ET9 is the "most Li Bin" product

NIO hit the sedan market for the third time.

Text丨Wu Xiaoyu

Editor丨Wang Hailu

2023 will be a challenging year for NIO. From January to November, NIO sold 142,000 vehicles, and its gross profit margin fell to 8.0% at the end of the third quarter, and the loss in the first three quarters widened to 15.3 billion yuan. From all dimensions, efforts to increase sales are the most urgent thing for NIO at the moment. However, this year's NIO DAY did not wait for Alps, a sub-brand of NIO to target the mass market. On the contrary, NIO released the most expensive and least niche car in history, the ET9.

The ET9 is positioned as an executive flagship at the 800,000 yuan level, benchmarking against the Mercedes-Benz S-Class. According to Li Bin, founder of NIO, the car is equipped with NIO's self-developed intelligent chassis, 5 nm intelligent driving chip, 900 V high-voltage architecture and 46105 large cylindrical battery, of which 17 technologies are world premieres and 525 patents have been applied. Since 2022, the self-development of these technologies has cost NIO two or three billion yuan in R&D expenses every quarter.

Among the car companies, probably only Li Bin dares to do this product.

Li Bin believes in the value of leading technology. In an interview with LatePost two years ago, he said that NIO defined products from scratch, insisted on positive research and development of power and intelligent systems, and did not "cut corners". NIO once bought a patent for a door handle from Jaguar Land Rover, and even felt that "money has fallen from the sky" to the legal department.

"If a brand wants to be a leader and be respected by global automotive companies, it must insist on positive research and development. Li Bin said.

Even at critical junctures, Li Bin puts R&D in an important position, even if the resources and money invested may not bring direct benefits in the short term. In 2019, NIO lost 10 billion yuan and fell into a crisis in the capital chain. Bi Lu, head of NIO's electric drive system and integration department, said in an interview with the media that the company adhered to a principle at that time, "no matter how hard it is, you can't work research and development". In the second half of 2019, NIO launched the development of the ET7 electric drive system, self-developed a 180kW front permanent magnet synchronous motor, and the silicon carbide project was approved again after receiving investment from the Hefei government.

In January 2021, the ET7 was released, which is the first product in China to use silicon carbide modules and be equipped with lidar.

But a year and 2 months later, the car was delivered. Some users who can't wait unsubscribe. After the product was delivered, sales were not as good as expected. In 2022, the NIO ET7 sold 23,000 units, and only 5,548 units were sold in the first 11 months of 2023.

Like the previous two sedans, the ET7 and ET5, the ET9 is still a "future" and will only be delivered in the first quarter of 2025. The reason for today's release, Li Bin explained in an interview with the media that NIO's flagship models are generally launched in advance, and he believes that "blockbuster products are worth the wait".

"It took 4 years from the launch of the Tesla Cybertruck to its delivery. (ET9) As an executive flagship sedan, are you so anxious?" Li Bin said.

He added that ET9 has been in development for more than two years and is progressing much faster than everyone thinks, but against the BBA's core fortress, he wants to "put a little longer" on testing and validation.

200 亿研发费花在哪? ET9 是答案

The ET9 project was launched in 2021, and at that time, Li Bin proposed three goals for this new car: first, to embody the spirit of innovation leadership, second, to make full use of the possibilities brought by technological breakthroughs, and third, to continuously iterate and evolve the design gene.

In pursuit of innovative technologies, NIO's R&D investment has continued to increase in the past two years. In 2022, NIO invested 10.84 billion yuan in R&D, Xpeng 5.21 billion yuan, and Ideal 6.78 billion yuan. In the first three quarters of this year, NIO invested 9.459 billion yuan, Ideal was 7.095 billion yuan, and Xpeng was 3.97 billion yuan.

Nearly 20 billion yuan of R&D investment in exchange for ET9. The ET9 is equipped with four major technologies developed by NIO: a fully wire-controlled intelligent chassis, a 900V high-voltage architecture, an intelligent driving chip, and a battery.

