4 Highlights and 1 Mystery of the New Te’s Press Conference

On August 31st, at the Chengdu Auto Show, NIO held a press conference on August 30th, one day prior, to announce the price and full layout of their first mass-produced car DEV 1. While the information disclosed in this conference was abundant, this article will summarize the key points. Without further ado, enjoy.

To start off, NIO moved the venue of their press conference to the Space Club in Chengdu, which is claimed to be the largest nightclub in Asia. Like several other automakers who have held nightclub-themed press conferences in the past, the NIO management team and investors sat awkwardly in a circle under deafening DJ music.

For these people, compared to the noisy and dark nightclub style from the previous day, the traditional and elegant high-quality themed event is undoubtedly a better experience. However, including NIO, an increasing number of automakers are conveying a message: our users are young consumers, they like nightclubs, and investors’ opinions do not hold much sway.

Of course, the location of a press conference cannot prove anything. Any user of any age cares about overall value, which includes price, products, services, and maintenance experiences. NIO still needs to pass this area’s criteria.

Key Point · Price

Following subsidies, the price range for NIO DEV 1 is between RMB 61,900-77,900. The Basic, Smart, Refined, and Premium Editions are priced at RMB 61,900, RMB 66,900, RMB 71,900, and RMB 77,900, respectively.

If we are discussing a product in the consumer goods industry, when its biggest selling point is price, then its overall product capability is certainly not the strongest. However, at the same time, if the pricing is compelling enough, it will cause enough shock in the industry to even re-shuffle the existing competition.

The above paragraph may sound a bit confusing, so I’ll give an example that’s easy to understand: Xiaomi. Xiaomi smartphones have come a long way, and they basically agree with the above conclusion. In the consumer goods industry, there are many examples such as Xiaomi. Is NIO the Xiaomi of the new car field?

Let’s keep reading.

Key Point · Product Capability

This part of the information was disclosed during the product launch event on April 19th, but yesterday’s press conference went into detail once again. I think NIO deliberately amplified the drama of the strong cost-effectiveness of their car. For less than RMB 80,000, what type of car can you buy?

“`

Basic configuration & testing:

A0-level model, with length, width, and height of 3735 mm/1655 mm/1550 mm
55 kW permanent magnet synchronous motor, with a peak torque of 170 Nm
35 kWh ternary lithium battery, with a maximum range of 350 km
7-inch full LCD instrument panel + 10-inch suspended LCD touch center console
Under fast charging mode, 30 minutes of charging can add 200 km of range
Over 300,000 kilometers of road testing and over 30 complete vehicle reliability tests have been completed

It should be noted that the maximum range of 350 km mentioned earlier by the CEO of Changan New Energy is based on a constant-speed test. In actual usage scenarios, the range of DEV 1 is about 270 km.

To be honest, these parameters are not outstanding for an A0-level vehicle. My feeling is that Changan New Energy’s strategy is to make these basic parameters reach a medium to high level, and then greatly improve other dimensions below to seize the market, defeat competitors, and win the favor of users.

What dimensions? Intelligence.

To be honest, I had very low expectations for the intelligence level of DEV 1 at first. There are several reasons. Firstly, to make a smart car, you need different teams of engineers from traditional vehicle engineering and Internet industries, and the management needs to strongly promote the integration of the two teams.

Changan New Energy itself is a very young company that was only established in September 2017, and the controversial OEM model was adopted in the production process. In addition, Changan New Energy’s product strategy and the positioning of DEV 1 make it unreasonable to expect DEV 1 to be like a Tesla or NIO.

But the announcement of the SITECH D.OS intelligent operating system and planning at today’s press conference shows that Changan New Energy has tried very hard.

First, some background: Changan New Energy joined the AGL Alliance earlier, with “AGL” standing for “Automotive Grade Linux”. It is a large open source force of the car networking platform in the automotive industry. Brands such as Mercedes-Benz, Toyota, Nissan, and Ford are all members of the alliance. CEO of Changan New Energy mentioned the AGL alliance repeatedly during the press conference, and it is evident that the participation of these top brands is also a kind of endorsement for Changan New Energy.

“`But it should be noted that many car brands using BlackBerry QNX and Android platforms are not small in number. Tesla has not joined any alliances, but it does not prevent it from achieving the best intelligence in the industry. Therefore, the real factor that determines the level of intelligence is the team’s input.

SITECH D.OS intelligent operating system has achieved what level? First of all, it has completed the trinity of ID account system + OTA + cloud service, supporting navigation payment, catering and entertainment, and travel. At this point, it has actually surpassed many traditional car companies that are slow. If compared with peers, it is roughly at the level of SAIC Alibaba’s Zebra operating system. Fair enough, Zebra system has been well received in the past two years, which is beyond dispute.

On this basis, SITECH has also developed products and services such as face recognition, automatic settlement of charging piles and intelligent assistants, which are either pain points or popular services. Of course, the actual user experience is another matter. Today, I tested SITECH’s intelligent assistant at the auto show, which was mediocre. Let’s see if SITECH can improve it in the future.

