How did the reborn NIO car prove its true value of "100 billion US dollars"?

On the night of January 9, 2021, in Chengdu, the famous musician Wang Feng came to NIO Day with three songs, including two songs-“Brave Heart” and “Brightness”, which are more suitable to describe Li Bin now .

Li Bin and the guests he invited, including a group of NIO investors, sat in the first row facing Wang Feng. They sang and turned on the flashlight of their mobile phones, shaking their hands up high.

These two songs describe Li Bin and his mood right now. Just like NIO Day a year ago, NIO car owners formed a band, adapted “The Worst Man of 2019” into a song, and gave it to Li Bin on the spot. Li Bin smiled bitterly as he listened, only he knew his true mood.

“2020 is the year of NIO’s rebirth after the catastrophe.” Li Bin started with these words during the release of the first flagship sedan ET 7.

The stock price fell to more than one block, and the layoffs continued in the second half of 2019, and EC 6 was pieced together. In the first half of 2020, with the gradual progress of financing, NIO has initially emerged from the haze.

NIO is always financing

In December 2019, NIO released NIOEC 6 on NIO Day in Shenzhen, the car that had been rumored before did not appear. At that time, it was widely believed that NIO was unable to make another car due to the tight capital chain.

Since its inception, NIO has been losing money, especially when it reached the peak of loss in 2018-the financial report disclosed a loss of 22.338 billion yuan for the whole year. In 2018, NIO only achieved the delivery of one car, namely NIOES 8. NIOES 6 is being developed.

The $1 billion raised by NIO in 2018 was just a drop in the bucket. Increasing losses have dragged NIO into a vicious circle-financing is not enough if the money is not enough, and then continue to burn money after financing, but the money is not enough. This also directly led to the delay of NIO’s sedan project in 2019.

At the World Intelligent Connected Vehicles Conference in October 2019, NIO co-founder and president Qin Lihong said that NIO “may not be sunny, but it must not die.” This has almost become a footnote for NIO management for 2020. .

It’s just that the turning point will come in early 2020. From February 6th to March 5th, 2020, NIO issued three convertible bonds and raised US$435 million.

On April 29th, NIO announced that it had reached an agreement with Hefei Economic and Technological Development Zone on the entry of NIO China headquarters. According to the investment agreement, strategic investors will invest 7 billion yuan in NIO China. Two months later, this strategic investment was completed. During the period, NIO also completed an additional issuance totaling approximately US$500 million.

Until the end of 2020, NIO also raised US$1.73 billion and US$2.65 billion in two additional issuances. NIO’s financial report shows that as of the fourth quarter of December 31, 2019, NIO’s cash and cash equivalent balances were only 990 million yuan. By the third quarter ending September 30, 2020, the cash on the NIO account increased by 18.566 billion yuan to 19.556 billion yuan.

Based on this calculation, at the end of 2020, NIO, which was short of money, may have about 40 billion yuan in cash on the account. At least for now, the shortage of funds is no longer the most pressing issue facing NIO.

After alleviating the financial pressure, NIO, which once had a share price of more than one block, had its market value more than 11 times its trough at the end of 2020, surpassing BYD to become China’s highest market value car company, and NIO’s delivery volume is still not a fraction of BYD.

Is it Model Y or BBA?

To solve the immediate worries, NIO’s long-term concern is, who is the opponent of NIO, and who will bring the greatest threat to NIO?

The answer between these two questions may be the same. NIO’s opponents pose the greatest threat to NIO; there may also be different answers. NIO’s opponents have many, but the biggest threat comes from another one.

On January 1, 2021, Tesla launched the Chinese-made Model Y four-wheel drive long-life version and high-performance version in China, priced at 339,900 yuan (USD $48557) and 369,900 yuan (USD $52843) , respectively.

In comparison, the starting prices of two similar NIO models, the EC 6 and ES 6, are 368,000 yuan (USD $52571) and 358,000 yuan (USD $51143) , respectively. This also means that Tesla has the price of a car for the first time, directly set in the price range of NIO products.

Although including Li Bin and Qin Lihong, all interviews received in less than half a month in 2021 stated that NIO’s opponent is not Tesla, and new energy vehicles are not a zero-sum game. New energy vehicles Instead, companies should form a group and turn more fuel car owners into electric car owners.

On the second day of ET 7’s release, Li Bin participated in several interviews in a continuous fashion. At the end of the day, after the Q&A, Li Bin spent about 3 minutes talking about his thoughts, “Don’t compare us with Tesla, We are different companies. In Europe and the United States, many people think that we are very big things. Chinese companies should have some original things.”

Li Bin believes that Tesla is a very good company, and many places are worth learning from NIO. It has contributed to the popularization and promotion of new energy vehicles. The whole world has given Tesla enough recognition. But NIO is not Tesla, and the genes and missions of the two are different.

Putting on Li Bin, Li Bin did not do NIO because he was inspired by Tesla. “When I wanted to be a NIO, Tesla was not worth much, only a billion dollars.”

But no matter how it is explained, it is difficult for the outside world to change the inherent impression that NIO is also facing pressure from Tesla. As a result, after the announcement of the listing of Model Y made in China, it was rumored that NIO’s official website also collapsed because EC 6/ES 6 suffered a large number of unsubscriptions.

