NIO-SW President Qin Lihong: No "price war"! Sales began to climb in the third quarter!

Even in the exhibition hall of the new forces, NIO House, covering an area of 3000 square meters, still attracts attention. Along with the brand new ES6 on the booth, there is a beverage station that offers city specials, a landscape painting composed of photos of 10,000 users, and car owner volunteers dressed in orange. NIO-SW seems to be conveying to the outside world through a series of details: we understand users and services.

In an interview with media such as Blue Whale Auto on April 18, NIO-SW co-founder and president Qin Lihong faced the impact of market competition and repeatedly mentioned the importance of brand and experience for NIO-SW to break through the finals. "We have had some pressure in the past two years because the penetration rate of new energy vehicles has increased first from the price range of 150,000 to 300,000 yuan, and the penetration rate above 300,000 yuan has not changed much."

Qin Lihong said that NIO-SW has done a statistics internally. In the first quarter of 2023, the market share of new energy vehicle models above 300,000 yuan increased by 60% compared with the fourth quarter of 2022. In his opinion, this indicates that the trend has not yet spread to this segment market, and NIO-SW's big opportunity has not yet come. "You know how much water you need to collect when it rains heavily. You need to make the basin bigger. This is experience, word of mouth, and brand. So I think that as long as the finances can support it at this stage, we must catch it. Quantity is the result of hard work, not begging."

Expected sales to start climbing in Q3

"Our price positioning is 300,000 to 6 million yuan, targeting the mainstream high-end market." Facing the increasingly fierce "price war" in the industry, Qin Lihong frankly stated that according to the current product plan, NIO-SW will not launch a model cheaper than the ET5 (guide price 328,000 to 386,000 yuan) for at least three to four years.

The confidence not to engage in a "price war" may come from NIO-SW's growth in market share and delivery volume.

According to Qin Lihong, in the fourth quarter of 2022, NIO-SW's market share in the pure electric passenger car market with a selling price of more than 300,000 yuan was about 50%, and it rose to more than 60% in the first quarter of 2023. According to the previously released delivery data, in March 2023, NIO-SW delivered 10,378 vehicles, a year-on-year increase of 3.9%; in the first quarter, NIO-SW delivered a total of 31,041 new vehicles, a year-on-year increase of 20.5%.

NIO-SW Chairman Li Bin previously stated that in 2023, NIO-SW has set a goal of doubling its sales from 2022. Based on the delivery volume of 122,500 vehicles in 2022, NIO-SW needs to deliver 245,000 new vehicles in 2023. In other words, the average delivery volume of the next three quarters of NIO-SW needs to reach about 71,300 vehicles.

After NIO-SW vertically switches products on a large scale, the upcoming new models naturally shoulder the heavy responsibility of achieving sales targets.

At this auto show, the brand new ES6 made its debut and opened for reservations, and is expected to be officially launched and delivered in late May, with no announced price yet; the 2023 NIO-SW with more than 15 upgrades has also been unveiled and is now available for reservations, with plans to start delivery in mid-May, with a starting price of 458,000 yuan. Although NIO-SW has set a relatively high sales target, it has chosen to take small steps rather than aggressively push sales.

"For us, the second quarter is definitely not the biggest sales starting period, but rather a transition period. For example, although our booth is very lively today, the only models available for sale this month are the ET5 and ES7. The first-generation platform's 866 has basically been sold out, and the sales of NIO-SW 2022 models are also nearing the end. During the transition period, new products will have a climbing process. Therefore, for me, the key to the second quarter is execution, ensuring that each product is released on schedule, on time, and with high quality, while meeting expectations in production, logistics, and quality. I think as long as these aspects are achieved, the subsequent sales will be smooth."

In the second quarter, the product will be switched, and sales will climb in the third quarter. Qin Lihong expects that the entire second-generation product lineup of NIO-SW will return to a normal and expected sales level, with the best time starting in September.

The construction cost of battery swapping stations is manageable for NIO-SW

As the most special part of NIO-SW's service system, the battery swapping station has been accompanied by both appreciation and questioning since its inception. Appreciation is based on recognition of service capabilities and user experience, while questioning mostly revolves around the cost side.

