How can the new forces break through?

On the first day of the new year, NIO Chairman and CEO Li Bin issued a letter to all employees. Li Bin stated in the letter that the impact of the epidemic and emergencies in 2022 has exceeded expectations and disrupted the original rhythm and plan.

In the letter, Li Bin listed areas where the company's development needs to be further optimized: the growth rate of delivery volume lags behind the overall growth rate of China's smart electric vehicle market; in response to supply fluctuations, many manufacturers respond more quickly and efficiently; in response to demand fluctuations, inertia It was too strong and adjustments were not made in time, causing unnecessary losses; software and hardware quality problems before and after the new car was launched have affected product reputation and reputation; test car accidents and data theft incidents exposed the need to strengthen the company's internal management; establishing user satisfaction There is a feedback mechanism in place, but the closed-loop speed of solving problems is still far from users’ expectations; the organization and team have expanded too fast in the past year, and the efficiency of internal communication needs to be improved urgently; the digital management system cannot well support new business changes. Demand has become a bottleneck for business development.

The eight optimizations proposed by Li Bin cover many aspects such as sales, supply chain, and services that car companies need to face. As the issues are raised, it is foreseeable that Li Bin may vigorously make adjustments to the company's system in the future. However, if you think about it carefully, the problem Li Bin mentioned this time is obviously not unique to Weilai. Many growing new forces also face this problem. In other words, Li Bin’s suggestions for his own NIO are also a warning to other new forces.

Image source: NIO

The barrel effect of new forces

With the change of policies, China's new energy vehicle market penetration rate has been rising, from 1%, 5%, 10%, and then to 27%. The 2020 "New Energy Vehicle Industry Development Plan (2021-2035)" states that the penetration rate of new energy vehicles in my country will reach 25% by 2025. Today, the penetration rate of new energy has exceeded the target planned that year.

In addition to the impact of policies, the continuous competition among car companies is an important reason. However, the automobile market is only so big. After several years of development, the automobile industry has transformed from an incremental market to a stock market. It is nothing more than new energy vehicles crowding out the fuel vehicle market, and car company A crowding out car company B. The stock game The essence of the industry has not changed, and competition among car companies will become more intense.

He Xiaopeng, founder of Xpeng Motors, predicts that in the next five to 15 years, leading automobile companies will be concentrated in five or six companies. Li Bin believes that the period from 2019 to 2024 is called the qualifying stage, and 2024 and 2025 will be the real final stage. What we do in the next few years will directly determine whether we can qualify.

It can be seen that car companies have already predicted the fierce competition in the future market, so how to compete for more territory in a limited market. From the perspective of the industry, with the rapid growth of new energy vehicle sales and the continuous improvement of market share , car companies must continue to improve their model systems and transform from a single main model to multiple models to seize the market side by side. Competition among new energy car companies is also entering a new era of systematic competition.

Take Toyota as an example. Through its ultimate management capabilities and continuously innovative company system, Toyota has created competitiveness with the "Toyota Production System" and "Toyota Quality Control" as its core. With this, Toyota has reduced costs and increased profit margins. , and gradually extend it to the entire supply chain. In the 1980s, Toyota vigorously promoted the "organizational flattening" reform, which also enabled it to adjust its strategy more flexibly.

What Li Bin has been doing over the years has actually been paving the way for Weilai's systematization. Li Bin said that looking back from 2025, the most basic things are bottom-level thinking, route judgment, and talent development, because "there is no need to change" from now on, and the rest is investment and execution. If you don't think too long, you will have to worry about the near future. Car companies are not just pursuing short-term sales growth. If they want to grow into a large global company, they need to be as perfect as possible in all aspects.

However, the systematic construction of an enterprise cannot be completed overnight. Even the system that Li Bin is proud of needs to be adjusted accordingly in different periods.

