After the price of the entire series was reduced and sales returned to "Nio 10,000", what do the five investors think of NIO now?
Latest update time：2023-07-08
Reads：
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Sales, brand, cost control, barometer of investor attitude.
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Author | Wei Lixue
Editor
| Li Yuchen
After experiencing a trough for several months, Weilai finally
swept away the gloom in June, and its sales gradually recovered.
According to official data released by NIO, a total of 10,707 new vehicles were delivered in June, including 6,383 high-end smart electric SUVs and 4,324 high-end smart electric sedans.
This reminds me of a joke made by NIO Chairman Li Bin in April this year.
He said, "For more than half a year from now until the release of Alpine at the end of the year, if we still sell 10,000 vehicles per month, Lihong and I will both be looking for jobs."
"Wei 10,000" was originally Li Bin's joke about his possible unemployment. But in the eyes of investors, sales exceeding 10,000 in a single month is Weilai’s safety line. On June 12, NIO announced a price reduction of 30,000 yuan for all models, and canceled rights such as free battery swaps and unlimited mileage for 10 years for the entire vehicle. The benefits of this move were immediate and gave NIO a chance to recover and take a breather.
In addition, on June 20, Weilai announced that it had signed a share subscription agreement with CYVN Holdings, an Abu Dhabi investment institution. CYVN Holdings will make a strategic investment in Weilai Automobile totaling approximately US$1.1 billion through the private issuance of new shares and the transfer of old shares.
Is NIO now out of the "dangerous period"? We interviewed five investors in the primary and secondary markets and talked about their true views on NIO. (
We will also launch a series of manuscripts on Xiaopeng, Ideal and others from the perspective of investors in the future. You are welcome to add the author WeChat WLX_Charlene_0905 and the editor-in-chief WeChat Gru1993 to communicate in advance
)
01
" The high-end brand effect is over and users return to pragmatism"
Primary market investor Xiao Ke
Both Weilai and Xiaopeng are on the way to falling behind, and discussing which company is worse is a matter of 50 steps and a hundred steps. Judging from the current situation, Xiaopeng seems to be doing better.
NIO's biggest advantage should be its brand, but since Ideal, Tengshi, Yangwang, and Ji Krypton have all been launched, it has been proven that the brand is of little help at this business stage. Consumers don’t think it’s weird to spend more than 400,000 yuan to buy Ideal or Denza. They still look at whether the product is worth 400,000 yuan. This incident only had a backlash on Xiaopeng. There are indeed cases where it is not worth the money and people will not buy it, but they are only a minority.
Therefore, the matter of "NIO is a high-end brand" is basically over. If NIO sells cars in the future, there will be no brand premium. Consumers may buy NIO because its car interiors are better-looking than others, which is pragmatism. Or buy Nio because its services are better than others, that is also pragmatism.
Pragmatism must have a cost, but brand premium has no cost.
From the perspective of product matrix, Weilai is under great pressure and its products are too crowded. It will be hurtful to push cheaper models without losing brand premium. It is difficult to adapt the battery swap system to cars costing more than 200,000 yuan and cars costing more than 400,000 yuan. If forced to adapt, it will have a great impact on the model design.
Assuming that Weilai’s new car worth more than 200,000 yuan does not rely so much on battery replacement, Weilai will be a new competitor rushing in like Xiaomi. There is no reason to do better than others.
NIO’s operation of the user base has actually gradually failed. Coupled with NIO's corporate culture, supply chain procurement, etc., these managements have no cost control concept.
Although Weilai has saved a little on the materials used in new cars and no longer piles everything in the best direction. Users hope that new cars will not have dual motors, but Weilai still holds on. After all products are switched to the new platform (NT2.0 platform), there will be some improvement in cost control.
For car companies, the most important thing is sales. No matter how many platforms there are, only when the sales volume is as high as that of BYD can we say that cost control is good.
02
"Sales are not much and costs are completely out of control."
Primary market investor Xiao He
Let’s first review Weilai’s new ES6, which is priced at 368,000 yuan and comes with configurations of 50,000 to 60,000 yuan. At that time, the media's reaction to this incident was a bit too strong, and they felt that the car price was unscrupulous.
