Author: Da Yan
On May 20th, NIO was officially listed on the main board of the Singapore Stock Exchange with the same stock code as in the US market. After the listing, NIO became the world’s first car company to complete listings in three locations and the first Chinese company to list in the US, Hong Kong, and Singapore.
As the leader of the once new force in China’s auto manufacturing industry, NIO is currently in a stage of gathering steam. In 2021, in the high-end pure electric vehicle market of over 300,000 RMB, NIO, with a sales volume share of 40.7% and a delivery volume of more than 90,000 vehicles, ranked first.
In 2022, three new cars based on the NT2.0 platform will be launched, which, together with the previous “886” models, will build the most complete model matrix among new Chinese auto makers. As a high-end brand, NIO remains the leader in China’s high-end intelligent electric vehicle market. With the launch of ET5 and the new brand models, NIO will begin a new round of sales harvest.
NIO’s Three Insurance Policies After Listing on Singapore Exchange
Faced with the risk of delisting of Chinese concept stocks in the US stock market, the first batch of domestic companies, including NIO, which were listed in the US, have completed their listings on the Hong Kong Stock Exchange. In addition to the HKEX, NIO has also landed on the Singapore Stock Exchange.
In the face of the continued suppression of “Chinese concept stocks,” not only have new automakers started to seek listings in Hong Kong, but other unicorns in various fields in China are also following suit. After its listing in Hong Kong, NIO became the first to test the waters in Singapore.
Being the first to list on the Singapore Stock Exchange can help NIO occupy a favorable position ahead of others, although the volume of the Singapore Stock Exchange is relatively small. NIO’s listing in Singapore can not only help its US investors find a reliable trading platform, reserve sufficient plans for potential delisting risks in the US stock market, and ease concerns of US stock investors, but also raise funds later in Singapore to support the company’s continuous development. Considering that Singapore itself lacks technological giants, if NIO’s performance is stable enough, it may be favored by investors and achieve unexpected results.
Especially now that Hong Kong market is beginning to accept a large number of Chinese unicorn companies, there is also pressure on the capital side of the Hong Kong stock market. Opening up a channel for listing in Singapore undoubtedly gives NIO one more choice than other new automakers.In addition, the automobile market in ASEAN region is also rapidly developing. As a new force actively exploring overseas, NIO needs to lay out a strategic plan to export its models, battery swapping systems, and customer operation models to the ASEAN region besides Europe. Therefore, in addition to listing on the Singapore capital market, NIO also announced that it will establish an artificial intelligence and autonomous driving research and development center in Singapore.
By going public in Singapore, NIO can not only greatly enhance its popularity in Southeast Asia, but also lay a foundation for its future sales in Singapore and throughout ASEAN. As a research center for semiconductor, artificial intelligence, autonomous driving and other technologies, NIO’s layout in Singapore will also provide considerable assistance to the company’s autonomous driving and artificial intelligence research and development.
The New NIO Brand has a Heavy Responsibility
On May 10th, the Hefei Economic and Technological Development Area and NIO officially signed a cooperation agreement, marking the opening of Phase II of NeoPark Xinqiao Intelligent Electric Vehicle Industrial Park and the key core components supporting project. According to the agreement, the project covers an area of 1,860 mu and is planned to be completed and put into production by 2024. The highlight of the entire project is that NIO’s all-new mid-to-high-end brand of smart electric cars will be produced at this base, which means that NIO’s long-rumored sub-brand will finally land. With this project, NIO will sound a new round of horn in China and even the global smart EV market.
For car companies, there are usually two strategies for launching a new platform or model: either, like multinational automakers such as BBA or Volkswagen and Toyota, they often first launch flagship products, and then use the established brand appeal to launch more cost-effective models; or, conversely, some companies will launch entry-level models under constraints, and then gradually move the brand up after achieving a certain level of sales. There is no right or wrong in these two approaches, and each company can choose the path that suits its own situation. However, judging from the fact that many independent brands are launching sub-brands with higher positioning, it is more difficult for brands/models to move up.
