Dialogue With Qin Lihong: Is there a Future For NIO in the Whirlpool?

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About three months ago, we had an in-depth exchange with Qin Lihong, the president of NIO, to understand NIO’s response to outside questions and the road ahead in the torment. How to continue to sell cars, improve customer service, improve operational efficiency, and accelerate the development of next-generation vehicles…


Dialogue With Qin Lihong: Is there a Future For NIO in the Whirlpool?
Qin Lihong, president of NIO

After a short and long period of time, once again talking with Qin Lihong, NIO is still in the center of the vortex, and faces more new problems. People often talk about the future of the Chinese automaker new forces, but their most urgent thing is to “live in the moment.” In the face of all kinds of negative rumors and speculations, is it really time for the “last straw”? Is there any future in NIO? All these questions, maybe you have to listen to NIO’s own voice.

60 seconds to understand the latest progress of NIO:

  1. As of the beginning of August, NIO has delivered more than 20,000 pure electric vehicles, and the cumulative mileage of users has exceeded 200 million kilometers.
  2. The previous recall of the battery pack including the battery replacement in NIO power station, NIO replaced a total of nearly 5,700 batteries, the old battery will be used for energy storage and other purposes.
  3. NIO recently announced that “all first-time owners will change their battery for free in whole life” and insisted on new policies to benefit old users.
  4. From its establishment to the present, NIO has invested more than RMB 26 billion, of which R&D accounted for more than RMB 9 billion and the proportion of R&D personnel exceeded 40%.
  5. NIO will continue to release one new vehicle in each year, next year’s products are still the first-gen platform SUV extension products, to maintain high-end positioning, pricing may be around 29-32 million. The second-gen platform is expected to be launched by 2022.
  6. In the future, the NIO Space will be based on lower cost and higher efficiency in the marketing channel.
  7. In order to reduce costs and increase efficiency, NIO plans to lay off staff to 7,500 people by the end of September, and it may be further streamlined in the future.
  8. NIO said that the break-even point depends on the investment model. For example, whether the second-gen product is invested or not, whether it is built or not, will dynamically affect the time node of profit and loss.

◆ Three stages of car-making racing

NIO internally regards the car-making as a competition, which is divided into three stages: the first is the “team training” stage. The key to winning is to make up the team and reach the battlefield within a limited time. In the past few years, NIO has completed the construction of the team structure, product series, marketing service system, etc., and has passed the first stage and entered the second stage of the “qualifier”.

Dialogue With Qin Lihong: Is there a Future For NIO in the Whirlpool?

If more realistic, the “qualifier” is the knockout stage. This stage started in the second half of 2018 and will last for 3-4 years, with real products and services to withstand the various tests of the market, every step is as important as walking on a steel cable. The industry often has a pre-judgment for “how many automaker new forces can be left in Chinese market”, the most cruel saying is “1-2 companies”, only survivors in this round can enter the finals.

The third stage of the contest, according to NIO’s judgment, it will start in about 2022 and 2023, smart electric vehicles will have ultimate product form, just like the impact of smart phones on feature phones, Who can define the next? The experience of who can define the next-gen products will eventually become the winner of the game.

◆ How to survive

For NIO itself, the brand awareness of the first stage is the most important, and it is necessary to grab time, so even if the efficiency of spending money is not so high, and even put a lot of trial and error costs, But the first phase of the work has been done.

“From a strategic perspective, NIO’s efficiency is actually very high. The first year won the championship, the second year broke the record, the third year sent the concept car, the fourth year pushed the production car, and broke the ceiling of the Chinese brand.” Looking at NIO’s footsteps, changing a company with the same money and time may not be able to achieve this level. Qin Lihong also admitted that the past tactical level is not perfect, and there are many arrangements and adjustments made under the urgency of the march.

In the second stage, we must pay attention to efficiency when we are alive. NIO’s recent move to lay off employees and sell the team is to “slim down” and run fast. According to Qin Lihong, there are three major initiatives:

Dialogue With Qin Lihong: Is there a Future For NIO in the Whirlpool?
NIO House in Hangzhou China

First, the marketing channel will be adjusted. In the future, the NIO Space, which will focus on lower cost, will be expanded from less than 30 to more than 100 at the end of the year. The annual investment in NIO Space is about tens to one million yuan, the cost of 10-20 NIO space is equal to a NIO House, the efficiency of selling cars will be also higher. The NIO Center is still under construction, but the speed will slow down. At present, 19 NIO houses have been opened in 16 cities across China, The NIO House in Zhengzhou and Chongqing will also be opened soon.

Second, the NIO Power business was adjusted, the NIO Energy business segment was established in the first half of 2017 and is currently seeking independent financing. The reason for this kind of plan is that the external demand for battery charging is increasing, this is a 300 billion blue ocean market, the internal power is that NIO has already built an energy service team with certain capabilities and equipment level, it is able to provide 7×24 hours of various ways to replenish energy anywhere in mainland China, the current service has exceeded 185,100 times. NIO expects to achieve greater efficiency through the independent financing development of NIO Power.

The third is optimization of organization. NIO plans to adjust the size of the staff to around 7,500 by the end of September, compared with the number of staff revealed in March this year (about 9,800), it has decreased by more than 2,300 persons. It seems that layoffs will not stop in a short term. Qin Lihong stressed that optimizing organizations is always a matter of things need to do, just like people losing weight, but it is not the “saw leg” of outside rumors, and the core business will not shrink.

The logic behind

Behind the various decisions made by NIO, Qin Lihong repeatedly mentioned the corporate vision – “create a pleasant lifestyle for the user”, which sounds like a kind of rhetoric, but in fact, this is the key to interpreting the many “unbelievable” behaviors, including the comprehensive and meticulous service regarded as “waste” by the outside world, founder Li Bin donated one-third of the shares to all users to set up trust funds and so on.

The latest evidence is that in addition to the lifetime free warranty, NIO has launched a lifetime free battery replacement service. Qin Lihong explained: “We have rational financial calculations, we feel that we should do this, If it is just for promotion, we should say that people who buy cars from now on can change their battery for free in lifetime, it can save a lot of money, But we can’t, it is necessary to bring the old users, we can’t damage the interests of the old users while the new policy comes out. ”

Dialogue With Qin Lihong: Is there a Future For NIO in the Whirlpool?

In the NIO App, there are various feedbacks from active car owners, there are praises and flaw, but the overall reputation of the car owners has been preserved. In the 30 million evaluation feedbacks, 4.9 high scores (out of 5 points) were obtained.

Qin Lihong said that the change in the list of these issues occurred in the last five years. The world is reaching a consensus, but today it has replaced the old problems with new ones. When you see an event that is more strategically agreed, when tactical concerns are getting more and more detailed, the real tipping point is coming.

The automobile industry is undergoing a tremendous change in the past 100 years in China. As the most powerful automaker new force in the past few years, NIO has naturally suffered more attention and pressure. The “focusing on user” mode has opened up a new path despite the controversy. As Qin Lihong said, I hope that the outside world will give NIO a little more time, because most of the practice has not yet reached the conclusion. Every achievement of innovation may go through countless efforts and trial and error, we may also have more patience and encourage innovative attempts by inclusive practitioners.