In fact, Weilai can only set this price, and ES7 users will definitely jump at any lower price. The reality is that old ES6 owners feel that the extra 10,000 yuan can be tolerated. NIO has also considered setting the price of the new ES6 at 358,000, but things like HUD will become optional. After the option was changed, the production line had to be customized on demand, so the cost was not saved much. If the price is 378,000 yuan, Nomi and HUD are standard equipment. Standard equipment is like an ideal approach, and Weilai does not want to do this.
The biggest problem investors have with NIO now is that its sales volume is not much and its costs are completely out of control. The stall is too big, selling second brands, third brands, and mobile phones. Some time ago, it even officially announced its investment in nuclear fusion. Every time I announce my performance, I am playing with my heartbeat to see how high the expenses will be.
In the short term, NIO's market value changes will mainly depend on its cash flow in the second quarter and whether gross profit can recover in the third quarter.
Weilai has also experienced the problem of unable to sell cars and out-of-control expenses before. Although a lot of money was raised, it could not even achieve the first step of making the gross profit minus sales expenses positive, and there was no commitment to control expenses.
Xpeng's G9 is working hard after its marketing failed. NIO's ET7 and ET5 failed one after another. Even the pricing of the new ES6 is delayed. Li Bin doesn't think there is an organizational problem. The only cruel thing Li Bin said recently was, "If the sales are less than 20,000, Qin Lihong and I will go out to find jobs." But it feels like neither NIO nor Li Bin has changed. We can see marginal changes in Xpeng, but not in Weilai.
What Weilai should consider is which of the services it provides to users are the rights and interests that should be allocated to car owners when buying a car, and which are doing charity and performing art. In terms of research and development, NIO has nothing else to offer except NT1.0 and NT2.0. What you spend on self-research and can internalize into your own strength is not as much as outsiders imagine.
03
“Nio relies on financing to survive”
Secondary market investor Long Yuanchen
NIO is slowly opening a gap with Tesla. Whether in terms of interior, intelligence, or services, the new ES6 is far better than the Tesla Model Y. Selling 10,000 units of the new ES6 in a month is not a big problem. But the ET5T will not sell very well because this model is too niche.
Many NIO models are niche, such as the ET5. The ET5 is nearly 100,000 more expensive than the Model 3, and its monthly sales are about 2,000-3,000 units. When it was first launched, the ET5 accumulated a wave of orders.
Weilai’s sales volume next month may reach 20,000. As for the ES8, selling 1,000-2,000 units in a single month should not be a big problem. Weilai wants to pile up the quantity first, but it must be delivered quickly, otherwise orders may be lost and snatched away by other car companies. Tesla's new Model 3 should be announced by the Ministry of Industry and Information Technology in July. It is expected that the new car will be released in August and September, and the ET5 will be more difficult to sell.
NIO gives people the feeling that the next car will always be better than the current one, so everyone is waiting. In contrast, the ideal product cycle is well grasped. L9 was launched first, L8 was launched within half a year, and L7 was launched half a year later. It is basically a half-year cycle. The ideal is to play the cards from high to low, and consumers who buy new or old cars will not feel at a loss.
Weilai will take one or two years to launch each product. This approach is quite similar to traditional car companies. Mercedes-Benz's A-Class, C-Class, E-Class, and S-Class were also launched two or three years apart. However, the price difference between different series of Mercedes-Benz is not small. The price of buying a new Mercedes-Benz C may be the same as buying an old Mercedes-Benz E, but consumers will think that I am buying a new model.
The business logic of Weilai is completely different from that of Ideal. Ideal is to build the market first and form an internal cycle. The ideal has now entered a positive cycle, and it will expand further when it has the ability. NIO has been using financing to expand the market from the beginning. No matter how much money it spends, it must occupy the market. It is completely Internet thinking.
Both of these paths are correct. For NIO, it mainly depends on whether it can make a profit.
