Image source: NIO official website
In March last year, NIO founder and chairman CEO Li Bin set two goals: to sell about 240,000 cars in 2023, and to sell about 240,000 cars in the fourth quarter of 2023. Achieve break-even.
One year has passed, and looking at the financial report data for the fourth quarter and full year of 2023 just released by Weilai, neither of these two goals has been achieved. According to
data, NIO's annual revenue in 2023 was 55.6179 billion yuan, a year-on-year increase of 12.9%, and its net loss was 20.7198 billion yuan, a year-on-year increase of 43.5%; the adjusted net loss was 18.3507 billion yuan, a year-on-year increase of 51.1%.
In terms of sales, the popular model et5, which NIO has high hopes for, did not create miracles. NIO delivered 160,038 units throughout the year. Although it increased by 30.7% year-on-year, the monthly average was less than 15,000 units, and it only completed 66% of the sales target. about.
Li Bin previously joked at a communication meeting, "If the monthly sales are less than 10,000 vehicles, then Li Hong (President of NIO) and I will have to find jobs." According to this statement, this data seems to have just escaped the danger of "re-finding a job".
The more you sell, the more you lose. The contradiction between input and output
Observe that in the process of promoting the financial report data, NIO highlighted revenue and delivery volume, and even used modified words such as "record high" and "leading" , but unfortunately, according to financial report data, NIO still loses an average of 129,000 yuan for every vehicle sold, and the losses are getting bigger and bigger.
Comparing the data in 2022, Weilai's revenue was 49.269 billion yuan, with a net loss of 14.559 billion yuan, and an average loss of about 118,000 yuan for each car sold.
The more money you lose when selling a car, the most direct reflection is the decline in gross profit margin. NIO's gross profit margin in 2020 was 11.5%, which rose to 18.9% in 2021, but by 2022 it was 10.4%, and in 2023 it dropped all the way to 5.5%.
This is not unrelated to the growing investment expenditure. According to
financial report data, NIO’s R&D expenditure in 2022 will be 10.836 billion yuan, and sales and administrative expenses will be 10.537 billion yuan. Investment expenditures will continue to grow in 2023, with annual research and development expenses of 13.4314 billion yuan and sales, general and administrative expenses of 12.8846 billion yuan.
Looking purely at numbers, NIO’s revenue increased by 12.9% in 2023, but its expenses increased by about 23%, and the increase in expenses was nearly twice the increase in revenue.
Of course, there is also a point of view that the imbalance between income and expenditure is worthy of attention, but we must also look at where the money of Weilai flows rationally?
is the brand with the largest battery swapping station system in China. According to the figures released by NIO’s official Weibo, throughout 2023, NIO has newly deployed 7,681 charging piles, and has deployed a total of 3,594 charging stations and 21,049 charging piles; throughout the year 1,011 new power swap stations have been added, and a total of 2,316 power swap stations have been deployed, including 747 high-speed power swap stations.
China Post Securities released a research report in September 2023. According to the research data, the comprehensive cost of NIO’s second-generation power swap station is about 3.5 million yuan, of which the equipment investment is about 1.5 million yuan and the battery investment is about 1 million yuan. (13 70kwh or 75kwh or 100kwh batteries), the electricity cost is about 650,000 yuan (assuming 30 daily services), and the rental cost is about 200,000 yuan.
Based on this rough calculation, the cost of new power swap stations in 2023 alone will be about 3.5 billion.
At a media communication meeting on December 14, 2023, Li Bin also said that the biggest lesson in 2023 is that the construction of sales capabilities lags behind, resulting in the loss of many intended orders. Therefore, the construction of the sales team will also be a major expenditure for NIO in 2023. Li Bin also said at
's third quarter earnings call that there are currently about 5,700 sales consultants, of which more than 3,000 have recently joined the company.
In addition, investment in the development of vehicle models and new technologies, especially intelligent driving technology, is equally huge.
Among the new car-making forces, NIO definitely has a large product line. In addition to the development and iteration of many high-priced models, NIO is also developing lower-priced Alpine brand models.As for
’s technical investment, according to NIO’s official information, NIO released 12 full-stack technology layouts for smart electric vehicles in 2023, and officially released skyos Tianshu, the car company’s first full-vehicle operating system. NIO's first self-developed chip product, the lidar main control chip "Yang Jian" and nio link NIO panoramic interconnection, announced the mass-produced cross-domain fusion supercomputing cluster adam ccc.