Therefore, after establishing a foothold in the mid-to-high-end market, it is imperative for NIO to complement the ET5 products below the positioning with a new brand. On the one hand, the competition among new forces in the automotive industry is becoming increasingly fierce, and NIO also needs greater delivery volume to catch up. The automobile industry is a profit-seeking industry that relies on scale. Greater sales volume can not only dilute the investment in research and development and molds, but also stabilize investors’ confidence and provide the most solid support for stock prices.On the other hand, Tesla’s $25,000 electric car project is also in the works. Once Tesla’s Berlin and Texas factories begin large-scale delivery and the rumored second factory in China is established, the $25,000 electric car project will inevitably be initiated by Tesla at the earliest opportunity. To this end, NIO also needs to prepare early. By appropriately lowering the entry barrier for NIO’s mid-to-high-end products through a new brand, while ensuring a certain product gross margin, it can continue to expand terminal sales and lay a solid foundation for pursuing a larger market share.
In NIO’s plan, the new brand is codenamed ALPS project, which has a similar relationship with the existing NIO brand as Audi and Volkswagen, and Lexus and Toyota. For NIO, the biggest challenge for the new brand is not on the technical side, but on the customer experience side. The reason why NIO has so many fans in the domestic market is that it can provide much better services than traditional luxury brands, but providing such services requires NIO to invest a lot of resources in customer operation and maintenance. For the new brand, as sales volume expands, NIO will inevitably need to create new marketing channels and match corresponding service standards. To this end, NIO has invited WeWork Greater China’s General Manager, Ai Tiecheng, to serve as the Vice President of Strategic New Business, to oversee the operation of the new brand in China.
Can NIO begin to harvest sales with its new product offensive?
Currently, NIO’s ES8, ES6, and EC6 models were all released before 2021. Looking at the entire niche market, although these models still have a certain competitiveness, the domestic auto market has always been a market driven by new cars, especially under the circumstances where competitors are all promoting new models with LIDAR. NIO also needs to refresh its models to ensure their competitiveness in the niche market.
Therefore, in 2022, NIO will deliver three new models at once. This includes a sedan combination composed of ET7 and ET5, and a brand-new mid-to-large-sized five-seat SUV called ES7. Pushing three new models to market within a year is a challenge for this new force in the auto industry, and it tests the ability of the entire company’s system. As long as it can ultimately achieve the smooth delivery of the three new models, NIO’s system capabilities will still be among the best of new energy vehicle companies.Among the three car models launched this year, NIO ET5 is the most remarkable one, with a starting price of RMB 258,000 (before subsidy) for BaaS (battery-as-a-service) plan, which lowers the entry level for buyers of NIO cars. NIO considers this model, which targets BMW 3 series in terms of product strength, as a weapon to boost its sales. Therefore, NIO even couldn’t wait until the official delivery of ET7 and eagerly launched this vehicle.
Nowadays, NIO needs a resounding victory to respond to the doubts from all parties. ET5 has such confidence in terms of product strength and product positioning.
The automotive industry is a long cycle industry, which generally takes two to three years from product R&D to final launch and delivery. With the support of Hefei State-owned Assets, the surge in the stock prices of American new energy auto companies, and the continuous growth of terminal deliveries in 2020, NIO has more confidence to build the NT2.0 platform, which gave rise to these three new cars. Through the introduction of solid-state LIDAR to comprehensively improve the vehicle’s perception of the surrounding environment, NIO can ensure its leading position in the field of autonomous driving/driving assistance.
It is difficult for automakers to evaluate their performance solely based on their sales performance. Each automaker has its peak and trough periods in launching new models, especially in the domestic market, where the new car effects are still very apparent. As long as ET5 can be launched and delivered smoothly, NIO’s sales performance this year is still promising. Next, the landing of NIO’s new brand products will also help it gain a larger share in the intelligent electric vehicle market.
Therefore, what NIO needs to do now is to move forward according to its own pace and on its own chosen path, to regain the new force sales champion and form a face-to-face competition with Tesla in the global market, which is a matter of course.
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.