From “the worst person in 2019” to becoming the opponent of the world’s richest man Elon Musk, this kind of different treatment can only be said to be Li Bin’s destiny as a more eye-catching public figure.

However, Li Bin still insists that NIO’s opponent is BBA (Mercedes-Benz, BMW and Audi). Starting from NIOES 8, NIO has used BBA as its opponent, benchmarking BMW X5, Audi Q7 and other models, while ES 6 and EC 6 are targeting BMW X 3, Audi Q5 and Mercedes-Benz GLC series.

As for the latest NIOET 7, Li Bin believes that the biggest rival of this model is BMW’s 7 series. Even in the NIO car owner community, Qin Lihong mentioned the BMW 7 Series when answering questions from car owners.

A NIO product manager told Sina Technology that the biggest difficulty for NIO in 2021 is Model Y. No matter how Li Bin and Qin Lihong express it to the outside world, it will be difficult to change everyone’s impression. Confrontation on the price point.

Whether it is Model Y or BBA, the answer to this question will appear in the delivery volume of NIO in January and the first quarter of 2021.

NIO’s future-price cuts or small models

According to many NIO insiders, the biggest difference between NIO and other car companies in the early days is that, not to mention cost control, but to experience the king. If you want to control costs, you must sacrifice part of the user experience.

This is also one of the reasons why NIO’s car prices remain high. Of course, NIO has targeted the blue ocean market of family SUVs from the beginning. But on the other hand, the user value of NIO is higher than other new car brands.

Qin Lihong said in an interview with Sina Technology that the average price of NIO’s cars is already around 400,000 yuan (USD $57143) . Among the three models sold, the ES 8 signature version is the highest, with a starting price of 558,000 yuan (USD $79714) , the lowest. The ES 6 sports version starts at 358,000 yuan (USD $51143) . The newly released ET 7 sedan starts at 448,000 yuan (USD $64000) .

But for NIO, although it has a high value-added user base, NIO’s delivery volume has been difficult to increase, although the delivery volume in 2020 is higher than the sum of 2018 and 2019. Official data show that since the first delivery in June 2018, NIO has delivered 75,641 vehicles by December 31, 2020, of which 43,728 were delivered in 2020.

In the process of negotiating financing with Hefei, some media once disclosed additional conditions for NIO financing: NIO China is expected to have a revenue of 14.8 billion yuan in 2020, three models will be listed, and a revenue of 120 billion yuan in 2024, and 6-8 models will be listed. , From 2020 to 2025, the total revenue will be 420 billion yuan and the total tax will be 7.8 billion yuan. It will be listed on the Science and Technology Innovation Board before 2025.

This is similar to a “gambling agreement”, but in the content of cooperation jointly disclosed by both parties, this part of the additional conditions has been hidden. Although the specific figures are nowhere to be verified, there is no doubt that NIO’s financing is still conditional. For NIO itself, it is an inevitable move to increase sales if it wants to escape from a new car.

In an interview with Sina Technology, Li Bin denied the possibility of NIO’s long-term price reduction. Li Bin believes that this is one of the differences between NIO and Tesla. The latter is cost-oriented. As the cost of parts drops, the price of the vehicle will decrease, but it can still maintain a sufficient profit margin, which shows that Tesla The value of the car is so much. NIO has its own genes and its own path, so there is no need to follow the Tesla (price reduction) path.

Li Bin told Sina Technology that the industry does have economies of scale and diminishing prices, but not everything can reach that level. For NIO, there may be two to three thousand to five to six thousand to 10,000 a month, which is a significant improvement, but from 10,000 to 20,000, there is no difference whether it is the supply chain or other costs. Even if the quantity increases, the price of raw materials may also be affected. For example, the price of cobalt will increase due to the increase in demand, which will affect the price of batteries.

Qin Lihong used a more direct analogy, that is, what Tesla wants to do is Ford in the era of electric vehicles, and what NIO wants to do is BBA in the era of electric cars. After the ET 7 conference, Li Bin added in an interview, “Now Ford no longer sells cars in the United States.”

But even if the price is not reduced at present, it does not mean that NIO cars will not become cheaper in the future.

In Chengdu, Li Bin talked about NIO’s future model planning plans in an interview with foreign media. He said that NIO obviously needs a smaller car, but the launch time of this car is uncertain, and it will not be cheaper. It does not rule out making a new brand outside of NIO to make small vehicles.

But in any case, NIO’s 2020 is still a success. Not only does it completely get rid of the tragic situation of the stock price, but the delivery of vehicles is also rising. In 2021, NIO also ushered in a good start. On the first trading day after the release of ET 7, the market value of NIO exceeded US$100 billion.

Looking back, Li Bin, who turned the tide, may be called “the best CEO of 2020.”

However, NIO will face greater challenges in 2021. An internal employee of NIO described it this way. When NIO had no money, many decisions were correct. When he had money, he didn’t know what to do. After the rebirth of 2020, NIO needs to prove that it is a veritable company with a market value of hundreds of billions of dollars.