NIO also officially released its first self-developed 5nm car-grade intelligent driving chip at the 2023 NIO Day - Shenji nx9031, self-developed global 900v high-voltage architecture, skyride·Tianxing intelligent chassis system, and flagship safety standard four Big core technology.
Long-termism vs. short-term reality
The report card handed over by Weilai in 2023 is not good-looking, even a bit gloomy, especially not long ago when Ideal just released a financial report of "100 billion revenue, 10 billion profit". However, there have always been two voices in the evaluation of NIO. Optimists have always believed that NIO is a long-term company, and challenges are only temporary. Once the engine is turned on, the endurance brought by "long-termism" is also the strongest.
We do not deny the rationality of this view, but the realization of long-termism requires the support of short-term reality. Since the money that should be spent must be spent, and NIO's gross profit margin is not enough to support it to join the price war in exchange for price for volume, then reducing costs and increasing efficiency has become one of NIO's key actions to balance the long and short term in 2023.
Li Bin also emphasized in a speech at the end of last year, "Long-termism is not an excuse for not doing a good job in short-term execution. Every step of the marathon needs to be run well." Behind this is Li Bin's judgment of the competitive environment and the company's current situation - the future The intensity of competition in the next few years will only increase rather than decrease, and the intensity will be beyond imagination. Efficiency must be improved and execution must be paid close attention to.
In the energy replenishment system, NIO has made a series of adjustments to reduce operating costs.
In April 2023, Weilai announced that the rights of first car owners who paid a deposit to purchase a new car starting from June 1 will be adjusted: home charging piles will be adjusted to paid purchase and installation; the number of free battery swaps per month will be adjusted to 4 times. On June 12, Weilai officially announced that the price of all models will be reduced by 30,000 yuan. At the same time, free battery swap will no longer be a basic car benefit. Users can choose to pay a single payment for battery swap, and new car owners need to pay per use for battery swap.
On the other hand, Weilai will open the battery swap business to other car companies to share the initial investment costs.
According to the previous speeches of Li Bin and NIO Senior Vice President Shen Fei, the break-even line of NIO power swap stations is about 50 to 60 orders a day, but currently only about 20% of power swap stations have reached this level. Currently, the average daily order volume at NIO’s battery swapping stations is 35 to 36, so more car brands need to join in to reduce losses.
On November 21 and November 29, 2023, Weilai signed power exchange strategic cooperation agreements with Changan and Geely respectively.
In addition, in November 2023, NIO announced layoffs and narrowed NIO's unprofitable businesses across the board. For example, Weilai previously hoped to imitate the vertical integration model of BYD and planned to produce its own power batteries. However, after evaluation, it was found that this project could not bring about an improvement in gross profit margin within 3 years, so it adjusted to self-developed battery cells, battery packs, etc.
In the automobile manufacturing sector, NIO spent 3.158 billion yuan to acquire the Jianghuai factory to reduce manufacturing costs.
On December 4, NIO appeared in the credit information management system of vehicle manufacturers of the Ministry of Industry and Information Technology, and obtained independent car manufacturing qualifications. Immediately afterwards, on December 5, Jianghuai Automobile announced that the company had previously publicly listed and transferred some assets, and NIO Technology (Anhui) Co., Ltd. became the transferee of the first and third guarantees of assets, and the total transaction price was 31.58 billion. Hefei Hengchuang became the transferee of the second package of assets, with a transaction price of 1.418 billion yuan.
In the third quarter financial report conference call, Li Bin said that after NIO independently builds cars, manufacturing costs will drop by 10%.
What other cards can be played in 2024?
In the face of market competition, Li Bin once mentioned that we must give up two illusions, one is to give up the illusion of exchanging price for volume, and the other is to give up the illusion that market competition will not be fierce.The sales of
hit a trough in 2023. NIO launched a series of counterattacks in the second half of the year. Although there was no huge reversal in the end, at least it did not lose the opportunity to compete. However, in the face of a competitive environment that may be more intense than in 2023, what other cards can Weilai play?
