Li Bin is no longer NIO's largest shareholder

Is the new car-making movement ushering in a new era of reverse joint ventures? Or is it in the brutal involution war, helplessly being copied by foreign capital? At the end of 2023, China's new car-making forces have already turned their fingers, and there are only 6 left, can they survive 2024?

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Text丨Intelligent driving network Summer rain

Editor|The little pig demon on Langlang Mountain

On December 15, he stood for 2 hours and 14 minutes to answer more than 140 questions from the media, and on December 17, he drove for 14 hours in a row, traveling 1,044 kilometers from Shanghai to Xiamen, testing a 150-degree battery pack, and on December 18, it was announced that he had received another $2.2 billion investment from CYVN, an investment institution in Abu Dhabi, the capital of the Middle East.

"Up" has become the key word of Nio Day, which will be held in Chengdu in five days, behind which NIO has once again "come out of the bottom".

"Why does NIO always get money at critical moments?" has become a big topic.

According to media statistics, since its establishment in 2015, NIO has raised more than 115 billion yuan.

Li Bin has demonstrated his strong financing capabilities, behind which there are not only well-known VCs such as Hillhouse, Shunwei, CICC, and Red Shirt, but also Chinese Internet giants such as JD.com, Tencent, Xiaomi, and Baidu, and after the Hefei Municipal Government has also become an investor in NIO, in 2023, Middle East capital will begin to become a new partner of NIO.

But as the famous saying "there is no free lunch in the world", for a start-up, every penny also has a price.

After NIO announced the news of obtaining the Abu Dhabi financing today, once the two parties complete the transaction, Li Bin will officially lose the status of NIO's largest shareholder.

It has become the second new Chinese car-making force to lose its status as a major shareholder after Leapmotor.

It can be predicted that after Leap and NIO, more new Chinese car-making forces will lose their controlling position.

Of course, for NIO, although it has lost its position as the largest shareholder, the control of the company is still in the hands of Li Bin.

Li Bin still controls NIO in his own hands through the AB-share weighted voting rights model, keeping it as a Chinese car brand.

In today's announcement by NIO, Abu Dhabi investment institution CYVN and NIO will enter into a new round of share subscription agreement, under which CYVN, through its subsidiary CYVN Investments, will make a strategic investment of approximately US$2.2 billion in cash to NIO.

Pursuant to the agreement, CYVN subscribed for 294 million newly issued Class A ordinary shares of the Company at a price of US$7.50 per share.

Five months ago, in July, NIO had received a $738.5 million strategic equity investment from CYVN. In addition, CYVN acquired certain Class A ordinary shares of NIO from an affiliate of Tencent Holdings, a shareholder of NIO, for a total consideration of US$350 million.

In other words, through the private placement of new shares and the transfer of old shares, CYVN's first round of investment in NIO in July totaled nearly $1.1 billion.

Upon completion of the US$2.2 billion investment, CYVN will beneficially hold approximately 20.1% of the total issued and outstanding shares of NIO.

In other words, CYVN won a fifth of NIO's shares with a total investment of nearly $3.3 billion.

NIO's current U.S. stock market capitalization is about $15.109 billion, a 10% premium to CYVN's valuation of $16.5 billion.

At this point, after the completion of the closing, NIO's largest shareholder will be changed from Li Bin to CYVN, and after the completion of the investment in December, CYVN will nominate two directors to the board of directors.

However, in terms of controlling stake, according to the information released by NIO, the NIO shares held by CYVN are Class A ordinary shares with 1:1 voting rights, while Li Bin holds Class C shares with 1:8 super voting rights, and after CYVN became the largest shareholder, the actual controller of the company is still Li Bin.

However, it is worth noting that Li Bin now owns 39% of NIO's super voting rights, and is still the company's shareholder with the largest voting rights, but it is unknown whether Li Bin has a veto power on major matters.

The investment follows the issuance of a convertible senior bond with an aggregate principal amount of up to US$1.15 billion in September and October this year.

According to NIO's 2023 third quarter report released not long ago, its cash flow increased by 13.7 billion yuan compared with the second quarter, and as of September 30, 2023, NIO held cash and cash equivalents of 45.2 billion yuan at the end of the third quarter.

It can be said that the financial situation has been greatly eased, so why continue to raise funds?

In fact, looking at this statement in detail, the accounts payable in the third quarter were 28.12 billion yuan, short-term debt was 4.833 billion yuan, and long-term borrowings were 5.232 billion yuan.

At the same time, on December 5, NIO announced that it would acquire the inventory, fixed assets and construction in progress of the three plants of JAC Passenger Car Company, as well as the structures and equipment of the Xinqiao plant of the passenger car company, for 3.158 billion yuan.

At the same time, on November 3, Li Bin issued an internal letter to all employees to open the 10% layoff and the adjustment of institutional settings, Li Bin said on the quarterly report call that he needed to pay hundreds of millions of yuan for this.

