On May 6th, Pulsestack reported that in the automotive industry's business competition, a new battlefield is emerging beyond the realms of technological and price wars - the battle for traffic.
At the recent Beijing Auto Show, the interactions between tech giants Lei Jun and Zhou Hongyi, both middle-aged "top-tier" car models, and the three leaders of NIO, garnered much more attention than the new cars and technologies themselves.
More and more automotive company executives are stepping into live streaming or being active on social media platforms, attempting to combat traffic anxiety by becoming "internet celebrities."
William Li, the founder, chairman, and CEO of NIO, unlocked his new identity as a "host" since December last year and has already conducted two live streams this year.
Speaking of "traffic anxiety," Li, a man who often trends on hot searches, humbly expressed that traffic is an interesting phenomenon. The cumulative effect is quite evident, and the clash between Mars and Earth is quite intense. He mentioned, "There should be opposition and conflict in traffic, but we are not willing to oppose or conflict, so traffic doesn't work well for us."
Li Bin said his traffic isn't doing too well, but in reality, he's a bit ostentatious. NIO has long been accustomed to moving forward amidst attention and controversy, thus able to maintain a relatively calm reflection on "traffic."
"NIO's publicity indeed has many areas that need improvement. Live streaming will allow more people, especially those who have not been in contact with NIO, to understand the real NIO," emphasized Li Bin. "But I definitely won't get addicted to live streaming; it's quite draining."
William Li, founder, chairman, and CEO of NIO (left) with Qin Lihong, co-founder and president of NIO (right).
Qin Lihong, co-founder and president of NIO, bluntly stated, "I have never thought that short-term traffic is a significant asset that we should pursue. Relying solely on high traffic to dominate the automotive industry and always perform exceptionally well is unrealistic. Ultimately, cars need to focus on products, technology, and services."
He metaphorically expressed, "Everyone is running a marathon of product technology and services. In this process, if one athlete's cheerleading squad is a bit stronger at a certain point, it doesn't necessarily correlate with whether they can ultimately win the championship. What we need to do is focus inwardly and run at our own pace."
"The 'Stupid Company' and the 'Deep Trench'"
Behind the traffic battle of automotive brands lies the increasing homogenization and intensification of the car market.
In just the past April, over 40 automotive brands initiated a new round of price wars, attempting to seize market share by trading price for volume.
To avoid endless internal competition, some companies choose to dig deep trenches, strengthening their differentiated competitive capabilities.
"While everyone is engaged in price wars, we are focusing on setting up charging stations. It may seem like a short-term loss. But I have always believed that there are too many smart people doing business in China, so there is a need for some 'stupid' companies to do some seemingly foolish but crucial things," Qin Lihong stated. "We believe this path is correct and must be adhered to because users only pay for experiences. In the long run, whether prices can reflect experience and value is the most crucial aspect."
NIO has always adhered to the "track" layout for its battery swapping stations. As one of the few car companies to massively invest in commercializing battery swapping technology, NIO's early investment in the layout of swapping stations has made many peers hesitant. However, Qin Lihong believes that in today's competitive market, having one or two differentiated thresholds is a luxury. How much money does it take to buy them? "We haven't invested too much, but rather not enough. If we have the capability, we should invest more."
Why does NIO insist on the seemingly "clumsy" route of laying out battery swapping facilities?
In Qin Lihong's view, the external understanding of the benefits of battery swapping technology is not fully in place. In addition to fast charging, the swapping mode is also the optimal solution to the battery life issue.
Batteries, as the most expensive component of electric vehicles, have a shorter lifespan than the vehicles themselves. Battery swapping stations naturally cycle the batteries, conducting health check-ups each time a battery is swapped in. "Take away batteries with low health values, leave the worries to us, and give healthy batteries to users. Coupled with a battery rental model, consumers can now worry less about battery lifespan."
A few years ago, e-commerce debated whether to build their own logistics, early airlines debated buying their own planes, and cloud service companies pondered self-built servers. According to Qin Lihong, experience from other industries reveals a simple truth: the key to many things lies in the most straightforward route, and heavy asset investment may be the true threshold for major competition.