The ET9's fully intelligent-by-wire chassis consists of three parts: steer-by-wire, rear-wheel steering, and fully automatic intelligent suspension. The steering by wire system (SBW) is driven by a steering motor controlled by an electronic control unit to drive the wheels to turn, and there is no mechanical connection between the wheels and the steering wheel. This means that the steering system is completely taken over by the control algorithm and does not rely on manually turning the steering wheel.

In October 2022, NIO signed an agreement with ZF to jointly develop steer-by-wire products. With the blessing of wire-controlled steering, in scenarios such as low-speed parking and U-turn, the ET9 only needs to make 0.65 laps to complete the operation of full wheels. In the event of rough road conditions such as bumps, the ET9 isolates the transmission of vibrations from the tires.

Rear-wheel steering gives the ET9 a smaller turning radius and more stable high-speed cornering capabilities. As a D-segment, the ET9 has an 8.3° steering angle at the rear and a 5.45-metre turning radius at the rear, which is comparable to the 5.5-metre ratio of the all-electric compact SUV smart #3.

Fully automatic intelligent suspension refers to the hydraulic pump driven by the motor, and the damping of the shock absorber is changed through the flow of liquid. Due to the faster speed of the motor, this suspension supports 1 second adjustment of the body height of 50mm. The goal of the fully automatic intelligent suspension is to allow the user to "walk on the ground" when driving the car on bumpy roads.

At the scene, Li Bin demonstrated a scene through a video: an ET9 test vehicle was carrying a four-story champagne tower over a continuous speed bump, and the champagne did not spill.

The implementation of these new technologies is expensive. This is reflected not only in the cost of hardware, for example, the purchase cost of a rear-wheel steering system is about 1-20,000 yuan, but also in the research and development expenses. In 2022, Nexteer announced in its interim report that it had won an OEM steer-by-wire system order with an amount of 2 billion yuan.

The purpose of self-developed chips is to obtain stronger end-to-end algorithm capabilities, but this is also a huge expense.

In October 2020, NIO was reported by the media that it was independently developing an autonomous driving computing chip, and Bai Jian, vice president of hardware at NIO, was responsible for the research and development of the chip. At the ET9, NIO launched the self-developed intelligent driving chip "Shenji NX9031" with a 5nm process, with the goal of achieving the performance of four "industry's flagship smart chips". At present, NIO's NT 2.0 platform is equipped with 4 NVIDIA OrinX chips, with a total computing power of 1016 TOPS.

After Tesla successfully developed its own FSD chip, China's new forces NIO, Xpeng, and Ideal followed closely behind, all of which are developing their own intelligent driving chips. The NIO ET9 is the first model to announce that it will be equipped with a self-developed chip.

The chip R&D process is very long, requiring a series of processes such as design, tape-out production, packaging and testing, identification and inspection, and application verification, as well as a lot of cost investment. According to the prospectus of Black Sesame Smart, from 2020 to 2022, its R&D expenditure continued to rise, reaching 255 million yuan, 595 million yuan, and 764 million yuan respectively, and more than 1.5 billion yuan was spent in three years.

Large cylindrical cells and battery packs are probably the most difficult parts to mass produce on the ET9. Li Bin said that the 46105 large cylindrical battery cell and battery pack developed by NIO have an energy density of up to 292Wh/kg per cell, a whole pack capacity of 120kWh, and a charging efficiency of 5C for the supercharging and quick-swapping battery pack, which can last up to 255 kilometers in 5 minutes.

Power battery research and development is a money-burning business that can easily cost tens of billions of yuan. From 2018 to 2021, BYD's R&D expenditure on battery projects was 7.08 billion yuan, compared with 16.24 billion yuan for CATL in the same period.

In terms of batteries, NIO reached a five-year strategic cooperation with CATL in January this year, and also invested in battery companies Sunwoda and Weilan Energy. The 150-degree battery pack jointly developed by NIO and Weilan Energy has just started mass production, and it is only rented but not sold.

NIO not only conducts joint research and development with suppliers, but also plans to develop and produce its own batteries. In 2022, NIO set up a lithium battery laboratory and battery cell trial production line in Shanghai, with a total investment of more than 200 million yuan, and in March 2023, Reuters reported that NIO built a large cylindrical battery factory in Hefei with a production capacity of 40 GWh.

