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Text | Jia Haonan
Source: Smart Car Reference
NIO didn’t dare to lose any more.
CEO Li Bin only commented in Europe a few days ago that Tesla "will be eliminated soon", but now after the earnings release, he is determined to "learn from Tesla".
Previously, it was insisting on high-end benchmarking BBA, but now it is pinning its hopes on affordable mass brands.
Instead of "hedging" losses with growth, it now promises "profitability within a year".
This change is because NIO suffered the most tragic loss in history in the third quarter. In a word, the summary is that the most sold car loses the most money. Every car sold, you have to lose 130,000 yuan.
NIO’s 2022 third-quarter earnings report sent an unprecedented signal.
Latest Bin Yan Bin Yu
At the analyst meeting after the earnings report, what did Li Bin have to say?
First, in response to the recent uproar over Tesla’s price cuts:
Tesla’s price adjustment is nothing new, and demand for NIO products has not fluctuated. Tesla’s Model 3 and Y and NIO products do not belong exactly to the same price range, so its price cut has not had much impact on NIO.
Brother Bin doesn’t care, because Model Y and NIO are selling models, not players at the same table.
What Brother Bin really cares about is how to explain NIO’s current performance and how to maintain the confidence of the outside world in NIO.
Therefore, the words of Bin Yan Bin this time can be roughly divided into two categories: interpretation and Flag establishment.
His explanation for the decline in gross margin is:
Gross margins are challenging this year, mainly due to battery prices. Lithium carbonate prices hit new highs,
Every time the unit price of lithium carbonate decreases by 100,000 yuan, our gross profit margin will increase by 2%; if the unit price of lithium carbonate decreases to 400,000 yuan, the gross profit margin can increase by 4 points.
The unprecedented loss, Li Bin believes, is due to rising R & D spending.
This is part of the NIO plan. The increase in R & D investment in the third quarter is mainly due to the increase in R & D investment in batteries, chips and other fields. Next, NIO’s R & D investment will basically remain at the level of 3 billion yuan per quarter.
And this part of the R & D investment also includes models from NIO’s two mass-priced brands.
One covers the 20-300,000 range. The other covers the 200,000 range.
How can these two brands drive up gross profit? Li Bin euphemistically expressed the meaning of "learning from Tesla BYD".
For a mass market, it can be very difficult to achieve 20-25% gross profit without vertical integration capabilities.
The so-called vertical integration refers to the cost reduction achieved through self-research and investment in key supply chains like Tesla and BYD.
BYD Tesla’s batteries and many components are vertically integrated. NIO has been developing AD (autonomous driving) chips, and the current team size has reached 500 people.
NIO recently established NIO Battery Technology (Anhui) Company, whose main business includes battery manufacturing and sales, and the chairperson is Li Bin himself.
Gross margins of 25-30% are not a problem in the long run.
The above is the first Flag of Bin Goli. We will insert an eye first and check it next year.
In addition, another important commitment is to "achieve break-even of the NIO brand in the fourth quarter of next year".
In addition to "vertical integration", the most crucial means is the launch of new models early next year.
"A total of 5 models", including the replacement "866" three models ES8, ES6, EC6, and two new brand models.
And "in the mass market, I hope that the monthly sales of bicycles can reach 50,000."
To summarize, Li Bin will have to hand in these assignments next year:
1) Five new cars, the first half of the deadline.
2) Two new mass-market brands with monthly sales of 50,000.
3) By the end of next year, the NIO brand will break even and start making money.
4) The gross profit margin is above 25%.
Well, it turns out that Brother Bin’s performance goal is to replicate it according to Tesla.
And among them, he has repeatedly emphasized, and the core of all his speeches lies in one thing: increasing gross margins.
And interestingly, this pursuit and emphasis on gross margins has never been seen at a NIO analyst meeting.
So what exactly happened to NIO? Is it related to the third quarter results just handed over?
What kind of results did you hand over?
The reason why Li Bin now makes gross margin improvement his top priority and bluntly learns from Tesla BYD is that NIO has suffered its worst loss-making season in history.