After years of planning, as of April 25th, NIO has established over 2,400 battery swapping stations nationwide, with 790 of them being high-speed stations. At the Beijing Auto Show, NIO announced the upcoming deployment of the fourth-generation battery swapping stations and 640kW fully liquid-cooled ultra-fast charging piles.
Incremental changes lead to qualitative shifts. Currently, NIO has made "recharging more convenient than refueling" a reality in cities like Shanghai and Chengdu. NIO's "recharge, swap, upgrade" all-scenario energy service system has significantly enhanced user experience, becoming a compelling reason for more users to choose NIO.
However, Qin Lihong admits that the infrastructure for battery swapping is still a work in progress. "When we can swap batteries all the way to Lhasa, Yili, Mohe, and Xishuangbanna, only then will the mindset towards electricity and oil truly change."
NIO's successful foray into battery swapping has prompted more automotive brands to include "battery swapping" in their plans. Yet, constructing swapping stations is a highly capital-intensive endeavor. Many brands building their own swapping stations not only face financial pressure but also risk resource wastage.
Hence, many brands opt for a collaborative model with NIO.
Recently, NIO and Lotus announced a strategic partnership for charging and swapping at the Beijing Auto Show. Prior to this, NIO had also reached battery swapping-related collaborations with Changan Automobile, Geely Holding Group, Jiangling Motors Group, Chery Automobile, Wanxiang Group, Anhui Jianghuai Automobile Group, and State Grid.
The expansion of the battery swapping alliance not only signifies national, industry, and capital recognition of NIO's battery swapping strategy but also accelerates the construction and popularization of battery swapping infrastructure, further driving the development of the battery swapping network and the standardization of the industry.
Simultaneously, energy services are poised to become a significant revenue stream for NIO. As Zhou Hongyi, the "Red Robe Master," mentioned, NIO is set to become a new energy and energy storage company in the future.
Breaking into the core fortress of BBA
At the Beijing Auto Show, the 2024 NIO ET7 (specs | images) Executive Edition was officially launched, starting at 428,000 yuan. As NIO's first sedan, the ET7 was officially unveiled in 2021. Over the past two years and one month, NIO ET7 has delivered 30,000 units, a seemingly modest number but already making it the top-selling Chinese brand in the executive sedan market above 400,000 units.
Li Bin admitted that this achievement was hard-earned: "The market for executive sedans has always been the core stronghold market for BBA. Personal cars are in the realm of individual preferences, as long as the driver is happy. However, executive-level sedans test societal consensus, requiring people's recognition of the brand's representation of high-end, luxury, or technology, which is not easy to break through."
The most significant difference between the 2024 ET7 and the old version lies in the second-row space and seating comfort. Li Bin stated that they were too optimistic back then, too technologically aggressive. In 2017 and 2018, everyone thought that autonomous driving was just around the corner, and the more valuable usage space for executive sedans would shift from the second row to the front row. This car won't be delivered until 2022, and they feel it shouldn't be too conservative. He chuckled, "Now, being too far ahead sometimes isn't good either; it's easy to become a martyr."
For Chinese brands, the executive sedan market is a tough nut to crack, especially testing product services and brand comprehensive elements. Qin Lihong mentioned that sales volume is not crucial; NIO hopes to have its place in the executive sedan market. What the ET7 aims to do is to "clear the path for everyone."
The humor of "striking while the iron is hot"
From restructuring the charging network to entering the high-end executive sedan market, NIO has made many bold decisions.
However, Li Bin said that while it's good to be bold, there should also be a strategy for "boldly following." This "following" refers to NIO's second brand, Leda.
Qin Lihong revealed at the auto show that Leda will unveil its brand and products in mid-May, but the specific product launch and pricing will be slightly later.
Undoubtedly, after Leda's birth, it will face competition from Tesla, Xiaomi's cars, and Xiaopeng's MONA. The public has been paying close attention to Leda, which targets the mass market.
Li Bin denied that Leda was created "to boost sales quickly by introducing a new brand."
"When we created NIO, we started with a high-end brand. When the infrastructure matures, we will enter the mass market, serve more users, realize our company's vision, and fulfill Leda's mission. NIO, as a high-end brand, needs to have a pioneering spirit, but Leda, as a mainstream brand serving the family market, needs a mentality and strategy of following boldly."
