Due to an article by Li Bin, the founder of NIO, the company has once again become the center of public opinion. The industry is divided into two sides of fierce debate, leaving those outside of the industry confused.

Under the manipulation of both subjective emotions from both sides, the discussions about NIO have lost their value. Those who stand far away from the vortex cannot distinguish the true situation of the company. What has happened to NIO? Perhaps only the highest management of NIO can answer this question.

On October 25th, Qin Lihong, the president of NIO, attended a new car forum at the World Intelligent Connected Vehicles Conference and discussed the difficulties faced by NIO and the management’s follow-up operation ideas with Zhao Fuquan, the dean of the Automotive Industry and Technology Strategy Research Institute at Tsinghua University.

About the Current Situation of NIO

Zhao Fuquan: The first question is, what kind of mood are you in today? Where is the joy and where is the pain? Qin, as the president, how do you feel?

Qin Lihong: I came here today in a good mood and want to say hello to everyone. Some things have been be overly interpreted and misunderstood by the outside world, but we are doing well and our cars have been selling well recently.

NIO’s booth is small, but we welcome everyone to come and guide us. However, our car has a high value, as it is a test car with radar at L4 level of autonomous driving. It may not be the most beautiful or clean car in the exhibition hall, but it’s the real thing. This is my second time attending the World Intelligent Connected Vehicles Conference, and I am very impressed. This high standard meeting for forecasting the future development trend of technology is frequently held in China, rather than flying to other places to participate, which is surprising in itself.

NIO’s Greatest Challenge

Zhao Fuquan: The production time for NIO is relatively long, and there have been many experiences during this process. As the leading enterprise of new car-making forces, NIO has also been questioned and experienced the first large-scale recall of electric cars by new car-makers. What has been the most difficult thing for you during this process, and what supports you to move forward optimistically today? Can you share this with everyone?

Qin Lihong: Thank you, Professor Zhao. As a witness to NIO’s development from its establishment to today, Professor Zhao knows us well, so his questions can always touch our hearts.

Zhao Fuquan: Now you have the opportunity to convince everyone whether NIO can stand tall in the future.# Qin Lihong: The Biggest Difficulty We Face Now Is the Problem of Unified Social Consciousness

No matter how we advocate for new energy or intelligent networking, the objective fact is that the ownership of electric vehicles only accounts for a very small percentage of the over 200 million vehicles in China. This means that 99% of the people in our society have not yet experienced electric vehicles.

Among the 1% of electric vehicles, only a portion of them are able to showcase new technologies and future development directions due to generational differences. Even some electric vehicles that do not conform to market and product rules in the past are still the mainstream of electric vehicle ownership today. The people who own cars in China are only a small percentage of the Chinese population.

Therefore, the biggest difficulty we face is when we share our ideas honestly and believe in what we are doing, but people around us think we are crazy. Our feelings may see more, and we can believe in them, and seriously do them well. But we face a majority who do not see or even refuse to see it, and they raise doubts.

As entrepreneurs, we may not have to care about these doubts, because our production capacity is limited, and we can only produce a certain amount of cars each year. But the social media environment is relevant to the transformation of the automotive industry, and the complex technology and industrial development associated with millions of people.

So to answer Mr. Zhao’s question, I can be very honest and say that the biggest difficulty in recent years is not financing, research and development, sales or company management, but rather the doubts and mistrust from the majority, which can be attributed to a lack of understanding, or a lack of willingness to understand.

About NIO’s Future

Zhao Fuquan: What do you think NIO should do in the next three years to regain people’s expectations?

Qin Lihong: NIO already has two mass-produced cars on the road and has delivered over 25,000 vehicles since the end of June last year, with an average market price of over RMB 450,000. Two of NIO’s SUV models also make it into the top ten rankings of Chinese SUVs that retail over RMB 300,000. Although we face many challenges, the situation is very good, and more and more customers express their approval through their purchasing behavior.The next few years will be very simple for us. We will return to the original goal and understand the essence of things. Firstly, we will continue to launch new products frequently to the market as it is something that NIO has always done. Moreover, we will cover more segmented markets to meet the needs of more people, which is the first thing we must do.

Secondly, we will maintain the service model and philosophy that NIO has done well and improve upon it. Furthermore, we will leverage our larger consumer base to improve the efficiency of service investment output, making it more sustainable. Many people have asked me whether the more cars we sell, the more challenging it will be to provide good services. There might be fluctuations in some stages but I am confident that the more cars we sell, the better we will become in providing services.