At present, when new car-making forces are generally unable to achieve profitability, NIO-SW's management always faces various questions about its battery swapping strategy, but its attitude is also very clear.

Li Bin revealed at the auto show that NIO-SW has been building 200 new battery swapping stations every month since June this year. In order to achieve the goal of building 1,000 battery swapping stations within the year, NIO-SW has urgently added a battery swapping station factory in Hefei, and currently has three battery swapping station factories in China to ensure supply.

"As of this morning (April 18), NIO-SW has 1,356 battery swapping stations, and 4 new ones were added this morning. We have no doubt that we will continue to do this. There are many discussions about the technical power combination, but everyone is betting. We still firmly believe that pure electric vehicles are the only trend visible in the future of new energy." Qin Lihong added in an interview that if we consider the next 20 years as a dimension, pure electric vehicles are the ultimate product. "If we guess wrong, the entire company will pay for this 'guess', and everyone will all in on this matter."

In his opinion, for companies that really bet on the electric vehicle track, if they do not have a layout in charging and swapping, the company may have deeper problems, although profitability may be higher in the short term.

Qin Lihong also mentioned NIO-SW's consideration of costs. "The cost of a mobile battery swapping station of more than 3 million yuan includes the cost of the battery, but we will not fill every battery swapping station put into use with batteries, but gradually increase the stock according to the holding amount."

If the battery swapping service is outsourced, NIO-SW's consumption on the cost side will be greatly reduced, so he believes that the battery swapping service is not simply a loss, but NIO-SW has created a service facility with higher coordination internally. "This account has been calculated repeatedly, and it can be managed. If we encounter any major problems in the future, it will definitely not be caused by the battery swapping station. Everyone can rest assured." "

"The latest financial report shows that NIO-SW has more than 40 billion yuan in cash on hand. We have not yet carried out financing in Hong Kong and Singapore since we went public last year, so everyone does not need to worry about funds. The future challenges are great, but NIO-SW's cash flow is also very strong."

No Internet Explosive Thinking

In an interview, Qin Lihong threw out the term "positioning."

"Mature brands such as Mercedes-Benz, BMW, Audi, Volvo, Cadillac, Ford Motor, Lexus, etc. each have their own positioning. In the long run, everyone will learn from each other, but in the short term, basically everyone will do their own characteristics. Mercedes-Benz has done luxury comfort to the end, BMW is driving pleasure and sports, etc. Everyone has positioned themselves well." In Qin Lihong's view, a company's judgment of the industry's fundamentals determines its competitive strategy, and NIO-SW, which is based on the high-end market, has never had the so-called Internet explosive thinking from the beginning, because following the crowd is not the most important consumer psychology in the automotive high-end market.

In the vision of Li Bin and Qin Lihong, NIO-SW's differentiation secrets in the high-end market are collected in a 3×2 matrix, with 3 in the product, service, and community fields, or user relations and user operations can be called, but Qin Lihong chooses to use the word community to express it. "Today, everyone can see that user volunteers and user photography works belong to the community category."

Qin Lihong said that NIO-SW also needs ×2 in the above three areas. The first is to have a high-level spiritual connotation, and products, services, and communities must all have it. "What everyone usually understands is the community category, such as doing more public welfare and environmental protection. These things are good for the sustainable development of society. I think that in addition to selling products at high prices, high-end brands must have a high-end spiritual connotation, and this high-level spiritual connotation has a very basic entry requirement, which must be original. The product must be original, the service must be original, and the community must also be original."

The second is to have a good and differentiated experience. The battery swap service is an example of NIO-SW's unique experience.

"Whether you say I am unique or say that my battery swap station is losing money, I just do it like this. If I don't do it like this, it's not NIO-SW. Products, services, and communities are superimposed with high-end spiritual connotations and differentiated experiences. This is our deconstruction of a high-end brand that can achieve success in the future. You may wish to use this standard to give us suggestions in the future. We can also use this criterion to look at other friendly businesses in the market. This is our methodology."