Source | Bohu Finance (bohuFN)

Recently, a barrage appeared in Li Bin's live stream: Can you please stop placing so many ads? Upon seeing this, Li Bin immediately responded, saying, "Where do I get so much money for marketing? I just gather some content and broadcast it myself."

For readers familiar with NIO, such remarks are somewhat unlike NIO's style.

After all, NIO, which will celebrate its 10th anniversary in two months, has always been generous with its investments: energy replenishment, mobile phones, intelligent driving, and Li Bin is also one of the industry leaders who enjoy discussing long-termism. In other words, NIO doesn't mind short-term losses. Since its inception, NIO has been mired in losses. Even in 2023, NIO's net loss expanded to an unprecedented 20.72 billion yuan, exceeding Li Bin's expectations by 10 billion yuan.

But now, things are definitely different. Last year, Li Bin was able to raise nearly 16 billion yuan from Middle Eastern investors, which impressed the industry. After all, competitors had also announced Middle Eastern financing, but it wasn't reported until after they ceased production, and the funds never arrived.

Without access to others' money, one must earn it oneself, and the only thing automakers can do is sell cars. In the second quarter of this year, NIO announced a turnaround with a belated financial report, with revenue of 17.45 billion yuan, a year-on-year increase of 98.9%, and a loss of 5.209 billion yuan, a year-on-year narrowing of 14.2%. As of August, NIO has sold over 20,000 vehicles for four consecutive months.

While this is undoubtedly a good performance for NIO compared to itself, it still lags behind competitors. ZEROPOUND, which closely mimics and aspires to be a smaller LIXIANG, surpassed 30,000 sales in August this year.

Hopes are pinned on LeDao. On the second day after the successful launch of LeDao L60, Li Bin and Qin Lihong were confident:

"There's indeed been an explosion of orders, and even after expanding our order server by five times, it's still struggling. We're still going all out to increase production.""""LeDao's competitors are Tesla, Volkswagen, and Toyota.""01 Cost-Effective Strategy

Li Bin's confidence in LeDao is evident, and the most direct evidence lies in market feedback. According to third-party data, LeDao L60 has received nearly 30,000 new bookings.

The enthusiasm in the market is straightforward: the product is excellent, and the price is affordable.

According to the launch event, as a mid-size SUV targeting family users, the standard range 60 kWh battery version of LeDao L60 is priced at 206,900 yuan, while the long-range 85 kWh battery version is priced at 235,900 yuan. Additionally, leveraging its battery swap advantage, if purchasing LeDao L60 through the BaaS model (battery-as-a-service), the entry price can further drop to 149,900 yuan, with a monthly rental fee of 599 yuan for the 60 kWh battery pack.

Not just the battery, LeDao L60 excels in its precise cost-cutting measures. In the fiercely competitive domestic auto market, it adheres to the principle of "I may not need it, but you can't be without it." Whether it's space, range, energy consumption, or intelligent driving, these are all crucial factors influencing consumers' purchasing decisions. In all these aspects, LeDao L60 delivers fully loaded features.

In terms of space, LeDao L60 outperforms the benchmark Model Y in length, width, and wheelbase. For energy replenishment, LeDao L60 adopts a 900V high-voltage platform, a configuration typically found in vehicles priced around 250,000 yuan. As for the infotainment system, LeDao L60 is equipped with the Coconut LeDao Intelligent System, built on SkyOS·Tianshu, the world's first vehicle-wide operating system. For intelligent driving, LeDao L60 boasts 30 sensor hardware and one NVIDIA OrinX chip, enabling full-scenario NOA coverage in 726 cities and 2,700 counties and districts.

Moreover, LeDao L60 can also share NIO's energy replenishment facilities, including 1,000 battery swap stations, over 23,000 supercharging piles, and over one million third-party charging piles.

In Li Bin's own words, "Compared to Tesla, LeDao may be two levels lower in brand value, but it offers stronger product capabilities and is 43,000 yuan cheaper in the same segment."""Users in the 200,000-300,000 yuan price range tend to prioritize meeting their needs, with price not being the primary concern but cost-effectiveness being essential. In the mid-to-large SUV segment, there are many star players, including not only the world's best-selling Model Y but also Xpeng G6 and the newly launched ZEEKR 7X.

LIXIANG's success with extended-range electric vehicles (EREV) has taught all players that users are willing to pay for noticeable experience upgrades rather than marginal technology improvements. LeDao L60, which excels in key competitive areas, has also reduced configurations in many aspects, such as omitting the liquid crystal instrument cluster and opting for a single-arm MacPherson suspension instead of a double-wishbone suspension.

Whether it's the unique battery rental model or the precise cost-cutting configurations, Li Bin has abandoned NIO's past habit of over-equipping and crafted a car that better caters to the market with LeDao L60.

02 Trading Price for Recognition

Last year, when NIO's monthly sales hovered around 10,000 units, Li Bin joked that if sales remained at around 10,000 units, he and Qin Lihong would have to look for new jobs.

He probably didn't expect monthly sales to reach 20,000 units only this year.""On one hand, this is related to delivery. When the NIO ET5 was first launched, it accumulated a considerable number of orders, but due to delivery issues, many of these orders failed to convert into actual sales. Therefore, production capacity was seen as a top priority by Li Bin for this delivery.

