Dangerous NIO, fishing where there are no fish, high-end pure electricity is passive water

On June 1, NIO quietly announced its May sales, and the share price fell by 0.60%. This was another decline after the share price of the second-generation ES6 fell by 9% on the day of listing. By June 5, the total market value had been less than 100 billion Hong Kong dollars.

From the head of sales/market value to the tail of new car makers, NIO only took 2-3 years.

The market value is less than half of Li Auto, which makes NIO, which lost 14.40 billion yuan last year and 44.60 billion in 5 years, on the verge of difficulties, and the cumulative loss is more than Tesla’s 15 years of establishment.

In 2022, NIO’s cash will decrease by 10 billion yuan, and as of the beginning of 2023, there will still be 40 billion yuan in cash in the company’s account. At such a "burning money" rate, I wonder how long NIO can support?

Li Bin, chairperson of NIO, actually knows very well. He said in an interview in April this year that,If this year’s work is not good, 24 years will become another 19 years, which means that NIO may be "back" in the ICU again.

After NIO went public on the Nasdaq, it once became the most valuable car company in China, and Li Bin (left) was no exception for a while.

Back in November 2020, NIO’s market value reached 72.84 billion US dollars (about 479.70 billion yuan), making it the highest car company in China in one fell swoop.

This can’t blame NIO’s current stock price, because sales are not awesome! In May this year, NIO only delivered 6,155 vehicles, a decrease of 7.6% month-on-month, ranking second to last among new car-making forces. This is the fourth consecutive month of decline, and it is getting farther and farther from the goal of "Wei 10,000".

The monthly sales of 3 models are about 10,000, and the 7 models are still around the 10,000, so NIO is dubbed "Wei 10,000".

"If NIO still 10,000 sales every month, Qin Lihong (president) and I will have to look for jobs." In early May this year, Li Bin also joked.

Li Bin and Qin Lihong are also very hard, but the high-end pure electric vehicle (above 300,000 especially above 400,000, such as ES6 plus optional super 400,000 yuan) market targeted by NIO is too small.

Regarding the problem of NIO, as the reader’s comment after the DearAuto article hit the nail on the head "Fishing where there are fish, otherwise it will be a dead end. Where there are fish? One is plug-in hybrid including range extension to solve the problem of mileage anxiety. One is to take a trolley within 150,000 to solve the problem of urban traffic, and the family has a second car. Where there are no fish, there are no fish in the more than 300,000 pure electric markets. Whether you are Wei Xiaoli, BYD Great Wall Geely, or Huawei, there are no fish. Wang Chuanfu said well, strategy is the most important, strategy is wrong, wasting money is small, wasted time is priceless."

I seriously suspect that this reader may be a Weilai owner who hates that iron cannot make steel, otherwise he will not be able to see the problem so clearly.

There is no universal standard for high-end pure electricity, which is generally considered to be more than 300,000 yuan, which is equivalent to luxury fuel vehicles.

NIO’s standard is higher – more than 400,000 yuan, and it often posted such forms last year to prove that it is a monopoly in this market.

In August last year, for example, NIO was still relatively popular, occupying the top and second place in the rankings, but the top 10 were imposed on less than 7,000 vehicles, all of which were given to NIO, and NIO could not support such a large company with more than 30,000 people.

Correspondingly, there are only 10,000 people in Ideal and Xiaopeng.

NIO also has an ET5 sedan that is more capable of playing, in the 300,000-400,000 range, the car claims to outsell BMW 3 Series, and the amount of insurance once exceeded 3 Series, but then sales fell rapidly.

In April, BMW sold nearly 12,000 3 Series, but only 4,293 ET5s, proving that the 30-400,000 pure electric market is not so optimistic.

Due to the unresolved issues of charging and battery life, pure electric vehicles are more suitable for small cars as the second scooter in the family, rather than pure electric vehicles such as NIO.

Of course, the popularity of big cars such as the Ideal L8 and D9 also shows that consumers can also pay for high-end big cars, but they are PHEVs.

The high-end is largely reflected in performance. For electric vehicles, improving performance becomes very simple, basically adding batteries and enhancing motors; while the interior is replaced by a large screen, just to see who has a larger screen and higher pixels.

The threshold has suddenly been lowered, which means that it is not as high-end valuable.

