Unlike what was expected at the beginning of the year, Li Bin will become the top of the rim in 2024. Originally, because the main brand of NIO had no plans to launch a new model in 2024, many people sweated for him. This year, the pace of the market has accelerated rapidly, and popular models such as Xiaomi SU7 and Li MEGA have accumulated huge traffic before they are launched, and mature players such as BYD and Geely have also continued to carry out product remodeling and iteration.
This attention mainly comes from short video platforms. Li Bin started a live broadcast, personally testing a 150kWh battery with a range of more than 1,000 kilometers, and challenging NIO's self-developed urban intelligent assisted driving in the evening rush hour in Beijing. He also brought Wang Chuanfu, Lei Jun, He Xiaopeng and many other car company bigwigs to record short videos together.
All this is to accumulate "popularity" for entering the mass market.
On May 15, the International Day of Families and the National Low Carbon Day, NIO launched its second brand "Ledao" in Shanghai, and the first mid-size pure electric SUV for the family market, the Ledao L60, officially entered the mass market with a pre-sale price of 219,900 yuan.
From high-end pure electric vehicles to the mass market, NIO must compete for this big cake in the fierce competition. Among the models in the same class, the annual sales of the pure electric Tesla Model Y in China have exceeded 450,000 units; With the product mentality of family cars and extended range, Ideal will exceed 100 billion yuan in revenue in 2023 and become the first profitable new power car company.
According to the plan, the L60 will be officially launched in September and delivered in mass production in the fourth quarter of this year. Therefore, if you talk about the numbers alone, it is actually difficult for Ledao to make a huge contribution to NIO's financial report this year. But all the goal is to pave the way for scale, and NIO has invested heavily in a number of technology research and development and charging and swapping facilities in the past, and they need more vehicles to dilute these fixed costs in order to ultimately achieve their profitability goals.
Therefore, for NIO, which has been established for 10 years, the release of the second brand is not only a devolution of potential energy accumulated and developing, but also a key battle that cannot be lost before the knockout of smart electric vehicles.
The brand meaning of "Le Dao" is: a happy family, a good way to run a family Image source: Ledao Automotive
01 Cheap is not the goal, the only goal is to sell more
NIO has always been a special presence among the new forces. On the one hand, its product design and aesthetics have been almost unanimously praised by consumers; But on the other hand, the high price of the product (except for the entry-level models ET5 and ET5T, which start at 298,000 yuan, and the rest are more than 300,000 yuan) has made it impossible to increase the volume.
The second brand's first model, the L60, is aimed at the mass and family markets. Compared with all NIO models, the entry-level model of Ledao has been changed from a dual motor to a single motor, the number of four OrinX intelligent driving chips has been reduced to one, the lidar has been removed, and the base battery pack has been reduced from 75kWh to 60kWh. According to a rough estimate of Geek Park, the above hardware costs alone can be reduced by about 45,000 yuan.
In addition, NIO obtained an independent car manufacturing qualification at the end of last year and laid out two manufacturing plants in Hefei, which also helped Ledao L60 reduce the cost of a single car. Li Bin said that the cost per vehicle of the Ledao L60 is expected to be 10% lower than that of the direct benchmark Model Y.
The pre-sale price of the Ledao L60 is 219,900 yuan, and if you combine the 2,000 yuan deposit before listing to offset the 6,000 yuan equity, it can be as low as 215,900 yuan, which is 34,000 yuan cheaper than the Model Y, which sold more than 450,000 units in the Chinese market in 2023. Subsequently, with the introduction of the BaaS purchase policy (i.e., the battery rental scheme for separating vehicles from electricity), it is expected that the starting price is expected to reach the range of 150,000 yuan.
But whether it's for NIO, or for any other car company, selling cars cheaper has never been the goal. At present, China's auto market is engaged in a fierce price war, consumers may be immersed in the happiness of "increasing the allocation and reducing the price" of various new products, but except for Tesla, BYD, and Ideal publicly announced that they have achieved profits, the rest of the new energy players are still in a state of large losses.
Therefore, for most car companies, sales volume is the core indicator of profitability. The automotive industry needs to invest huge fixed costs upfront, such as product research and development, factory construction, etc., and these fixed costs require a certain amount of cumulative gross profit per vehicle compared to the BOM cost per vehicle. In addition to the aforementioned factory commons, Ledao is also the first production model to use NIO's NT3.0 platform.
The Ledao brand will take on the important work of "volume".
On May 16, Ai Tiecheng, senior vice president of NIO and president of Ledao Automobile, described the orders observed within the company within 12 hours of pre-sales as "far exceeding expectations" at a media conference. Outside of financial reports, NIO rarely publicly releases sales or orders, and previously at NIO's fiscal year 2023 conference call, Li Bin once said that he believes that a factory's production capacity of 10,000 vehicles per month can be considered reasonable and healthy.
Ai Tiecheng, Senior Vice President of NIO and President of Ledao Automobile, introduced the first model, the L60 | Image source: Ledao Automotive
02 Why do you want to be a second brand?
The launch of Ledao also represents that the new car-making forces that have started their businesses since 2014 have begun to enter the stage of multi-brand strategy.
In addition to Ledao, NIO's third brand (internally codenamed "Firefly") is reported to be unveiled within a year, while Xpeng's second brand, Mona, was unveiled at the Beijing Auto Show in April and is expected to be officially unveiled in June.
For Europe's century-old auto giants or car groups, multi-brand is a common business strategy, and the core reason is that the price range that can be covered by a single brand is limited. For example, the products of the Volkswagen Group range from tens of thousands of yuan to tens of millions, so they need 12 brands such as Bentley, Porsche, Audi, Volkswagen, and Skoda to carry them separately.
