Author: Wang Hui
Introduction: “If one is not tired in the cold, one will not be affected by frost; If one is not warm all day, one will not be freed from the frost.” Every serious loss can be called an immortal gain. Without experiencing the cold of winter, one cannot appreciate the pine and cypress trees. Without hardship, one cannot know the virtuous person. Li Bin is taking firm steps towards his “madness”, and in the near future, NIO will go further under his leadership.
At the just-concluded 2021 NIO Day, Li Bin’s statement “I really don’t understand why everyone is still buying gasoline cars now” once again ignited the Internet. Some people say that there is no problem, once you have driven an electric car, you don’t want to go back to a fuel car, and many people have made similar comments to Li Bin. Others say that Li Bin is “pretending to be ignorant” and point out that without green license plates, who would buy new energy vehicles?
The times are changing, and user groups are also being divided. Oil and electricity form two major camps, and controversy and friction are inevitable, so the reason behind the controversy is not difficult to understand. In terms of industry development, we believe that instead of meaninglessly criticizing Li Bin for his ambiguous statement, it is better to think carefully about whether he has pointed out an industry phenomenon that everyone has overlooked.
When the penetration rate of new energy vehicles exceeds 20% four years ahead of schedule, and Tesla, NIO, and Wuling electric cars continue to sell well, buying electric vehicles has become a trend, and even a fashion. Li Bin later explained why he made this statement, saying that infrastructure is developing rapidly and there are many good products to choose from.
Over the years of making cars, Li Bin has continuously struck gold mines and become a super online celebrity. The remarkable thing about this super online celebrity is that he always “does what he says he will do”, making NIO’s business better and leading the trend of the times. This undoubtedly proves from a side perspective that Li Bin is not talking nonsense, his words are not empty, on the contrary, the so-called “strange remarks” just demonstrate that he is thinking about the industry and taking practical actions.
From this perspective, as a good friend of users, Li Bin plays a role that is rich and down-to-earth, without the grandeur of traditional car company CEOs. When the narrative power in car-making gradually shifts from the automaker to users, it is necessary to have a flesh-and-blood founder role.
“I think the ultimate goal of a company depends on how the founder thinks.”
If one wants to understand a company or a brand, one essential process is to understand its founder. A founder’s beliefs deeply affect a company’s development beliefs, and determine its potential. NIO’s ability to survive the harsh winter of 2019 is undoubtedly closely related to Li Bin’s impact on NIO.
“I think the ultimate goal of a company depends on how the founder thinks.” Li Bin talked with the media about the relationship between a company and its founder.Li Bin is someone who has done many crazy things, although he no longer does them, like driving across the US in three and a half days, from New York to Los Angeles. He remembers it vividly, and they had basically driven down from the east hills of Los Angeles while dozing off behind the wheel.
Li Bin is a person who is incredibly crazy, but he is systematically fulfilling his “madness”. He says, “If he says he will do it, he’ll do it.”
It is very difficult for the automotive industry to innovate, and Li Bin has made many breakthroughs, including accepting interviews and filming invitations from talk shows. He rarely accepts interviews and filming, and he even jokes that entrepreneurs who don’t become internet celebrities nowadays won’t make it big. Perhaps it is precisely because of his insane mental fortitude that has led to his gradual success today.
After deciding to work on cars in 2014, Li Bin started to recruit people globally to build his team. After two years of research and development, in 2016, NIO’s electric car broke the record at the north loop of the Nurburgring and became the fastest electric car on the Nurburgring, causing a sensation in the automotive industry. But Li Bin said that making the world’s fastest car was just his first step. In his plan, he intends to make a global production car in 2017 and hold a global new car release conference.
Whether it is in terms of products or views on technology, Li Bin is always embodying the “human-centered” point of view.
Li Bin believes that there is no need to focus too much on the efficiency that technology brings; it is just a foundation, not a goal. “Of course, we hope to attract more attention, but whether we are committed to artificial intelligence technology or self-driving car technology, the ultimate goal is to make these good technologies really available to everyone. We think this is important.”
“We are chatting, and we define the space. Therefore, humans are always the first.”
“Why can’t we do this? What’s wrong with doing this?”
