Writing by | Roomy
Edited by | Zhou Changxian
“The NIO ET5 will sell more than the BMW 3 Series in one year,” said QIN Lihong, the CEO of NIO, at the Chengdu Auto Show. His words have sparked widespread discussion and criticism of NIO, with some saying “are they dreaming?”
Although in August, NIO returned to the top three in the market with sales of 11,000 units after falling behind for a few months. At that time, the other two faces in the top three were not the familiar Xpeng and Ideal, but NETA and Ling Hang, ranked first and second respectively.
The new force brand that used to run with the second-tier camp has now overtaken “Little LIR” (NIO), regardless of whether NIO is satisfied or not. However, netizens are not satisfied with the ideas of “the NIO ET5 will surpass the BMW 3 Series within a year”, with many saying they feel “very skeptical”.
QIN Lihong did some calculations and said that the BMW 3 Series sells between about 10,000 and 15,000 units per month, so it is not easy for the NIO ET5 to surpass it within a year. However, the savvy QIN Lihong did not commit to anything and said that “the ET5 should be stable after a year, and I think it will still be competitive.”
Regarding the comparison between the NIO ET5 and the BMW 3 Series, the media has already discussed it many times, and the basic opinion is that “it is difficult”. Currently, only one model, the Ideal ONE from new forces, can achieve sales of more than ten thousand per month.
Here, “AutocarMax” does not want to discuss how likely it is for the NIO ET5 to surpass the BMW 3 Series, because the answer is “anything is possible”. QIN Lihong also thinks this way. What we want to explore is why the usually steady and experienced QIN Lihong can say such two sentences.
What is the support behind it.
“NIO ET5 surpassing the BMW 3 Series within a year”?
NIO’s thinking has strong purpose. It can be seen from the product lineup lined up in a row at the Chengdu Auto Show. The NIO ET5, ES7, ET7, and 2022 ES8, ES6 and EC6 with the Alder and Chiyang smart systems are all here.
This is the first collective appearance of NIO’s product upgrade, and the original product shortcomings have also been improved, including many performance indicators, such as intelligence.
Therefore, QIN Lihong has repositioned their competitive rivals after the group upgrade of the product line. Of course, his positioning is not blind, but is based on feedback and research on some market leaders in the past year.
“We have been talking too much about BMW in the last two years.”Qin Lihong admitted that BMW focuses on product strength and driving pleasure and NIO has always benchmarked BMW in the development of products. It is self-evident that NIO wanted to establish a luxury electric brand from the beginning.
So why isn’t it Audi or Mercedes-Benz?
In fact, as early as three years ago, Qin Lihong was often asked the same question on different occasions, “BBA is going to make electric cars, are you close to death?”
Three years later, the answer is also obvious. As Qin Lihong said, “Now they have completed the first round of licensing, but the movement seems to be not so great, of course, they have also achieved good results. But in my opinion, the relative position of their oil cars in the market can be ignored.”
This statement cannot be called humble. However, it cannot be called inflated, because currently BBA has not fully developed electric cars, which is also a fact.
The reason for choosing BMW as a direct competitor rather than Mercedes-Benz and Audi was not an impulsive decision by NIO or Qin Lihong’s casual remark. At the beginning of NIO’s establishment, every product was benchmarked to BMW.
The current product matrix also verifies this statement. The ES8 and ES6 are benchmarked to the BMW X5 and X3, while this year’s ET7 and ET5 are aimed at the BMW 5 Series and 3 Series.
Avoiding Audi and Mercedes-Benz is because “our average ticket price is already higher than Audi, exceeding 100,000 yuan, which I think is not easy to compare. Mercedes-Benz brand construction is very complete, and it should be the most complete in the entire automotive industry.” For NIO, Mercedes-Benz is still an object that needs to be chased.
Well, a world that only makes Audi feel bad.
Data shows that the invoiced price of NIO’s products sold in July has exceeded 420,000 yuan. Compared with the three BBA, the average invoiced price of BMW is close to 400,000 yuan and that of Mercedes-Benz is around 410,000 yuan. The overlap with the product range of NIO is far higher than the average transaction price of Audi, which is just over 300,000 yuan.
