On November 25, 2024, NIO will celebrate its tenth anniversary. Founder Li Bin returned to where his dream began — at 789 Anchi Road, reflecting on his entrepreneurial journey.
In fact, before this formal office was established, NIO's earlier address was in an office building across from the Anting Station on Line 11.
Shanghai, NIO...
In summary, this company, which started in Anting with a global vision, has during its ten years significantly raised the profile of Chinese automotive brands. In the Chinese pure electric market, where the average transaction price exceeds 300,000 yuan, NIO holds over 40% market share; it has developed the world’s first automotive-grade 5nm high-performance smart driving chip; and has constructed 2,750 battery swap stations and more than 24,200 charging piles...
However, facing increasingly powerful competitors and a fiercely competitive market environment, the ongoing losses have placed unprecedented pressure on Li Bin.
According to NIO's third-quarter financial report released on November 20, revenue was 18.674 billion yuan, below market expectations and a year-on-year decrease of 2.1%. The net loss was 5.06 billion yuan, compared to a net loss of 4.557 billion yuan in the same period last year. NIO has now recorded over 50 billion yuan in losses for four consecutive quarters, with cumulative losses reaching 15.29 billion yuan in the first nine months of this year. Over the past decade, NIO's losses have approached 100 billion yuan, making it difficult to find a competitor that surpasses it in the Chinese automotive industry.
While Li Bin projected ambitious targets for 2024 — a revenue of 66 billion yuan and sales of 220,000 vehicles — he admitted that, in his perspective and compared to peers, NIO's growth rate was still not fast enough.
Thus, "the next two years are critically important for survival; NIO cannot afford to falter." Li Bin pointed out that delivering 220,000 vehicles a year is still insufficient, stating, "This won't allow us to compete in the future." Following the organizational reshuffles at competitors like XPeng and Li Auto, which have yielded visible results, NIO, now ten years old, must evolve.
On November 25, in an internal memo, Li Bin reflected on the current competitive landscape, NIO's entrepreneurial spirit, and how the company plans to navigate its challenges ahead.
Regarding competition, Li Bin remarked, "The competitors NIO faced ten years ago are completely different from those we face today." Even during the dark days of 2019, he remained confident because he knew where NIO excelled. However, in recent years, stronger competitors have emerged.
For example, BYD, which sold only 730,000 vehicles in 2021, now surpasses 500,000 sales in a single month; Huawei wields significant brand and technological power; Li Auto makes a profit of 13,000 yuan on each vehicle sold; and Xiaomi's automotive division, backed by industry leader Lei Jun, launched at the peak of its powers.
In comparison, NIO has achieved a 30% growth over three years, which, while positive, pales in speed next to its competitors.
"In the face of such fierce competition, we must be clear about what to retain and what to change; we must hold onto what needs to be sustained and change what requires change," stated Li Bin.
Compared to peers, NIO is generally perceived as having a superior service system and overall structure. This company sells more than just cars; it conveys a certain sentiment. The value it provides goes beyond products to include emotional connections. Though NIO has expanded significantly with three major brands and extensive battery swap systems, while also pushing for advances in smart tech, it is rapidly burning through cash. Nonetheless, Li Bin firmly believes that to create value, there are three areas where there can be no compromise: creating products based on technological innovation, offering services that exceed expectations, and fostering a community that grows together. Thus, amidst choices of what to pursue and what to forgo, NIO has provided a clear answer.
Li Bin provided an example: during the challenging 2019 recall due to battery fires, when NIO's monthly sales were only a few hundred units, he traveled to regions like Northeast China, Inner Mongolia, and Shanxi where NIO users were located to understand why they chose NIO. These users inspired him in numerous ways, leading to the concept of free battery swaps, which he promptly implemented. By September 2019, NIO's daily orders began to rise, transforming monthly deliveries from a few hundred to over 2,000 units.
In Li Bin's view, both customer satisfaction and commercial success are equally important. The firm commitment to the battery swap model, in some ways, defined the path laid out by the customers for NIO. Certainly, he foresaw that building the battery swap system would become one of the company's strongest competitive advantages.
When discussing change, Li Bin indicated that the company currently has a clear top-down framework for its business structure, but what truly needs to be established is the self-growth capability within the organization from the bottom up — enhancing systemic efficiency. As a massive enterprise with tens of thousands of employees, NIO inevitably faces challenges regarding organizational bloat and inefficiency, and implementing reforms will face resistance from both external and internal sources.
Li Bin mentioned a concept — the most basic operating unit. He believes that this “most basic operating unit” could be frontline employees. Their effectiveness and output determine the overall company efficiency. This can also be applied to each research and development project, every vehicle, individual parts, retail locations, charging and swapping stations, and even each battery.
To enhance operational efficiency around these basic operating units, it is crucial to establish clear operational, cost, and return-on-investment targets while creating detailed execution plans. Timely reviews and continuous improvements of operational results are necessary, which requires management support departments to shift their mindset towards offering tool support and managerial empowerment, thus establishing a self-growth capability from the bottom up.
NIO's future positioning sparks ongoing speculation about the company. For instance, its second brand, Ledo L60, is ramping up production and plans to introduce new models to compete with Li Auto’s L7 and L8; the third brand, Firefly, evokes greater dreams of intelligent electric compact vehicles; while the planning of the NT3.0 platform signifies a significant enhancement in NIO's product strength.
Furthermore, the company aims to establish its three major brands in international markets.
The vast potential for imagination translates to immense workloads, and whether NIO can cut costs while enhancing efficiency will be foundational to sustaining its large-scale business. Li Bin noted that NIO must engage in "cost control, cost management, and investment return management" across all fronts going forward.
For the upcoming year, NIO's goal is to double its sales, targeting 440,000 units. Even with this ambitious aim, Li Bin still believes, "It's not enough."
If NIO can remain at the table over the next two to three years, there will be opportunities to witness a brighter future.