In order to maximize efficiency, Li Bin may first start reforms within the company. In the letter, Li Bin pointed out that the team will continue to expand in 2022, but unclear responsibilities, inconsistent goals, imperfect processes, and repeated construction abound, and there is still a lot of room for improvement in efficiency. Li Bin believes that the work tasks will increase a lot in 2023, but the company's resource investment will only increase slightly. We must tap the potential from within, especially for inefficient organizations, inefficient teams, inefficient processes, and inefficient processes. The project needs to be comprehensively sorted out and optimized.

Systematic competition is more like the barrel effect in management. For a barrel to be filled with water, every wooden board must be flush and undamaged. If one of the wooden boards of the bucket is uneven or there is a hole under a certain wooden board, the bucket cannot be filled with water. Extending this to car companies, the same principle applies.

When new forces first enter the automobile market, they rely on a single prominent point of entry to quickly acquire early adopters. For example, NIO is good at service, Xpeng is about autonomous driving, and Ideal focuses on extended range and zero anxiety. However, if it wants to enter the mainstream mass market, a single longboard can no longer meet the needs of more users. At this time, car companies need to compete from a single longboard to a comprehensive system capability. Even a shortcoming will become fatal. defect.

Li Bin's suggestions basically include the problems that new forces face or will soon face in their development. Among them, in addition to the direct indicator of sales volume, it also mentioned the hard issues such as supply chain, data security, software and hardware, and soft issues such as service and marketing that new forces will face in the later stages of development. These suggestions can be described as a tranquilizer for the rapidly expanding new forces.

Image source: Xpeng Motors

Completing the shortcomings of the "barrel" is the key

The real competition of smart cars is all-round competition, especially after entering the finals, there must be no shortcomings. If new forces want to break through the fierce competition, the problems mentioned by Li Bin must be solved.

For example, supply chain issues, new forces and traditional car companies have repeatedly stated that due to shortages in parts supply, there are no cars to sell, which in turn affects sales; data theft issues are related to the property and life safety of the majority of users, including Weilai and Toyota. Other car companies have encountered data crises. Zhou Hongyi of 360 has repeatedly warned car companies to pay attention to data issues; software and hardware quality control issues and user feedback mechanism problems will appear almost at the same time, and software and hardware problems in cars are unavoidable, but how Promptly providing user feedback after problems arise is a problem that car companies need to face head-on. Many new power brands have experienced collective complaints from users. The replacement of Ideal ONE caused Ideal to fall into a credibility crisis and sales suffered a setback. The miscalculation of Xpeng G9 led He Xiaopeng to decide to make great efforts to rectify the organizational structure.

As mentioned above, car companies have experienced these crises to a greater or lesser extent, and how to solve them is a thorny problem.

Of course, success cannot be achieved overnight. In the near future, new forces are trying to remedy the situation through comprehensive reforms.

NIO is about to embark on a comprehensive adjustment, and Lideal and Xpeng Motors have also chosen to adjust their company's organizational structure. The industry believes that an organizational structure with clearer hierarchies and higher coordination can stabilize the rear in a more fierce market environment and improve the quality and efficiency of corporate development.

In order to prepare for revenue on a scale of 100 billion or 1 trillion, Li Auto is upgrading from the management model of a vertical functional organization to a matrix organization. Li Xiang, the founder of Ideal, said, “Organizational upgrading is the most important test question for companies entering a larger and more difficult stage. More than 90% of failed companies do not actually have problems with their business. Business problems are only superficial, but the essence is the organization. Capabilities cannot adapt to scale expansion and industry changes.”

Decision-making deviations that occurred when Xpeng G9 was launched exposed problems in the internal management of Xpeng Motors' organization and became the trigger for Xpeng Motors' reform. Xpeng Motors kicked off its reform in October 2022, adjusting its organizational structure into: five major committees, three product matrices, and five major systems. After this organizational structure adjustment, He Xiaopeng himself will reduce his direct participation in his ecological enterprises and will actively participate in Xpeng Motors' business. The official explanation stated that they hope that through this organizational structure adjustment, they can comprehensively improve the efficiency of the previously overly centralized organization, reduce communication costs, and get closer to users to understand real user needs.