To prove this point, Qin Lihong also shared another set of data. From January to July this year, according to the number of insurance policies, NIO alone accounted for 40% of pure electric vehicles priced between 300,000 and 400,000 yuan, and Tesla remained the first place. Because Tesla raised the price from more than 200,000 yuan to more than 300,000 yuan. However, for electric cars priced above 400,000 yuan, NIO accounts for 60%.”We sometimes feel it’s not very sporting of us, because it’s indeed very limited to compete with 40,000 or more pure electric vehicles in terms of performance, service, and convenience of charging and swapping. Although there is a sense of modesty, there is something deeper implied in Qin Lihong’s words. What he really wants to say is, ‘The overlap between NIO users and BMW’s existing users is higher than that of Tesla’s.’ In his view, this doesn’t mean a head-on collision with BMW. It proves that in the past few years, BMW has done well in the high-end fuel vehicle market.
There is another layer of meaning, which is not to be compared with Tesla in terms of market positioning. Because NIO’s average transaction price is not only higher than Tesla’s, but NIO also wants to set a benchmark for “premium luxury electric vehicles” in the environment where intelligent electric vehicles are gradually becoming popular.
Currently, Tesla still plays a more leading role than NIO in electric and intelligent vehicles. Qin Lihong also acknowledges that “Tesla’s circle is much larger than NIO’s,” but in the market, NIO is no longer the first direct competitor to Tesla.
“In the first two years, we mentioned Tesla more, and now Tesla has raised its own price to more than 200,000 yuan. We feel that BYD should also raise its price more. The two have become increasingly closer.” I don’t know Musk’s reaction to Qin Lihong’s words, but he’s probably not very happy.
Based on the logic and thinking behind these, it is easy to understand Qin Lihong’s goal of “NIO ET5 surpassing BMW 3 series within a year.”
However, goals always have two answers: success or failure.
“Bin is busy plating dishes, and I am busy setting the table”
It is evident that Qin Lihong is confident in NIO surpassing the BMW 3 series within a year with the ET5. At the Chengdu Auto Show, he announced the locking and delivery dates for ET5, which will start locking on September 9 and be delivered on September 30.
The reason for his confidence is that since the delivery of NIO ET7 on March 28 this year, the cumulative sales have exceeded 10,000, which also proves that NIO, after the adjustment period, has outstanding advantages in this round of product competition and is recovering quickly.
As the key weapon for NIO’s next competition, the new car based on the NT2 platform has entered the intensive deployment stage. The most prominent feature of the NT2.0 platform product is that it solves the problem of “being flattened” for intelligent technology.
The price of NIO ET5 ranges from 328,000 to 3.86 million yuan, while the BMW 3 series ranges from 299,900 to 399,900 yuan. The two are highly competitive in the 300,000 yuan price range. In fact, there are many competitors in this range, making this competition more challenging. NIO ET5 is challenging BMW 3 series sales of fuel vehicles, and it is necessary to have sufficient product strength.
The NIO ET5 is undoubtedly a force to be reckoned with. Equipped with top-of-the-line hardware for intelligent driving, it comes standard with LCC lane centering and ALC automatic lane changing functions. With the standard 75kWh battery pack, its range has been increased to 560 kilometers, and with the long-range 100kWh pack, its range has been increased to 710 kilometers. It can accelerate from 0 to 100 km/h in 4.3 seconds…
These are experiences that the BMW 3 Series gasoline version cannot provide. According to the order trend, the ET5 should be a flagship model for NIO.
However, Qin Lihong did not make an absolute statement, saying, “There is also another possibility. If the monthly delivery volume of ET5 in the future reaches more than 10,000 vehicles and BMW doesn’t sell any less, we haven’t surpassed it. That would be even more interesting. Let’s wait and see.”
He added that he did not mean “either you die or I die.” He still had concerns about the main pressure on production, as climbing the production capacity of the second advanced manufacturing base in Hefei, China, as expected, was still uncertain.
