Li Bin's internal letter: NIO's comprehensive performance has not reached the expected goal, and there are many lessons to be reflected

Rakuten on January 9

Li Bin, founder and CEO of NIO, issued an internal letter today, saying that in 2023, in a macro environment full of uncertainties, the competition in the smart electric vehicle industry has entered the most fierce stage of the qualifying round.

"Our overall performance has not met the expected goals, there are many lessons to be learned and reflected, and there are too many organizational capabilities that need to be improved as soon as possible. ”

In December 2023, NIO announced the completion of a US$2.2 billion strategic equity investment from Abu Dhabi-based investor CYVN Investments RSC Ltd ("CYVN"), announced on December 18, 2023.

In July 2023, CYVN made a US$38.5 billion strategic equity investment in NIO and purchased NIO's existing shares from Tencent for a total consideration of US$350 million.

Following the completion of the US$2.2 billion strategic equity investment, CYVN collectively beneficially holds approximately 20.1% of the Company's total issued and outstanding shares. CYVN became NIO's largest shareholder.

Li Bin said that in the case of the cooling of the capital market, NIO has successfully introduced strategic investment, which has supplemented funds and resources for the next stage of development, and NIO's technology, strategy and development prospects have been recognized by long-term investors.

Li Bin also said that every colleague of NIO should be mentally prepared, give up illusions, and face challenges head-on. Stress and challenges are always the best opportunities for great companies to improve their capabilities, and in the coming year, do the following: prioritize the priorities and focus on the high priorities.

The company's three high priorities are: to ensure the long-term investment in core and key technologies, to ensure the leading edge of technology and products and to deliver on time and quality, to ensure that sales and service capabilities can cope with the fierce market competition, and to ensure that sales can be converted into sales as soon as possible, and to ensure that the research and development of 9 core products of 3 brands is carried out on schedule.

"In 2024, we must resolutely avoid ineffective and inefficient investment, resolutely save every penny that does not create value for users and the company, save every kilowatt-hour of electricity that is not needed, save every unnecessary document printing, do not waste every click and inquiry, and do not waste every opportunity for product and service improvement brought by user feedback. ”

The following is the full text of the internal letter:

Dear colleagues, 2024 is here, and I wish you all a Happy New Year!

In 2023, in a macro environment full of uncertainties, the competition in the smart electric vehicle industry has entered the most intense stage of the qualifying round. The past year has been another challenging and unforgettable year for NIO.

Our overall performance did not meet the expected goals, there are many lessons to be summarized and reflected, and there are too many organizational capabilities that need to be improved as soon as possible. We have also proved our enterprising spirit and tenacity in the face of adversity with our own practical actions, withstood the test, and laid a solid foundation for the next stage of development.

In 2023, we delivered five new models in six months, fully demonstrating NIO's ability and efficiency in product development and delivery. At the NIO IN Innovation and Technology Day, we gave a comprehensive introduction to 12 full-stack technology layouts for the first time.

The all-domain pilot assisted NOP+ has accumulated steadily, entering urban areas from high speeds, and the evolution speed of application group intelligence capabilities is industry-leading. User satisfaction with the in-cabin experience continues to improve, and the first flagship mobile phone, NIO Phone, is launched, leading the innovation direction of driver connectivity. The world's leading technologies such as the Shenji intelligent driving chip, the SkyOS Tianshu operating system, the 900V global high-voltage platform, and the SkyRide intelligent chassis unveiled together with the global intelligent electric vehicle technology flagship ET9 have made more people understand that technological innovation is the background color of NIO.

In FY2023, we delivered 160,000 units, up 30.7% year-on-year, and continued to rank first in China's electric vehicle market with an average transaction price of more than 300,000 units, with a market share of more than 40%. NIO's brand image in the high-end market has been recognized by more and more people.

In terms of sales capacity construction, the investment in recent months has begun to play a role, laying the foundation for coping with market competition in 2024. We have efficiently completed the "Thousands of Stations, Thousands of Piles" plan and fulfilled our commitment to users.

The daily battery rental service was opened, and the 150kWh battery overcame difficulties and passed the announcement test, and the service system of "rechargeable, replaceable and upgradeable" was more perfect. In November, we signed a battery swap cooperation agreement with outstanding peers such as Changan and Geely, marking a historic step forward in the openness and sharing of NIO's battery swap network. Charging and swapping services are not only our service advantages, but also become an important long-term business growth point.