However, at present, NIO is emphasizing efficiency improvement internally. Li Bin said in the third-quarter earnings call that NIO will develop its own battery packs, cells, and materials, but entrust others to produce them. He believes that the long investment cycle of the manufacturing side of the production battery and the occupation of fixed asset investment are not conducive to the improvement of gross profit margin, and NIO does not currently have the resources to make its own batteries.

In three years, it has hit the sedan market three times

The ET9 is positioned as an executive flagship sedan, and its main competitors are the "façade" of Mercedes-Benz, BMW, and Audi. Among them, Mercedes-Benz S leads the way in sales, according to Bitauto Vision, in 2022, Mercedes-Benz S sold a total of 25,700 units in China. The starting prices of BMW and Audi 7 Series and Audi A8L, which are of the same level as BMW and Audi, are 43,600 yuan and 132,800 yuan lower than those of Mercedes-Benz S, respectively, but their sales are less than 60% of that of Mercedes-Benz S, with 14,500 and 10,300 units respectively.

In the era of fuel vehicles, BBA (Mercedes-Benz, BMW, Audi) used three-speed sedans to completely cover the middle, low and high markets. In 1972, BMW's first generation of the 5 Series mid-to-large sedan was born, ushering in the classic BMW design era, with the kidney grille becoming a BMW icon. Three years later, BMW launched the BMW 3 Series, a sedan one level lower, to cover a wider market. After another two years, the BMW 7 Series was born, positioned as a D-segment luxury sedan.

Correspondingly, Mercedes-Benz launched the E-Class, C-Class, and S-Class sedans, and Audi launched the A6, A4, and A8 sedans. Over the course of 50 years, the nine sedans of the top three German families have been remodeled, taking turns to be the first choice in the three markets.

In China, mid-to-high-end sedans are mainly for the business market. The Audi A6 is the best-selling business sedan in China, and the BMW 5 Series and Mercedes-Benz E-Class also have a large proportion of business customers. One level higher, business demand dominates.

According to a salesperson at an auto company, it will be difficult for a new car brand to challenge BBA's luxury executive sedan. Because in the executive travel market, BBA has spent hundreds of years occupying and solidifying the minds of consumers, turning different levels of popular cars into symbols of different statuses. A luxury flagship sedan with a higher age group and a higher level of loyalty to the BBA.

The above-mentioned people believe that executive cars have "class attributes" in the minds of customers. The person who drives the Mercedes-Benz S has a high degree of overlap with the "people who drink Moutai and Wuliangye", "(the big boss) goes out, and he must take the Mercedes-Benz S, with pomp and face." ”

In the past, NIO launched three sedans for the three major sedan markets, benchmarking the popular models of Mercedes-Benz, BMW, and Audi. In January 2021, NIO launched the ET7, which is benchmarked against the BMW 5 Series and Mercedes-Benz E-Class, and in December of that year, NIO launched the ET5, a smaller sedan, to benchmark the BMW 3 Series, and the just-released ET9 is benchmarked against the Mercedes-Benz S.

Neither the ET7 nor the ET5 sold as well as expected. The ET7 sold just over 5,000 units from January to November this year. The ET5 aims to surpass the BMW 3 Series, but only 44,000 units have been sold this year, compared to 134,000 units sold by the BMW 3 Series.

At NIO DAY 2021, Li Bin once called the ET7 a car "born for autonomous driving". As the first car of the NT 2.0 platform, it adopts NIO's self-developed Aquila super-sensing system, which includes 33 perception hardware, one of which is a high-precision lidar, and the supercomputing platform Adam is based on four NVIDIA OrinX chips, with a total computing power of 1016TOPS, which is seven times that of Tesla.

At first, the ET7 received a lot of positive reviews. But users waited for more than 1 year before deliveries of the car began. In the process, the Xpeng P5, which was three months later than the ET7 was launched, was delivered in the fourth quarter of that year, becoming the first model to mass-produce LiDAR.

After the delivery, the ET7's reputation also declined. In the early days, quality problems such as abnormal seat noises caused a storm of public opinion. To this end, NIO has set up a self-developed seat team, and optimized seat comfort, wireless charging panel power, and more when the facelifted ET7 was released in April this year.