Li Bin has always had his own unique perspective on the choices that NIO wants to make, and he has enough confidence; all of his confidence is based on specific facts, not baseless conjecture. When some media asked Li Bin whether he would still think that choosing Hefei was right when NIO can self-sustain, he was very positive and thought that it was right, both in the past and now.”I now feel that it is a very appropriate and reasonable decision for us to establish the Chinese headquarters in Hefei. If not, wherever we go to negotiate, we would have to quickly establish a new factory for industrial landing. If the production capacity in Hefei is not fully utilized, both sides of the production capacity will not be enough, resulting in low efficiency. Moreover, investing in Hefei is more logical. Hefei itself has the foundation to build an industry cluster for new energy vehicles, but they need a leading enterprise. In addition to equity investment, it does not need to make other investments in a hurry. In the future, under the national strategy, Hefei may also be the biggest beneficiary of the Yangtze River Delta integration.”
At that time, choosing to cooperate with Jianghuai factory, this decision made both Li Bin and NIO highly questioned, not only from the outside, but also within the company. “Cooperating with Jianghuai, do we lose face?” At the meeting, Li Bin sat on the stage and looked at the people below.
Even when facing an interview with CCTV, Li Bin exploded again, “I know a lot about the Huachen BMW at that time. Huachen and BMW have crossed the line together, Huachen is still Huachen, and BMW is still BMW. BMW’s X series and Mercedes-Benz’s AMG are both manufactured by OEM. Why do I have a concept of this? Because I have visited these factories. Jianghuai is in the Hefei Economic Development Zone, investing tens of billions to help us build a world-class factory with the best equipment in the world, designed according to our process requirements. We will participate in the entire manufacturing and cooperation management, and inspect the vehicles according to our quality standards. Jianghuai provides skilled workers and mature manufacturing management. “
“Why not? Why not?” Li Bin’s words were sharp because he firmly believes that the Chinese automobile industry can succeed.
China is already the world’s largest automobile production country and the largest consumer country. More than 30% of cars in the world are produced and sold in China. More than 70% of NIO’s parts suppliers are globally influential. During Premier Li Keqiang’s visit to Germany, NIO signed a strategic contract with the largest auto parts group in Germany, which is the world’s largest purchasing order for new energy vehicles, approaching nearly 5 billion yuan.
“I believe that the entire Chinese automotive industry can have this confidence until today.”
“Even if I fail, most of the 10 billion US dollars in labor has been paid to the Chinese people.”
Straightforward Li Bin speaks the truth, but the story is never perfect and always experiences ups and downs.
When NIO was founded in 2014, Li Bin turned over tens of billions of funds to invest heavily in order to shorten the development time. However, since 2018, his development plan has been affected by a series of things, with the most crucial one being NIO’s capital chain being on the brink of breaking.
In 2019, Li Bin called it a “perfect storm,” which was a “stress test to the limit” for NIO. Many people didn’t know that Li Bin, who had raised tens of billions of dollars in capital, almost lost the company due to a lack of money.
Li Bin admitted to the media that during the toughest times, NIO sold the ordered production equipment to Tesla’s Shanghai factory and counted the cash situation with executives every night. At that time, there were almost no investors willing to lend a helping hand, and some of the earliest institutional investors in NIO had also cleared their NIO stocks.
The reason it was called a “perfect storm” was because all the threats and costs caused by this “storm” were already expected, such as external US-China relations, industry competition, changes in the capital market, battery incidents internally, and ES8 being in the repair stage in the early days. Suddenly, a larger customer base brought more pressure to the service, and over the past five years, problems within the team had emerged since the company went public.
After returning to China in September 2018, Li Bin understood that what he needed to do now was to open up the RMB market, as until then, they had been financing in US dollars. Over the years, NIO had brought $10 billion in foreign exchange to China, which had been spent in the global market but could no longer fully rely on the US dollar market.
“Even if I fail, most of the $10 billion has been paid to Chinese employees. This is definitely beneficial for promoting the progress of the industry. Even if we die, our bones will nourish the land.”
All the problems were exposed at that time. Under such circumstances, people were pessimistic about NIO, and there were many analyses online about the current situation and the future trend of NIO, but most of the conclusions were not very positive.
One of Li Bin’s responses was to sell the ordered equipment to Tesla’s Shanghai factory, as Tesla was the only factory under construction at that time and needed to save time. NIO had already paid half the price, and the equipment had arrived at the customs, so selling it to Tesla was a win-win situation, effectively saving Tesla six to seven months of time cost.