In the face of the cooling capital market, we have successfully introduced strategic investments to replenish capital and resources for the next stage of development, and NIO's technology, strategy and development prospects have been recognized by long-term investors.

Thank you for your hard work! Together, we have proved that we are loyal to our original intention in the face of pressure, and we have the ability to face problems and solve problems.

In the past few years, the share of plug-in hybrid, extended range, entry-level and mass-market pure electric products has increased rapidly, and starting in 2024, with the accelerated popularization of charging and swapping facilities and the change of user consumption psychology, the high-end pure electric market where the NIO brand is located will usher in an inflection point of explosive growth.

In the second half of the year, we will usher in a second brand for the mass market, which will bring new growth points to the company while serving more users. Our continuous investment and in-depth layout in technology, products, services, and communities give us the confidence to participate in the next stage of competition.

Dear colleagues, the next two years will be the most important stage of the transformation period of the automotive industry, and the intensity of competition will be beyond imagination. We will face more powerful competitors, more and more excellent products, more fierce price wars, more complex public opinion atmosphere, and a macro environment full of uncertainty.

Every colleague should be mentally prepared, give up illusions, and face challenges head-on. Pressures and challenges are always the best opportunities for great companies to improve their capabilities, and I look forward to working with me in the coming year to do the following: prioritize the priorities and focus on the high priorities.

The company's three high priorities are: to ensure the long-term investment in core and key technologies, to ensure the leading edge of technology and products and to deliver on time and quality, to ensure that sales and service capabilities can cope with the fierce market competition, and to ensure that sales can be converted into sales as soon as possible, and to ensure that the research and development of 9 core products of 3 brands is carried out on schedule.

The company's resources are limited, each department and every colleague should make full use of VAU's working methods, clarify work ideas and work priorities, do a good job of horizontal and vertical alignment, ensure that the output of the department and their own work is consistent with the company's high priorities, improve the company's overall operational efficiency, and establish system capabilities at all levels.

After 9 years of development, the business framework of our product technology, service and community has basically taken shape, and the organizational structure of supporting multi-brand, multi-region and multi-platform has been initially established, but our system capability is still far from our goal. The intelligent electric vehicle industry has a large volume and a long industrial chain, and a 1% gap in system capacity means a 10% gap in sales and profitability.

System capability is the capability we need to improve the most, and the new model launch in 2024 has fewer tasks, which is a good time window for us to improve system capability.

The construction of system capacity requires the active participation and joint efforts of all colleagues in the company, and each department must clarify the essential logic and key success factors of the business, set clear and definite goals, use resources to the cutting edge, formulate specific implementation plans, adjust the organization, people and input, and business focus according to market changes, and benchmark the excellent practices of peers Xi, and timely review and continuous improvement of delivery results.

Please remind each other that NIO does not lack theoretical concepts, and that it is necessary to put an end to generalized empty talk in daily work, implement the clear direction, focus on action, and fight in a daze. Strengthen cost awareness and cost control capabilities.

In the past few years, the company's business boundaries have expanded rapidly, and the system capabilities have not been perfected, and many projects have caused a waste of resources due to in-depth business understanding and poor management. We resolutely invest in product technology research and development and service infrastructure, but resolute investment requires high cost awareness and cost control capabilities.

The company's resources are limited, we are still suffering losses from R&D and infrastructure investment, and we need to continuously improve our financial performance to support the company's sustainable development, and we have the responsibility and obligation to make good use of every penny of our investors and shareholders.

R&D, supply chain, quality, manufacturing, sales and service, management and support, every link and every expenditure must have the awareness of calculating and improving the return on investment, and the ability to continuously optimize and save costs and expenses.

In 2024, we must resolutely avoid ineffective and inefficient investment, resolutely save every penny that does not create value for users and the company, save every kilowatt-hour of electricity that is not needed, save every unwanted document printing, do not waste every click and inquiry, and do not waste every opportunity for product and service improvement brought by user feedback.

Excellent companies can achieve market success with the best resource investment, and we must set the highest goal of fine management in the industry and resolutely implement it in place. Our journey is a marathon on a muddy road, and if we keep running every step well, we will gradually lead the way.

In 2024, let us all focus on system capacity building, face challenges, move forward firmly, move forward together, and power up together!

Li Bin

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