departments and positions of duplicate construction, change the process and division of labor to offset the offset, and cancel the offset posts. The second is to improve resource efficiency, and the plan will postpone and reduce the investment in projects that cannot improve the company's financial performance within three years to ensure long-term investment in core key technologies and products.
In this sense, the layoffs are just the beginning of this round of change. According to industry revelations, this round of adjustment of Weilai mainly involves batteries, chips, mobile phones and other teams, but the overall size of these three teams is only about 1,800 people, and Weilai also intends to retain the fire of some businesses such as batteries, according to the scale of 3,000 people, the actual scope of change of Weilai is wider.
Among them, the channel will be another hard-hit area. An employee of a store from Shanghai said that since the middle of the year to expand the number of sales personnel, NIO has been reducing the number of product consultants, and many people are also trying to switch to sales, but it is still relatively difficult.
In fact, since Tesla withdrew from Beijing Parkview Green at the beginning of the year, the outside world has doubts about its own channels, and then Xiaopeng poached Wang Fengying from the Great Wall, and turned around and threw himself into the arms of dealers. In October this year, Reuters broke the news that due to lower than expected sales overseas, NIO has begun to re-evaluate the dealer model, and now, letting go of the burden of self-operation can be regarded as a follow-up trend.
However, it's one thing to let go, it's another to rebuild. Referring to the reversal speed of Xpeng, it may take one year to achieve results from the comprehensive consolidation of organizations, products, and channels at the earliest. During this period, NIO's cards on the product were basically finished. According to Li Bin, before 2025, there will be no new product releases for the main brand of NIO, at most it will be an update and iteration of the existing 8 cars.
This means that in the coming year, NIO's main brand will not have new product defense, while NIO's competitors are the opposite. Among them, Ideal will launch MEGA at the end of the year, and there will be 3 pure models and 1 extended range model next year, Zeekr will launch a sedan at the end of this year, and two more SUVs will be launched next year, and VOYAH will launch an extended range version and a new mid-size SUV this year.
BBA will also enter the electrification year next year. According to the plan, next year, BMW will launch 5 plug-in hybrid products, the pure electric version of the five series station wagon, the new iX2 and other blockbuster products, and Mercedes-Benz will also switch from the existing oil-to-electric EQ series to the new model under the first pure electric platform MMA, and Audi will also launch the A6 e-tron and Q6 e-tron based on the new platform PPE.
NIO's variables may come from its sub-brand, its second brand, Alps, which was originally scheduled to start next year. With the recent contraction and refocus, the operation speed of NIO's sub-brand may be further accelerated. On November 9, Alps was revealed to be integrated into the main brand of NIO. On November 20, Qin Lihong revealed that NIO will release new products and models at this year's NIO Day.
It is worth noting that NIO's funds may not last long. As of the end of Q2, NIO's cash reserves on its books were 31.5 billion yuan, a decrease of 6.3 billion yuan in a single quarter, which is only enough for five quarters at the current rate of cash burning. Previously, NIO was also revealed to be interested in buying two factories in Hefei. According to the sale announcement issued by JAC, the combined value of the two factories is about 4.5 billion yuan.
For NIO, the funds on the books have long been stretched, and in the short term, NIO will have to pay a large amount of layoff expenses. According to employee disclosures, NIO's compensation system for this layoff is N+3. According to last year's annual report, the per capita salary of NIO is about 370,000 yuan, and it is roughly estimated that even if the average compensation is 4 months, the severance pay for 3,000 people will cost 370 million yuan.
According to public information, before the listing, NIO had completed 5 rounds of financing, with a cumulative amount of more than 2.2 billion US dollars. It went public in September 2018 and raised about $1 billion. Subsequently, NIO successively introduced two rounds of strategic investment from the Hefei Municipal Government and shareholder Baillie Gifford, and publicly issued five rounds of convertible bonds and five rounds of additional stock issuance, raising a total of more than 85.8 billion yuan.
If you include the US$740 million investment of CYVN in Abu Dhabi in July this year and the US$1 billion convertible bond just issued in August, NIO's cumulative historical financing amount has exceeded 121.2 billion yuan. On September 25, Bloomberg broke the news that NIO was considering raising another $3 billion, but then triggered a flash crash in NIO's stock price. In this case, it is also difficult for NIO to further raise funds to replenish blood.
In addition, the VAM between NIO and Hefei is also facing cash. Among them, NIO needs to achieve revenue of 14.8 billion yuan in 2020, 120 billion yuan in 2024 (6-8 models listed), 420 billion yuan in total revenue from 2020 to 2025, and 7.8 billion yuan in total tax revenue, and be listed on the Science and Technology Innovation Board by 2025. Otherwise, NIO would need to buy back its shares at an annual interest rate of 8.5%.
A person close to NIO's management believes that if the situation worsens, NIO may reconsider splitting the battery swap station for listing. He said that there had been preliminary discussions on this matter internally. In June this year, after NIO untied the vehicle from battery swapping, the ecology of NIO's battery swap station has gradually become clear.
According to the latest data, up to now, NIO has deployed 2,113 battery swap stations across the country, of which more than 800 new battery swap stations this year are the latest third-generation stations. According to Shen Fei, NIO's third-generation station hardware and design have been comprehensively upgraded, which can not only be backward compatible with more models, but also integrate the concept of charging and swapping, which can further improve the comprehensive operation efficiency.
At the NIO Power Day in July this year, Shen Fei also systematically disclosed the commercialization model of NIO's battery swap station. He said that the reason why NIO can pay for the granularity of the battery swap service is that the layout of the battery swap station is only a visible part on the water, behind which is a complete set of capabilities such as energy cloud system and power grid dispatching, and in this track, NIO is at least 2-3 years ahead of its peers.
Shen Fei is not worried about the heavy investment mode of the battery swap station, he said, at present, the average daily service volume of Weilai battery swap station is 35 to 36 orders, and without adjusting the price, the average daily service volume can reach 50 to 60 orders to basically achieve breakeven, according to Shen Fei's calculations, with the increase in users, if the station is stopped this year, the country's battery swap stations can actually make money immediately.
At today's crisis juncture, the battery swap station once again stepped in to put out the fire. On November 21, NIO announced that it has reached a cooperation agreement with Changan Automobile, and the two parties will cooperate in battery swap standards, battery swap systems, battery management, and product pre-research. In addition, Li Bin also revealed that there are 4 or 5 car companies that are talking. This is rare positive news for NIO recently, and as a result, NIO's Hong Kong stock rose nearly 5% intraday.