In addition, NIO also adjusted its team. “We reduced more than 3,000 employees, which is still a quite sad thing, but there is no way. The management reduced by 30%, and the adjustment was greater than expected by the outside world. Long-term investments and business not in need of that many people were reduced. We originally built a strong algorithm team in the United States, but it was too long-term and had to be cut, reducing 500 people. There were also XPT and frontline service colleagues.”
The impact of the storm is always a series of consequences.
“Doing things beyond common sense requires perseverance and gives everyone time to understand you.”Li Bin once put forward a point of view within the company that there should be no lingering trauma. He said, “Those who experienced great trauma in the past tend to play it safe in whatever they do now. They tremble and dare not fully commit or think creatively, which is definitely not the way to go. You have to invest and face the future with determination.”
Becoming bolder after experiencing trauma is Li Bin’s manifestation of self-confidence and pride.
As early as 2018, Li Bin had a premonition about NIO’s future. “The battery recall was the hardest thing for me because it affected user interests and was unexpected. To be honest, I never thought there was anything difficult about expected things. We knew we had to lay off employees, contract our business and so on starting from September 2018.”
Despite this, NIO’s various measures still left the impression of “spending money like water” on the outside world, but in fact, these were all planned and reasonable measures. From 2012 to the first half of 2015, NIO had already done a lot of “underlying thinking”, and from the second half of 2015 to 2018, it was all done according to the previous ideas. In this process, some operational inertia had already begun to form. “Simply put, I have paid tuition fees, but I know where the tuition fees went. I didn’t spend money recklessly. This is the biggest misunderstanding of the outside world about us.”
During that challenging time, Li Bin met many potential investors, but most of them chose to wait and see. Li Bin also understood, and frankly stated that from a business investment perspective, it was reasonable not to invest at that time from the second half of 2019 to the beginning of 2020.
“At that time, the investors who were willing to spend time talking to you were already good buddies. It’s not important whether they invested or not. When people are in a pitiful situation, most of them are unwilling to deal with you because everyone is casting their vote with their time. There is always a question mark in investment decision-making: Do we have enough funds to support several years? This is still difficult. If I were an investor, I would also think that Li Bin lost so much in 2019, and if he still loses so much in 2020 and 2021, can I handle it? If the answer is no, he has no reason to invest. He cannot take the company’s interests as a joke. So I think it’s very normal.”
But there were also many who extended a helping hand and chose to trust Li Bin. From an investment perspective, there are three questions to ask: First, is there a problem with the industry? Is the direction correct? Second, where exactly is the company’s value? Has it become stronger or weaker? Has its value disappeared? Third, what are the company’s problems? Is it correcting them? These three questions are easy to answer.
However, many people were frightened and did not analyze it deeply. Looking back, in the fourth quarter of 2019, when NIO was perceived to be on the brink of collapse worldwide, it was still able to sell more than 8,000 cars, more than what others had sold. This was a very important signal.”We are doing what we believe in. We haven’t done anything wrong, we haven’t committed financial fraud, we haven’t owed any bank money, and we haven’t run away. We are working hard, but just facing difficulties.” Li Bin believes that his persistence is correct, and he is proud of it. Time has proved that he is correct.
On April 7th of this year, the 100,000th NIO vehicle was produced, with an average selling price of 4.275 million yuan per vehicle. In November, NIO delivered a total of 10,878 new vehicles, an increase of 105.6% year-on-year, reaching a new high. It is worth noting that from January to November this year, NIO’s cumulative delivery volume has reached 80,940 units, ranking first among new energy vehicle companies in terms of sales.
During this process, some people came and went through twists and turns, but Li Bin didn’t care. “Everyone has their own choices. I cannot require every colleague to think from my perspective. Besides, he lost his stocks before and now the loss is even greater.”
Li Bin has always believed and persisted that it is the users who are supporting NIO to continue to move forward, and no matter what difficulties are encountered, the original intention remains unchanged. When faced with overwhelming doubts, Li Bin still has enough composure. This is also an extremely important aspect. “Doing things beyond common cognition requires composure, and giving everyone time to understand you.”
When not feeling cold, frost will not fall; when warm, frost will not dissipate during the day. Each severe loss can be regarded as an immortal harvest. Without experiencing hardship, one cannot appreciate the value of evergreen trees; without facing difficulty, one cannot know the true character of a gentleman. Li Bin is carrying out his “madness” step by step, and in the near future, with his leadership, NIO will go even further.
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.