The demand for high-end pure electric cars, if there is one, is small. NIO worked hard, but to no avail. After the launch of ES6, ES8 sales plummeted; when ES7 came out, ES6 sales fell again; when ET5 came out, ET7 dropped sharply.

This is not a problem with the NIO family. Even the most powerful pure electric brand, Tesla, saw its million-dollar Model SX sales plunge after Model 3/Y came out.

Mercedes-Benz, BMW, and Audi all performed poorly in the EV market. This is definitely not an accident. It is not that these products themselves are flawed, but that the market positioning is incorrect.

"We also know that high-end pure electric is a point of no return, but we can’t change it, it’s the decision of the global headquarters," a luxury brand head told DearAuto on condition of anonymity.

In addition, after three years of epidemic attacks, consumers are not as rich as manufacturers imagine, this year, no matter how the government at all levels to stimulate, car sales are always tepid.

According to the National Bureau of Statistics, the per capita disposable income of residents in 2022 was 36,883 yuan; this year, consumers seem to be even more short of money, and even if they have it, they will not dare to spend. The fire in Zibo during the May Day holiday also proved that ordinary people are "short of money", because the cost of going to Zibo is much cheaper than that of Sanya or Lijiang.

One of the reasons why NIO stood out in the early days was that it started early and had a first-mover advantage, which won the favor of the capital markets. The second relied on the ultimate service to create a unique city and build its high-end image. The power exchange model is the core of NIO’s service system, but this core may bring down NIO.

According to industry data, the cost of NIO’s first-generation replacement stations is about 2.50 million-3 million yuan, and the cost of second-generation replacement stations is about 1.50 million yuan (excluding batteries). NIO has established 205 first-generation replacement stations, and the number of second-generation replacement stations is 1,100. In this way, NIO has invested 21.625 billion in replacement stations. Including land rent and operating costs, NIO’s investment in replacement mode has exceeded 10 billion yuan.

In 2023, NIO plans to increase the number of new power stations from 400 to 1,000, with a new investment of 2 billion yuan.

"Kneeling and licking service" has no bottom line, it is difficult to get off the service, and the car owner is also spoiled.

NIO began to do some "tricks" on the service this year, including that the beta version of NOP + Enhanced Pilot Assistance will be switched from free use to paid subscription; the power exchange benefit will be changed from the original 6 times a month to 4 times a month free and no longer send home chargers.

The "backlash" came soon, and NIO’s sales in April and May did not exceed 7,000 units.

After the second-generation ES6 went on sale, ES7 owners quit (thinking that the ES6 was too cheap, affecting the residual value of ES7 used cars) and asked NIO for compensation. The owner replied to Li Bin and said: "My relationship with you is not that close. I am here to negotiate, not to talk."

Li Bin said publicly that this is impossible because he needs to invest in real money.

High-end is the tone of NIO electric vehicles. Li Bin has repeatedly emphasized that "NIO will not offer low-end vehicles, nor will it reduce prices."

But the auto industry is an industry that pays attention to scale. Li Bin is very clear in his heart, "In the long run, the sales of 2 million cars a year by car companies are the line of life and death. If you can’t see the hope of sales to this line, I think it will be difficult."

For NIO, the top priority is to sell more cars and cut costs to survive.

Due to NIO’s high-end attributes limiting its sales scale, its second brand, Alpine, and even its third brand, Firefly, are expected to be used primarily for impulse.

Let’s not say that multi-brand operation is a huge pit, and there are few successful precedents for Chinese and foreign automakers.

For NIO, going down is more difficult because it faces stronger competitors. In addition, mid- to low-end brands have higher cost requirements, which is not good at NIO.

According to NIO’s plan, the Alps brand will mainly target the price range of 20-300,000 yuan. And it is expected that products will be launched in 2024.

But competitors in this price range include BYD, Tesla, Extreme Krypton, Wei Brand, Deep Blue, and a large number of joint-venture electric vehicles.

Firefly is NIO’s car brand, which will be launched in Europe at that time, and is expected to be in the price range of 10-200,000 yuan.

The competition in this market is even more intense in China. Not only are there a bunch of pure electric vehicles including Aian and BYD, but also a large number of plug-in hybrid models. Wuling is also a mythical existence. (Text | DA Bin)