However, most of the multi-brand strategies of European and American automobile groups are carried out in the form of capital acquisitions, and the research and development of each brand is relatively independent of each other. NIO's development path is more like another pure electric brand, Tesla, both of which have chosen an independent R&D route from high-end to mass-market, but Tesla has not chosen a multi-brand route despite having different models from the million-level Model S to the Model 3 in the 200,000 price range.
Li Bin did not agree with Musk's approach, in an interview with the media, he said that multi-brand was his basic clear strategic direction at the beginning of the business 10 years ago, except for the attempt of joint research and development (which was later abandoned), he has always firmly chosen this route.
In 2021, the Ledao brand team was officially established.
Compared with a single brand, multiple brands need to build their own independent sales networks. From a business point of view, this is also in line with the different target user profiles of the two brands: 70%-80% of NIO users are from first-tier cities, while Ledao hopes to enter the sinking market.
At the end of last year, Li Bin said that the second brand planned to open 200 sales stores in 2024, and today he updated the work progress, saying that there will be "at least 100 stores" ready for sales and delivery before the launch in September.
The L60 can use the shared NIO 3rd and 4th generation battery swap stations Image courtesy of NIO Power
However, Li Bin made it clear that Ledao would not consider an independent split and listing. In addition to having an independent sales system, a large number of other basic capabilities can be reused, among which the most consumer-aware is battery swapping.
"3-minute battery swap" is a differentiated feature of NIO as the core of new energy products, and it has also invested a lot of resources in the early stage. So far, NIO has built a total of 2,415 battery swap stations in China, of which the third and fourth generation battery swap stations will be shared by NIO, Ledao and other car companies' cooperative models (these models are expected to be launched in 2-3 years). According to reports, the number of battery swaps per block can reach about 60 times a day to achieve breakeven, while the current average is about 30 times.
Like the scale of car sales, Li Bin is not worried about the subsequent increase in the number of vehicles that will cause the experience degradation of NIO users. "We are not afraid that there will be many people who will replace the battery, and if there are more, we will build again. Now that more and more people are using smartphones, the signal and internet speed will not get worse or worse."
In addition, for different brands of models, it is expected that there will be different service methods in the later stage - this is also the advantage of the multi-brand strategy, after all, it will be much easier to define a service as exclusive to a certain brand than to define it as "exclusive to certain models".
Qin Lihong, president of NIO, told Geek Park that although the battery swap stations after the third generation have the ability to support different brands, they can be flexibly adjusted according to different situations during operation, "This ability to flexibly adjust can be carried out in minutes", and both NIO and Ledao car owners can check the real-time queuing status of each battery swap station in the mobile app.
In addition, the L60 is expected to be equipped with urban NOP (Intelligent Pilot Assisted Driving Capability) at the time of delivery.
03 "Cheap" may not be enough
The Ledao brand means "family fun, family care", focusing on the family user market, and Ai Tiecheng, who once worked in Disney, has become a brand operator.
At the brand launch conference, Ai Tiecheng's debut was recognized by Big Multimedia, and several creative promotional videos showed the outstanding performance of Ledao L60 in terms of space, comfort, driving experience and other product qualities.
Ledao L60 for the home market | Image source: Ledao Automotive
The Model Y and Toyota RAV4 are two cars that have been repeatedly compared at the press conference, and this direct bid against the competition is not common in NIO's past press conferences. It can also be seen that after entering the mass market, the competitive pressure is obviously greater than that of the high-end market.
At this stage, Ledao may face the following major challenges:
First, sales ability. Opening 200 independent sales outlets isn't just about throwing money at it. In the past, 70%-80% of NIO's car owners came from first-tier cities, so there is still a lack of enough successful experience in the sinking market. As Ai Tiecheng repeatedly emphasized at the press conference, mass-market consumers need them to "cut the cost", which may be very different from the previous user portraits. However, it is speculated from the current online recruitment information of Ledao Auto Sales that the first two batches of Ledao sales stores will still start from provincial capitals and second-tier cities with relatively large incomes, which will not be very abrupt.
Second, fierce external competition. In fact, since it was announced last year that it would release the second brand or more, there have been voices saying that NIO may have chosen a not so good time. After all, the market is too volatile, and many car factory owners have publicly stated that they are "selling cars at a loss". Therefore, Li Bin also said that this car "will give priority to the pursuit of sales rather than the growth of gross profit margin".
Third, more sensitive and discerning consumers. In fact, with a series of online information about the hardware configuration of the L60 model, there has been a series of criticisms, including the use of MacPherson suspension, the entry-level battery is only 60 degrees, etc. At the media conference, Li Bin actually gave detailed responses to these questions, but in this price range, perhaps some consumers are more sensitive to the "parameters" that can be seen and quantified than the subjective "experience", not to mention that they now have many other choices.
The "Family Car Value Formula" proposed by Ledao | Image source: Ledao Automotive
In 2023, Li Bin detailed NIO's 12 full-stack R&D investments at the NIO Technology Day, and carried out large-scale internal adjustments in the fourth quarter, reducing the staff of edge departments such as NIO mobile phones, and nearly doubling the size of the sales team. In the fierce market competition and the changeable capital environment, Li Bin is relying on the past R&D investment to carry out various reforms to improve efficiency.
The Ledao L60 is the first official product after the efficiency improvement, and from the numerical point of view, it is certainly unlikely to be the "savior" of NIO in 2024, because the actual large-scale delivery time is actually only one quarter, but it may be the best mirror to observe NIO at the moment.
*Header image source: Ledao Automobile
This article is an original article by Geek Park, please contact Geek Jun WeChat geekparkGO for reprinting