The first card played by NIO in 2014 is still to reduce costs and increase efficiency.
On January 25, NIO released the 2024 version of its worry-free service products. The biggest change in this adjustment is to bind insurance and service fees, and adopt a car insurance + service fee model, which is divided into exclusive version, enjoy version, and light version, with prices of 4,999 yuan/year, 1,399 yuan/year, and 499 yuan/year. Compared with the previous version, the core change is the cancellation of maintenance points and the reduction of value-added service coupons.
As a "user-oriented" car company, high-end service experience has always been one of Weilai's core competitiveness and differentiation. In 2018, when Weilai launched its first mass-produced car, the es8, it also launched a "worry-free service" package service for car owners in all regions of the country, with a cost of 14,800 yuan per year. After purchase, car owners can enjoy free vehicle repairs, free maintenance, and three types of insurance provided by insurance companies. It is an unprecedented one-price all-inclusive service model in the automotive industry.
But the price is that Weilai needs to pay a lot of money for this. Li Bin once revealed that for Worry-free Service 1.0, without counting the labor costs of NIO’s own service department and investment in mobile service vehicles, NIO would lose 4,000 yuan a year for a single user who uses Worry-Free Service.
Li Bin said, "We need to be careful with our budgets this year. The general direction of Weilai this year is cost management. We previously acquired an insurance agency, and after converting all insurance rebates into costs, the Light Edition and Enjoy Edition can earn a little more, which is top-notch." The exclusive version is not necessarily the case. The previous worry-free service will definitely be a loss. If the user base is large, it will be difficult to sustain." Another card of
is the new brand - Alps.
NIO’s main battlefield has always been the high-end market. The sales models are mainly mid-to-high-end models with 300,000-500,000 yuan. The capacity of this market itself is relatively small. 90% of the domestic new energy vehicle market sales are concentrated in 300,000 yuan. In addition, the competition for models below 10,000 yuan is also more intense. Not only the traditional car company BBA, but other new energy car companies are also joining this market. Last year, Xpeng released the g3, asked the world m7, and BYD launched the new All high-end models looking up to U8 are making inroads into NIO’s hinterland.
In addition, the price war between car companies has continued since the beginning of this year and has become more and more fierce. On February 27, the new extremely krypton 001 was officially launched. Jikrypton 001 and NIO’s et5t both take the hunting route, but the price of Jikrypton 001 is nearly 30,000 yuan lower than NIO’s et5t.
In Li Bin’s view, Weilai is unwilling to sacrifice the profit margin of the main brand. It must maintain gross profit first and will not exchange sales for price wars. He said that the NIO brand will not have any cheaper cars than the et5, including the models being planned.
In order to make profits, exploring the market seems to have become an important way for NIO to expand sales.
Li Bin revealed at the earnings conference call that Alpine's first car not only directly competes with the model y in product positioning, but the most important thing about this car is that it can replace the battery, and at the same time, "the cost is 10% cheaper than model y."
At the same time, Alps will use a separate sales network, after-sales system and battery replacement network, part of which will be shared with the main brand. The main brand will retain some exclusive battery swap stations, "similar to the relationship between private cloud and public cloud."
According to NIO’s schedule, the Alpine brand for the mass market will be officially announced in the second quarter of this year. It is planned to release Alpine's first product in the third quarter and start mass delivery in the fourth quarter.
"Achieving growth with new brands targeting the mass market is the company's top priority in 2024." Li Bin said at the earnings call. At the same time, he said that from the perspective of the second brand, it is indeed aimed at the family market, and competition will definitely be more intense, so the second brand will give priority to pursuing sales. Gross profit will certainly not be the focus in the early stages, sales will have a higher priority.
NIO's performance in 2023 has caused the outside world to mention Li Bin again in 2019. Some people even think that the "worst person of the year" may return in 2023.Li Bin also publicly responded that NIO’s current situation is different. "In 2019, we have to solve the problem of survival. Now we have to solve the problem of development quality and adjust the pace of development."
There may be challenges or difficulties. From a rational and optimistic perspective, we are more willing to believe that the experience of having endured life and death crises is also It gives Weilai enough ability to withstand stress.
(This article was first published on Titanium Media app, author｜Han Jingxian, editor｜Zhang Min)