R&D expenses and administrative expenses remained high: R&D expenses in the third quarter were 3.04 billion yuan, up 3.2% year-on-year, and sales and general administrative expenses were 3.609 billion yuan, up 33.1% year-on-year.

Of course, NIO's continuous financing can also be regarded as a rainy day, especially when it is ushering in a series of favorable conditions, and it is easier to obtain capital recognition.

In the second half of this year, when NIO's battery swap model was controversial, it successively ushered in the cooperation between Changan Automobile and Geely Automobile, which greatly boosted confidence in this model.

At this time, Li Bin refinanced at the cost of giving up his position as the largest shareholder, indicating that he was not optimistic about the competitive situation in the future market.

"Next year's market, next year and the year after will be very fiercely competitive, the brand of Weilai, let me tell you, we will not exchange price for volume, I said within the company to give up illusions. I told my colleague,

The first pair of market competition

The degree of tragedy of the struggle, to give up the illusion, must be miserable,

Second, we must give up illusions about exchanging price for quantity, and we must give up illusions for both, externally, and internally.

”

On December 16, at Li Bin's face-to-face communication with the media, he repeatedly emphasized "giving up illusions".

Why has NIO been so short of money?

The traditional saying is that Li Bin is fighting a long-term battle of so-called time for space, and solves the biggest shortcoming of pure electric vehicles through the battery swap mode: the current battery life is not enough to meet the multi-scenario application of consumers.

The battery swap mode and extended range power proposed by NIO and Ideal are actually two answers to one question.

It's just that judging from the feedback from the current market, Li Xiang's range extension scheme is more popular, while Li Bin has taken a stupid but ambitious solo road, an ecological model that replicates the Amazon cloud model to create an energy storage cloud, and this road requires time to change space, and quantitative changes need to cause qualitative changes.

What Li Bin needs most is time.

It is this kind of persistence that you can understand why NIO is also making efforts to charge 800V high-voltage charging, and has achieved mass production of 150-degree battery packs, and continues to invest heavily in battery swap stations

It is precisely after the mass production and delivery of the 150-degree battery pack that Li Bin's battery swap mode seems to have a breakthrough

What kind of breakthrough is it?

A small battery pack is used for daily battery replacement, and a large 150-degree battery pack is used for long-distance travel

Isn't it a bit like using electricity for daily travel in the city and oil for long-distance travel?

If the 150-degree battery pack is on the car, even if the price of the cheapest eT5 in NIO goes straight to more than four or five hundred thousand, there is almost no cost performance in the market, and the battery swap mode solves this problem

NIO did not use a high-capacity battery pack to put the battery swap mode on death row, but it completed the integration into the battery swap mode, forming a closed loop

Expectations for NIO are becoming more positive and positive

However, after Li Bin abandoned NIO's largest shareholder, a relatively pessimistic narrative is emerging in the Chinese market.

In the first half of this year, Yang Honghai, COO of Kia China, once said: "Foreign companies have advantages in technology, capital, global layout and other aspects, and they can wait for the end of the war and re-enter the market through "bottom-buying" acquisitions. ”

Will "copying the bottom" become a prophecy?

In late November this year, the French automotive group Stellantis completed the completion of its investment in Leapmotor, and Stellantis Group acquired about 20% of the equity of Leapmotor at a price of 15 euros, becoming the largest shareholder, while Volkswagen also acquired a 4.99% stake in Xpeng Motors at a price of nearly 705.6 million US dollars.

At a time when the outside world is shouting that China Automobile has opened the era of reverse joint ventures, the largest shareholder of NIO, China's best new car-making force, has also changed hands

Today's new car-making forces in the Chinese market are the best companies and teams left in the knockout competition of hundreds of companies, and today's detailed counting, there are only six Wei Xiaoli, Leap, Nezha, and Gaohe (of course, a new batch of car-making companies Yuanhang, JuneYao, Xiaomi, etc. are becoming new entrants).

China's own brands should take more active action and build more comprehensive and in-depth cooperative relations with new local forces

Of course, from the perspective of a market economy, it is not surprising that this kind of division and merger between capitals is common, and it is not surprising that it is controlled by A today and acquired by C tomorrow

Even for a German star like Mercedes-Benz, its top two shareholders are Li Shufu and BAIC Group.

We can't say that Mercedes is no longer a German brand

But just as many netizens regret Alibaba today, the biggest beneficiaries of China's e-commerce dividends in the past decade are SoftBank and Masayoshi Son

Behind this is the opportunity for local Chinese capital to let go of Alibaba and become overseas capital.

NIO's U.S. stock opened 7.6% higher at the opening today, which shows that the capital market is highly optimistic about this investment, and from the daily line of NIO, NIO is indeed coming out of the trough and showing an "upward" state.

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