Author: Chang Yan

This past April was an unforgettable month for the entire new energy industry.

Due to the impact of the pandemic, almost all brands have been affected in sales, production, and delivery.

Just this afternoon, everyone was amazed by the fact that Tesla, the industry leader, only delivered 1,512 vehicles in China in April, while in the same evening, we welcomed the financial report release of NIO, the ideal car for the first quarter of 2022.

It is precisely because of this that everyone’s urgency and impatience towards delivery, growth, and expansion have become calm and rational, and Li Xiang’s method for the ideal car has become the most lively topic tonight.

After all, this is the foundation for fighting a prolonged war.

Gross Margin and R&D

Although delivery in April was affected, the ideal still achieved good results of over 10,000 average monthly deliveries in Q1, with a quarterly delivery volume of 31,716 vehicles, a year-on-year increase of 152.1%.

The year-on-year increase is vehicle sales revenue. In the first quarter, the ideal achieved a vehicle sales revenue of RMB 9.31 billion, and the growth rate of 168.7% is even greater than that of sales volume.

In this quarter, the total revenue of the ideal car was RMB 9.56 billion, with a gross profit of RMB 2.16 billion. Although the net loss for the quarter was RMB 10.9 million, as of March 31, 2022, the total amount of cash and cash equivalents, restricted cash, time deposits, and short-term investments of the ideal car still reached RMB 51.19 billion.

And for those of us who care more about product technology, two key indicators are more important to us.

One is the gross profit margin, which reached 22.4% this quarter, a significant increase compared to the same period last year’s 16.9%, but the difference from Q4 2021’s 22.3% can be ignored.

The second is research and development expenses. The ideal car’s R&D expenses for the quarter were RMB 1.37 billion, a 167.0% increase from the RMB 514.5 million in the first quarter of 2021.

Ideal is bidding farewell to the era in which it has been questioned for its conservative R&D investment and laying the platform foundation for the upcoming model explosion next year.

Our product plan is very similar to the iPhone

It seems that Li Xiang doesn’t shy away from his admiration for Apple, of course, who wouldn’t want to be the next Apple?

In the previous quarterly earnings call, Ideal had expressed its hope that “in ten years, Ideal cars will be able to achieve the same level as Apple,” and in this earnings call, he again used the iPhone’s product logic to compare Ideal’s product layout strategy.

Previously, we already knew that Ideal will welcome new models of different sizes next year, as well as introduce pure electric power, but how these technologies and product specifications coexist and develop has always been a topic of concern and doubt.

This time, Ideal has answered this question in detail, which can be understood as horizontal and vertical directions.

Horizontally, there are two different power and body forms.

For range extension technology, Li Xiang believes that the most corresponding body form is SUV. He thinks that range extension is not the most efficient for sedans and MPVs, but SUVs are very suitable.

As for pure electric technology, it is also known that it is not efficient to drive large-sized SUVs, so Li Xiang said that Ideal’s pure electric products will be “a product that is different from all forms on the market” and specifically designed for pure electric forms.

With such a distinction, Ideal’s dual-power form is no longer a choice that users are struggling with, but has become complementary products with unique and appropriate target audience. It is natural for a family to have two different power Ideal models.

Vertically, the price is between 200,000 and 500,000 yuan.In Li Xiang’s view, the ONE from Li Auto is undoubtedly a hit product, as it has gained more than 30% of the market share in the price range of 300,000 to 400,000 yuan of new energy vehicles. Li Auto’s next step is to expand more segments of the market.

Li Auto will strive to create a hit product for every ten-thousand-yuan price range. Based on the large and medium-sized SUV ONE, there will be both pure electric and extended range models available.

Although these models may differ in appearance, the underlying platform technology will be further utilized. The classic saying from Li Xiang of “Our product plan is very similar to the iPhone” comes from this aspect.

You can view it as every generation of iPhone having the same iOS, industrial design, and chip technology. Also, through different body sizes and hardware distinctions, it caters to a vast market area from mini to Pro Max.

“This is the product logic of the entire Li Auto.”

Two guarantees and three models

During the current financial report meeting, Li Xiang also mentioned that two key experiences will become standard configurations of Li Auto’s products.

Firstly, all of Li Auto’s products will use four-wheel drive as the powertrain form.

Secondly, all of Li Auto’s products will have sufficient intelligent experience. The goal is to make every family feel the experience of intelligent driving and cabin technology.

For Li Auto’s targeted “families with children,” the safety and convenience experiences brought by these two guarantees will become important reasons for users to choose Li Auto.

Here, you can think of Li Auto’s product planning as a Rubik’s Cube.

Looking at the most crucial plane, the X and Y-axis represent the price and powertrain form we just mentioned, and as it becomes a 3D cube, the depth of the Z-axis is determined by common technology and experience.In the coming year, we will be able to see three ideal new products: a brand new flagship product with extended range, a new BEV high-voltage platform electric vehicle, and the first mid-size car product priced between 200,000 to 300,000 yuan.

Meanwhile, the charging network prepared for the pure electric platform has already begun to be deployed. The IDEAL team has emphasized its focus on intercity highways while being relatively cautious about the layout of charging points within cities.

In any case, this description that sounds far away gives us a little hope for the ideal future while we are standing at home.

This is the fifth press conference I have attended today. I will stop here for now.

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.