Regarding intelligent driving, a piece of background information: at SITECH’s press conference on May 25th, Bosch and SITECH reached a cooperation on AVP (Automated Valet Parking) technology. Chen Ming, the President of Bosch’s Intelligent Networked Business Unit in China, came to the scene to support SITECH.

Automated parking is very interesting. On the one hand, it has been widely used in mass-produced cars, but few people actually use it.

On the other hand, at this year’s Bosch Connected World, Dieter Zetsche, Chairman of the Board of Directors of Daimler AG, and Volkmar Denner, Chairman of the Board of Bosch, jointly demonstrated automatic parking. Another newly established car company is also deploying automatic parking.

Because truly usable and easy-to-use automatic parking lots are available in various parking lots and underground garages across the country and around the world, it is essentially the primary application of L4 level autonomous driving technology in limited scenarios. It is not easy to initiate the sensors and computing platforms throughout the car to perceive and make decisions.Nio announced its plan for intelligent driving yesterday. The focus of SITECH D.OS 2.0 is on continuous learning and intelligent driving capabilities. Nio will continue to optimize its smart algorithms and provide Level 3 intelligent assisted driving in version 2.0. It will also promote Level 4 intelligent driving and Autonomous Valet Parking (AVP) in a controllable range and subdivided scenarios.

I would like to remind you that Nio DEV 1 is a product that costs less than 80,000 RMB, even if later models incorporate L3 or even L4 autonomous driving technology. It is not an exaggeration to say that Nio has put in “a great deal of effort”, right?

Highlights · Sales & Service

As I mentioned earlier, there is a lot of information at the press conference, so sit tight and keep reading.

Regarding the SDS (Sales Delivery Service) phase, there are huge differences in the approach between traditional car companies and Tesla, as well as among some of the newer auto manufacturers. This indicates a lack of uniformity in the business model. Now let’s take a look at Nio’s strategy.

It is difficult to summarize Nio’s sales model with just one sentence, but one might say it takes “the best practices of all”. There are three online channels: PC, APP, and third-party platform official online store, which are responsible for selling whole vehicles, original parts, and lifestyle products.

There are also three offline D.BOX channels:

A-type “elf” stores: 50-100 square meters, mobile with the flow of people, flash stores to expand brand awareness;
B-type flagship stores: 150 square meters, including the sale of Nio-related products;
C-type image stores: a minimum of 300 square meters, which are traditional 4S stores.

Finally, all of the above stores will be fully connected to the Nio management system, and Nio will use it to uniformly digitize and manage every SDS order.

So far, Nio has 68 dealers in 70 cities. The goal for the end of this year is to open a total of 80 stores, including 10 A-type, 60 B-type and 10 C-type stores.

Nio’s after-sales service brand is called D.CARE. Under the D.CARE system, the customer service management platform independently developed by Nio will launch a 24-hour service, which allows users to use phone, SMS, WeChat, APP, Web and other channels, in addition to voice calls. This is part of Nio’s smart remote diagnostics, one-click appointment for maintenance, one-click road rescue and other services built in the D.OS.

It’s also worth mentioning the worry-free service package:

If the car is traded in after three years, it provides a 50% residual value replacement.
Free battery replacement one time within three years.
A 90-day return policy (trial run) if returned for any reason after 90 days.

Evaluation · Capacity

Despite being only one-year-old, the DEV 1 has already entered the list of the 309th batch of road motor vehicle production enterprises and products catalog of the Ministry of Industry and Information Technology, and was officially launched on the production line of FAW, the manufacturing partner, on August 16. Nio plans to deliver 4,000 vehicles this year, and 42,000 valid orders have been accumulated with a deposit of 2,000 yuan.

In addition to cooperation with FAW, Nio’s own smart factory will be fully put into operation in 2019. The factory includes four workshops: stamping, welding, painting, and final assembly with an automation rate of 90% and planned production capacity of 200,000 vehicles annually.

Suspense · Nio’s Future

Finally, the suspense is addressed. Before, Nio’s CEO said, “Nio is steadily advancing in every step.” Is this progress he mentioned or just about survival?

Nio was born in the Guian New District of Guizhou, and is one of the key incubation industries of the district government, which has provided various resource tilts and policy supports during Nio’s development. With the strategic cooperation agreement on manufacturing with FAW, Nio was able to proceed into delivery phase in just a year with 42,000 valid orders accumulated. The sales and service layout is also in full blossom.

My previous impression of Nio was that their management had a strong ability to integrate their resources and execute effectively. They thoroughly squeezed all kinds of resources from their partners and maximized them into their competitive advantages.

However, running fast will sometimes conceal some weaknesses. For example, with the huge and comprehensive sales and service system, are there conflicts of interest? What challenges exist in the operation of the whole service system? How can the worry-free plan balance the user experience and operating costs?

Especially as Nio CEO has emphasized, “Nio will have reasonable profit margins. Any new automobile manufacturer must return to the business essence, which is a business in itself.” Let us look forward to Nio’s development in the future.