The characteristics of densely populated cities in China, combined with the layout of mobile Internet thinking, create a favorable environment for a service system with high standards and efficiency. It is worth noting that the quality of services does not necessarily rely on the level of technology. In the urban environment of China, we have our own service model which we have considered extensively, and from here we can improve NIO’s services further.

The third thing is that no matter how difficult it is, we must allocate enough resources and time to think, layout, and implement the next product and technology plans. Entrepreneurs cannot just ensure survival in the present day; they need to make preparations for the future to compete with more complex and globalized demand for products and technology, laying groundwork for future generations to come. This is what we need to focus on currently.

As for sales, I have always believed that sales are the result of a combination of good products, services, reputation, stable economy, and sufficient purchasing power. Without one of these, even if we strive to achieve sales short-term, in essence, sales will not be sustainable. We must persist in doing these things well, as sales and company development will naturally follow.

In terms of finance for NIO, on the 28th of October, 36Kr was the first to report that NIO’s former CFO, Xie Dongying, was about to leave the company. NIO then confirmed this news through a public announcement. As NIO has continued to strive for financing recently, the departure of their CFO at such a critical moment has raised questions. It is worth noting that on the 25th of October, Qin Lihong was already aware of the upcoming finance personnel changes. So, why did Xie Dongying leave under such circumstances? Let’s take a look at what Qin Lihong had to say.

Zhaofuquan: There is another important matter that you have not addressed. Is there any financial issue?# Qin Lihong:
It’s okay, I’ll help everyone do some simple math. Based on public data, the just-released Q2 report shows that NIO lost over 2 billion RMB in a quarter, but in fact, it’s not that bad. Due to a round of battery recalls, all costs were accumulated in one quarter. Sales numbers have been announced for consecutive August and September, with sales exceeding 2,000 vehicles. The average price of NIO is 400,000 RMB, and there is also some revenue from service fees. By selling cars, NIO can also earn several billion RMB. It may not be very sunny, but it is definitely not going to die.

We are a normally operated company. If NIO sells 20,000 vehicles this year, sales revenue has reached tens of billions RMB. We are a high-end brand with normal cash flow, quantity, scale, and monthly revenue. In this case, everyone’s concern about us is slightly redundant. We are still doing well, thanks to friends for caring about us. There may be more people who need our attention.

Zhao Fuquan:

Thank you, Mr. Qin. I personally think that NIO should speak out. If you don’t talk about certain things, people won’t know, then guess, without knowing the truth, they believe, and if lies are told too much, it will be considered true. NIO is working hard to solve all the difficulties in corporate operations. These problems are normal for all companies and we should face them objectively.

Mr. Qin mentioned the most important point. When ES6 and ES8 simultaneously start with two models of vehicles, and the service system has also begun to take shape, the biggest thing in the past few years is NIO’s experience with new generation vehicles. This is not the accumulation that traditional automakers can achieve. And with 10 billion RMB in cash flow, there is even greater space to do more. Confidence is greater than before.

Conclusion

Zhao Fuquan: I personally think that the new four modernizations of automobiles, electrification, networking, intelligence, and operation are not just simple technological progress, but also progress in business models, resource combinations, and fundamental infrastructure changes. If everyone is tired of talking about the new four modernizations now, it’s because the conceptual hype is too hot, but the Long March has not yet taken the first step.

Moreover, the process of transforming from carburetor to electric injection has a difference. This is an industrial revolution that brings about the restructuring of industries. It’s not just about the automotive industry, but also about the progress in many scientific and technological fields supporting our development. From this perspective, it nurtures unlimited business opportunities, but the challenges are huge. Many things are simply not things that the industry can solve on its own. New car-making new forces emerge in this process. It’s not just a matter of thinking that there is gold to be mined simply. It is more an opportunity to participate in this industry and a historic major opportunity for transformation.

All participants have to go through high heat, and gradually decrease in heat until elimination. Many people become disadvantaged and ultimately have to climb uphill to become stronger, which is the S-curve of innovation.The difficulty we all see is the hype generated during the uphill climb, and the challenges encountered by many enterprises during the calm period are also a process of survival of the fittest. I believe that as long as a few can emerge victorious from the trials and tribulations, the Chinese automobile industry will have new strength. You must believe that without the participation of companies like Geely, Great Wall, and BYD twenty years ago, there would be no glory for today’s independent brands.

This article is a translation by ChatGPT of a Chinese report from 42HOW. If you have any questions about it, please email bd@42how.com.