After all, the biggest obstacle to delivery is whether the supply chain is stable or not. The ET5 will be delivered in September, and the ES7 is planned to be delivered in the third quarter… Concentrated delivery of multiple models has a great boost to sales, but it is also a great challenge for the supply chain.
Qin understands this and dares to make such a statement because he trusts the product strength.
There is no need to say much about the trend. In recent years, there has been a significant trend to shift from gasoline-powered vehicles to electric vehicles, and the market demand for NIO has been strong.
In addition to market trends, Qin’s confidence is based on NIO’s iteration speed. “NIO is the only global electric vehicle innovation company that has completed iterations,” said Qin.
Regarding the past year, in which NIO slipped from the leader in innovation to third place in terms of sales, Qin explained that NIO entered the adjustment period earlier than other brands due to its earlier start.
For more than a year, the main thing Qin has been busy with is realizing product iterations. “We were the first to enter the curve, and adjustments had to be made at speed in the curve; this is an objective rule,” Qin said. Qin hopes that as the industry concentration continues to increase, NIO’s goal is to achieve a breakthrough from 1 to 100 and grow into an industry giant.
There are significant challenges.
The laws of intelligent electric vehicles are completely different from those of gasoline vehicles. In the past, gasoline vehicles had a life cycle of 5 years, and products that sold for 10 years were not uncommon, but this way of thinking does not apply in the age of electric vehicles.”We must approach this market with the mindset of iterating once every three years, which in turn is a great test for any company’s investment level, strength, and determination,” said Qin Lihong.
Because the iteration cycle of chips, screens, and software is much shorter than that of cars. According to Moore’s Law, chips, screens, and software need to be iterated approximately every 18 months.
Once consumers form an impression of a brand or a model as “outdated” in terms of intelligence in this era of technological competition, it is a very scary thing, unlike the long-lasting labels of luxury and driving performance in the era of fuel vehicles.
Qin Lihong understands that intelligent products must adapt to the process of developing one generation, selling one generation, and preparing one generation. “I think this curve is necessary and is the rite of passage for every intelligent electric vehicle company.”
Therefore, lagging behind in growth for one year means iteratively changing to a new generation of products. Currently, NIO’s three products on the NT2 platform, ET7, ET5, and ES7, will enter the delivery stage, and the first generation of three models, ES8, ES6, and EC6, have also been upgraded.
“What have we been busy with this past year?” Qin Lihong humorously said, “Bin is busy with developing, busy with ordering dishes, and I am busy with setting up the desktop. Today, the basic layout of the Chengdu Auto Show is almost complete.”
In the past year, NIO has made preparations in many aspects and its rhythm is very fast. The software and hardware iteration capabilities of its products have been renewed. Qin Lihong believes that for the intelligent racing track, changing generations is the first big turn, and NIO has entered the turn. The delivery of ET5 and ES7 is a clear signal.
“At this time, others are still on the straight road, and NIO, which has entered the first bend, is basically about to come out of the corner, and speed will come back.” Qin Lihong’s mentality this time is more stable than at any time in the past year.
Final Thoughts
Returning to the top three in sales, NIO and Qin Lihong still cannot sit back and relax, as there is still a major issue to address.
That is the preparation of the sub-brand.
As the new energy market matures and enters a new cycle of competition centered on core value intervals, the market structure will become similar to that of fuel vehicles. The market share in the range of 200,000-300,000 yuan will gradually expand and eventually become the mainstream market. NIO needs to quickly fill this market segment.
“The team over there has become stronger, the product team has basically completed its work, and the market and brand team’s framework already exists, and is currently in the process of recruiting new talent,” said Qin Lihong. He also shared a little story that the leader of the new sub-brand dressed up as a booth staff member on media day at the Chengdu Auto Show and sat there listening for a while before leaving.
“I also told him, ‘Little brother, watch your big brother’s class and strive to do better in the future.'”> Even though Qin Lihong emphasized that the overlap between NIO and Tesla is decreasing, as the market competition intensifies, NIO still needs to penetrate into the market segment where Tesla Model 3 and other products are located, which is undoubtedly a tough nut to crack.
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A grand test will continue.
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.