The sales staff of the above-mentioned car companies believe that BBA's mid-range sedans sell well, and the product quality is the premise. "BMW 5 Series, Mercedes E-Class, the car is really not bad, there is nothing wrong. "The ET7 is not impeccable in terms of product, or far exceeds the product power of other combustion vehicles in its class.

In 2022, the ET7 sold 22,910 units in the nine months of delivery, and the Ideal L9, which is also a new energy vehicle with more than 400,000 units, delivered 38,973 units in the first four months of its launch. However, in the sub-category of pure electric vehicles with more than 400,000 yuan, ET7 is still the first in sales.

But this year, after NIO switched many of its products to the second-generation platform, the sales of the ET7 continued to decline. In the first 11 months of this year, only 5,548 ET7s were sold, according to Jaylan Road, a third-party data agency. During the same period, the BMW 5 Series sold 121,700 units.

Like the ET7, the ET5 was initially launched with high expectations. As the lowest-priced product under the NIO brand (328,000 units on sale), the company aims to surpass the BMW 3 Series' sales. On the day of its launch, orders for the ET5 also overwhelmed the NIO app.

But then, ET5 repeated the path of ET7. ET5 has a waiting period of up to 9 months from release to delivery. People close to NIO have told Late Auto that this is because the ET5 is produced at an F2 factory, which takes months to improve the process upfront. In addition, the ET5 has 120,000 SKUs, which also adds to the difficulty of mass production.

After mass production, the ET5's reputation and sales did not meet expectations. Limited by styling, the ET5 has a compact interior with less headroom in the rear. In order to compensate for the lack of space, in June this year, NIO launched the ET5T, the sister model of the ET5, with 1.7 cm more headroom in the rear than the ET5.

In addition to the product itself, another reason that affects the sales of the ET5 is the price. Compared with BBA's best-selling sedan, the new energy popular sedan Zeekr 001, and Tesla Model 3, the price of ET5 is on the high side. In order to increase sales, in June this year, NIO reduced the price of all products by 30,000 yuan, but correspondingly, it also untied the battery swap rights from the price of the whole vehicle. The starting price of the ET5 has been reduced to less than 300,000 yuan.

But the move only stimulated ET5 sales in the short term. In July, monthly sales of the ET5 increased from less than 4,000 units to more than 5,000 units, but with the delivery of the ET5T, sales of the ET5 slipped to less than 2,000 units. The ET5T has sold around 3,000 units per month over the past three months. Combined, the two cars still fall short of the average monthly sales of the BMW 3 Series (about 12,100 units).

Now, NIO has added another piece of the puzzle to the high-end sedan market, benchmarking the BMW 7 Series and Mercedes-Benz S-Class with the launch of the ET9. The ET9 still hasn't picked up on the lackluster of the first two sedans' product launches and launches, with a delivery time of more than 1 year and a target delivery in the first quarter of 2025.

In terms of products, ET9 has full configuration and strives to be absolutely leading in technology. While the leading EV platforms on the market today are all 800V, the ET9 is a 900V platform with faster charging speeds. NIO has participated in the self-development of many technologies such as 5nm chips and large cylindrical batteries.

If the ET9 wants to seize the market of Mercedes-Benz S, product and technology leadership may only be the basic capability. Electric vehicles have never managed to make their way into the high-end business market, not even BBA's own electric vehicles. The Mercedes-Benz EQS 580 dropped from 1.51 million yuan to 1.31 million yuan after its launch, a drop of 200,000 yuan, but as of November 2023, only 1,595 units have been sold. In 2022, the best-selling electric car in the 800,000-level market was the Porsche Taycan, but only 3,292 units were sold.

ET9 should not only achieve absolute product leadership, but also go beyond the category and make electric vehicles accepted by the high-end executive market.

Li Bin is also soberly aware of the challenges ahead. In the group interview session after NIO Day, Li Bin said that function-oriented cars are easy to define. Pondering the user psychology of the executive flagship model is a "more difficult challenge".

Zhao Yu also contributed to this article