Li Bin stated that the vehicle manufacturing plant has commenced double-shift production. According to plans, LeDao is expected to produce 5,000 units in October, with production capacity rising to 20,000 units by March next year.

On the other hand, it's also related to market strategy. People's impression of NIO is often associated with its service and high-end positioning, which relies heavily on services such as pick-up and drop-off for car owners, as well as its pioneering energy replenishment planning. However, the high-end market is inherently limited, and the stagnation of domestic auto market growth is not new news. NIO, which is positioned in the high-end segment, finds it challenging to increase sales in this market.

But long-termism, especially battery swapping, requires a sufficient scale of vehicle ownership to help consumers form a perception.""NIO has been the most resolute among new-energy vehicle makers in terms of both battery swapping and charging pile investments. However, due to its investments in the energy replenishment system, NIO has faced much criticism, including short-selling by institutions and negative media coverage. This prompted NIO President Qin Lihong to come forward to explain, "You can't expect a four-year-old child (NIO Power) to support the family financially."""In fact, there is a significant gap in energy replenishment. PwC predicts that the demand for battery swap stations for light vehicles is expected to increase to 33,100 by 2035. According to forecasts by relevant national agencies, the demand for charging piles in China will reach 30 million by 2025.""However, the construction cost of battery swap stations is not low. Qin Lihong, President of NIO, has stated that the cost of a single battery swap station is approximately 3 million yuan. Based on NIO's current number of 2,429 battery swap stations, NIO has invested over 7 billion yuan in this area, excluding additional expenses such as site leasing, personnel operations, and electricity costs. According to Shen Fei, Vice President of NIO, each battery swap station needs to handle 50-60 swaps per day to achieve break-even.

The pressure of losses has forced NIO to slow down the construction of battery swap stations. NIO originally planned to add 1,000 new battery swap stations this year, but as of August, it had added fewer than 200.

NIO has also been urging allies to join its battery swap alliance, and automakers such as GAC Motor, Geely, and Chery have chosen to participate. However, transitioning from a standalone battery swap model to a collaborative one may be even more challenging than NIO executing it alone. The primary obstacle lies in the standardization of battery pack sizes and specifications, which in turn affects the unification of vehicle chassis and battery swap technology routes.""Li Bin himself has stated that the difficulty in battery swap cooperation lies in operations, requiring exploration into how to implement hierarchical decoupling, how to structure each layer of technology, and how to consider complex application scenarios.""As a key investment project for NIO, it cannot abandon battery swapping. At this juncture, LeDao L60, which could potentially achieve monthly sales of 20,000 units, may become the key to solving this puzzle.""03 Pure Electric Vehicles Lack Security

As ZEEKR and Xpeng have officially announced their hybrid models, there are now fewer pure electric vehicle teammates left for Li Bin. When asked about plans for hybrid vehicles, Li Bin's response was intriguing:

"Let's discuss it when Tesla introduces an extended-range model."""The significance of extended-range electric vehicles (EREV) need not be elaborated upon here. The industry's shift in perception from "lagging technology" to "truly desirable" is ample proof of the market's fervor for this technology. To some extent, EREV has almost become a guarantee of sales.

Even when considering the overall plug-in hybrid market, the growth of hybrid models far surpasses that of pure electric vehicles.""According to data from the China Association of Automobile Manufacturers (CAAM), since the beginning of the year and as of July, except for February, which was affected by the Spring Festival holiday, sales in other months have maintained year-on-year growth rates of over 80%, with sales volumes increasing from less than 300,000 units at the beginning of the year to over 430,000 units in July.""According to a Counterpoint report, global sales of new energy vehicles increased by 18% year-on-year in the first quarter of 2024. Among them, sales of plug-in hybrids grew by 48%, while those of pure electric vehicles grew by only 7%.""Ouyang Minggao, Vice Chairman of the China Electric Vehicle Hundred People Forum and Academician of the Chinese Academy of Sciences, stated that China's comprehensive electrification transition will take approximately another decade, necessitating a continued parallel transition and implementation of a dual-drive strategy for EVs and PHEVs.""As an ardent supporter of pure electric vehicles, NIO may not be the top seller in China, but it is certainly the most ardent in building charging infrastructure. Due to its leading position in energy replenishment facilities, NIO often faces unavoidable challenges.""For instance, during this year's Spring Festival, to meet the energy replenishment needs of its car owners during the tourist peak in Xinjiang, NIO designated some service area charging piles to serve only NIO vehicles from 11 am to 6 pm. This quickly became a trending topic on social media, and NIO was criticized for "lacking magnanimity." Subsequently, NIO shortened the exclusive service time from 7 hours to 4 hours, only to face dissatisfaction from NIO car owners.""For NIO, reality is not as rosy as it seems. Even though sales were robust and gross margins improved in the second quarter, the 12.2% gross margin level is not only significantly lower than that of LIXIANG but also inferior to that of Xpeng during the same period. In the cutthroat competition of the new energy vehicle market, neither marketing nor R&D expenses can be spared.""Even though LeDao L60 has made a strong start, the challenges facing Li Bin remain significant.

Reference Materials:

1. New Energy Vehicle News N.E.S.: Growth Exceeds Pure Electric Vehicles by 31 Times; Chinese and Foreign Automakers Embrace Hybrids – How Long Will the Boom Last?

2. Baobian: Can LeDao Alleviate Li Bin's Anxiety?

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