Even the timing of Leda's launch was carefully planned.
In 2019, NIO predicted that around 2024-2025 would be the final stage of the qualification race. Leda's launch at this time was opportune. "Because a lot of things will be wasted in the front, high-end brands may be okay with this, but if a brand in the mass market cannot take off in the current period, cannot have enough volume, it will be very difficult."
As NIO's mass market brand, people are curious whether Leda will enjoy the same services that NIO is famous for. Li Bin explained that, like Lexus and Toyota, the service philosophy is consistent, but the specific service items should follow basic business sense. Just like the facilities enjoyed at a five-star hotel differ from those at a three-star hotel due to price discrepancies. "For example, Leda won't have as many Leda Houses as NIO. It won't establish a specialized network for charging like NIO, including pick-up and delivery services, all of which incur costs that its pricing cannot bear, so it will be on a pay-as-you-go basis."
In terms of competitiveness, Li Bin is confident.
At the car show, when asked by the media about the highly discussed topic of sales figures, with Xiaopeng Motors claiming that the MONA will definitely outsell Xiaomi's SU7, Li Bin expressed his focus on Leahead. He mentioned that MONA will surely sell well, as will SU7, but he added, "However, our Leahead L60 will sell even better."
He then chuckled, saying, "But this (overtaking them) won't trend, probably no chance, the advertising is too strong."
Marathons require a steady pace and patience.
Over the past decade, NIO, once a new force, has crossed the line between life and death, gaining more achievements and experience.
However, in this cutthroat market, anything can happen. Just as in the past decade, some once-prominent new energy vehicle companies have disappeared, and some market favorites have seen a drastic drop in sales. NIO is not yet in a position to relax.
In April this year, NIO delivered 15,600 vehicles, a year-on-year increase of 134.6% and a month-on-month increase of 31.6%. Part of the significant sales surge in that month was attributed to the effective subsidy strategy. In the first three months of this year, NIO's sales were 10,055 units, 8,132 units, and 11,866 units respectively. Overall, NIO's sales still show significant fluctuations and are in urgent need of further breakthroughs. Moreover, all of NIO's new models this year are facelifts, without any completely new models, so the upcoming ET7 may become a key driver to boost its sales.
In April, apart from the leading BYD, Aiways, Li Auto, WM Motor, and Xpeng also had higher sales than NIO. Looking at the competitive landscape, traditional car manufacturers have strengthened their overall capabilities by collaborating with excellent technology providers to fill their gaps. Meanwhile, Xiaomi's entry into the market as a dark horse is notable, with Lei Jun revealing on Weibo that by the end of April, the cumulative orders for the Su7 had reached 88,063 units. Competition in the new energy vehicle market is only expected to intensify further.
So, how can NIO outpace in this marathon and survive until the end?
Li Bin believes that as automotive products have evolved, their forms have approached the ultimate state. The phase of technological exploration may stabilize over the next two to three years. The focus will shift towards long-term operational efficiency, creating high-value durable consumer goods, and enhancing operational and sustainable capabilities.
"This year, NIO is primarily focusing internally on enhancing its system capabilities, including cost management and investment returns. Like Toyota, which achieved global leadership in sales and profits through continuous lean operations. I believe that the ultimate winners in China will be companies with strong systematic competitiveness, leading in technology, products, services, and operational efficiency."
Li Bin predicts that by 2035, half of the world's top ten groups will be Chinese companies. This transformation could be visible within a decade, without the need to wait for the next generation. "We hope NIO will be one of them, although it's challenging." In a decade, China may retain around 20 to 30 brands and a dozen groups, with 10 to 15 of them "doing reasonably well."
Over the past decade, NIO has overcome numerous challenges, gaining more experience and insights.
It is evident that after bringing many groundbreaking innovations to the industry, NIO is now introspective, understanding its own goals better and focusing on its own pace.
"We always say it's a marathon on a muddy road. We need good stamina, steady steps, a good rhythm, the ability to handle obstacles without falling, or if we fall, the ability to get back up. We still need to have patience," says Li Bin.