NIO is such a big store. If one day Xiaopeng really launches high-voltage fast charging, NIO will not be able to continue its battery swapping business. When it is difficult to see profits, Weilai can only survive by financing. In one sentence, it depends on whether the capital bosses are willing to believe that it can be done in the future.
At present, Weilai cannot die. It just needs to raise funds when it is cheap or when it is expensive.
NIO’s narrative is grand, and investors prefer to listen to it. The story it tells is similar to Tesla, so even if it is just for financing, investment in chips and energy must be done. When telling stories to investors, the company is just talking about what it wants to do in the future, what the benefits of its products are, and what its business layout is. But now when the market value is still relatively low, do you want to come in? NIO’s current market value is not expensive for foreign investors.
04
“Nio is here, it’s time to consider how to monetize the brand”
Primary market investor Lao Zhou
NIO's marketing is weaker than its peers, and its product highlights are not as simple and easy to understand as ideal, making it difficult to impress consumers. When Weilai's new ES6 is launched, the ideal terminal channel will sell various attacks on the new ES6. Regardless of whether the approach is correct or not, at least the attitude of fighting is there. This is the combat attitude that should be adopted in competition in the automobile industry, but NIO does not have such a combat attitude. It is too Buddhist.
Li Bin has a bit of an ostrich policy when it comes to market management. As a luxury brand, he can simply ignore competition. Luxury brands are only objective factors. What is important is to exert subjective initiative and understand how to market products in the era of involution to achieve the desired effect of the brand.
Super luxury brands have their own advantages, and sales and pricing have not been affected by the bad economic environment. For example, Ferrari has experienced strong sales despite the global economic recession after the epidemic. This is the tone that a luxury brand should have, but NIO has not yet reached that point.
Judging from the early stage, NIO's user services are very cost-effective and can make the brand stand up. Without these services, it would be too difficult to establish a luxury brand image from 0 to 1. In the more than 20 years of history of China's automobile industry, basically no car company has been able to successfully build a luxury brand. But after having a brand, Weilai should consider how to monetize the brand.
05
“Weilai’s market value will not fluctuate much during the year.”
Secondary market investor Lu Yunbo
NIO's market value will not fluctuate much during the year because the order volume for all NIO products after price reductions is acceptable.
Looking at sales alone, the new ES8 cannot sell many units in a month. Previously, the old ES8 sold about 2,000 units in a single month. Our main focus now is the new ES6 and ET5. When the volume of the new ES6 increases, the ES7 will definitely die, and sales can reach 0.
If the combined sales of ET5 and ET5T can reach 7,000-8,000 units in a single month, plus the new ES6 can sell several thousand units each month, and other cars can sell 3,000-4,000 units, then Weilai can basically sell Achieve monthly sales of about 1.5w-2w. The capital market mainly depends on whether Weilai can return to sales of 10,000 in a single month.
NIO’s market share in BBA is already very high, and it can only be said that it will continue to grow along with the penetration rate of the industry.
The downside risk for NIO is that the cash burn has not stopped. If it is not stopped, everyone will see that the cash on its account is getting less and less, and they will trade in its bankruptcy expectations. Even if the sales volume goes up, it will feel that it will not be able to withstand next year and the year after that. But I have to admire NIO’s financing capabilities.
At this point in time, whether it is Weilai, Ideal, or Xpeng, everyone, investors actually have a relatively accurate view of their sales during the year. In Q1 this year, on the one hand, everyone was worried about the industry downturn, and on the other hand, they were worried about the product strength of new cars. By Q2, the fluctuations in the industry have been maintained at a stable state. The company's new car product strength has been demonstrated, so there will be no major expected adjustments in sales volume. For the company's valuation, it is a very stable state.
Wait until the second half of 2023, and the secondary market will trade expectations for 2024. So it still depends on the sales volume of Q3.
Note: Xiao Ke, Long Yuanchen, Lu Yunbo, etc. in the article are all pseudonyms.
In the future, Leifeng.com will also launch a series of manuscripts on Xiaopeng and Ideal from the perspective of investors. You are welcome to add the author WeChat
WLX_Charlene_0905
and the editor-in-chief WeChat
Gru1993
for communication and discussion.
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