In the third quarter, net losses were 4.1108 billion yuan ($577.90 million), up 392.1% from the third quarter of 2021 and 49.1% from the second quarter of 2022.
This year’s Q2 financial report, NIO because of "selling a loss 100,000" on the hot search, and Q3 even more.
In fact, NIO’s deliveries reached a new high in the third quarter, reaching 31,000 vehicles, an increase of 29.3% from the third quarter of 2021 and 26.1% from the second quarter of 2022.
In comparison, Ideal delivered 25,500 vehicles in the third quarter, while Xiaopeng delivered 20,783 vehicles.
But even if NIO has such excellent delivery results, it is still unable to smooth out the huge losses, and the average loss is 132,500.
Sales volume increases, losses expand, and the intuitive factor is a decline in gross profit margins.
In the third quarter of 2022, NIO’s gross margin was 13.3%, compared to 20.3% in the third quarter of 2021 and 13.0% in the second quarter of 2022.
Why the gross profit margin has been reduced, Li Bin’s explanation has been given earlier, the increase in research and development expenses, and the increase in raw material costs.
Looking at NIO’s third-quarter financial results this year, it actually confirms the view that we have analyzed before that "NIO has entered a new stage".
The first stage is to establish brand identity, awareness, and determine the technical route and manufacturing layout. Survival is the top priority.
This stage is over.
What are the highlights of next year’s NIO?
NIO car 2.0, next year is a line of life and death.
The first is the capital aspect.
NIO currently has more than 50 billion cash on the account, which can be said to be easy to spend in the short term.
But in the capital markets, NIO has almost exhausted the means of public financing, and US stocks, Hong Kong stocks, and Singapore have all been listed.
Next, NIO must prove its hematopoietic ability to everyone.
The NIO brand’s new 577 model, and next year’s new 866, their scale – the gross profit model, it is difficult to achieve profitability breakthroughs in the short term.
The reason is simple. The average price of the model is similar to or even higher than that of the old model. It is still competing for brand, quality, and service in the high-end market, directly stealing customers from BBA.
Just like the old 866 model, which had dug up the superficial "rich man’s mine", Li Bin took the 577 and the modified 866 model into the depths of the mine and continued to dig. He still undertook the task of breaking through upwards.
Shaking BBA’s dominance in the luxury car market is a gradual process, and even if it can break even in the short term, it is difficult to become a cash cow.
In this way, if the second stage of NIO survives and lives well, it is actually not on the "NIO" brand at all.
Where is it?
An affordable brand for the mass consumer market.
The brand that covers the 20-300,000 range is called "Alps", and another more cost-effective brand has only one code name, "Firefly Project".
So, "Alps" and "Fireflies" are the new stories of NIO.
But whether this story holds true or not depends on sales.
Since NIO has built a car, is it the car that users buy and pay for?
The impression formed in various aspects may not be the car itself, but the service.
This kind of service after buying a car, to put it bluntly, is an additional benefit, you can think that 40, 500,000 buy a car, which contains 200,000 services.
But here is the question, when 200,000, 300,000-priced models, or even cheaper mass-market models are launched in the future, will users get consistent service? Or will NIO still be able to guarantee "Haidilao-style" service indiscriminately?
Li Bin is very modest this time, and wants to learn from Tesla and BYD, but these two car companies have always been companies that sell out their cars, and users and owners have never had illusions about "service" –
Originally there is nothing, where to make dust.
NIO is different. NIO’s brand, reputation and the "pride" of car owners are somewhat closely related to service.
So the challenge of the new model is not sales, but whether the "roots" of NIO are still strong after such sales go up?
If you have sales and lose service, you will also lose the entire brand that has been operated at a loss.
Wei will not be Wei, and the future will not come. It will only be more difficult than selling a car at a loss, and even a fundamental crisis.
Brother Bin, have you thought it through?
Will you consider NIO’s cost-effective models?
(Disclaimer: This article represents the views of the author only and does not represent the position of Sina.com)
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