On September 16, 2020, the Global New Energy Vehicle Supply Chain Innovation Conference was held at the Nanjing International Expo Center. The conference was attended not only by well-known domestic and foreign automobile manufacturers and component enterprises, but also by automotive industry experts and scholars and representatives from relevant government departments.
At the conference, Shen Feng, Executive Vice President and Global Quality Committee Chairman of NIO, delivered a speech.
Here is a summary of his speech:
Firstly, I would like to report on NIO’s global layout. Our headquarters is in Shanghai. Recently, as you all have seen, our NIO China will be located in Hefei, with our research and development institutions in Beijing, the United States, Munich, and the UK. Our production is in collaboration with JAC Motors and is located in Hefei. We emphasize that “Three Electric and Three Intelligent” are independently developed by NIO.
At present, the NIO ES8 and ES6 are distributed in 307 cities across China, with a cumulative delivery of over 50,000 vehicles.
Looking at the entire global luxury brand’s pure electric SUV market, the NIO ES6 has ranked first for 14 consecutive months.
By the way, our third car, the EC6, will be delivered to the market soon, so you will soon see our brand new EC6 on the road.
Thoughts on the Supply Chain
China’s supply chain has its strengths and weaknesses compared to the rest of the world, and we cannot attribute all the problems solely to the supply chain. We believe that the growth and development of the supply chain is closely related to the automakers, so we hope that the automakers can do more innovation and positive research and development to drive the entire supply chain’s development.
Firstly, we refer to our supply chain and suppliers as partners. This is not only what we say, but also what we think and do. We hope to develop and win together with our partners.
NIO has over 1,000 partners, and without them, we would not be where we are today.
Our automaking is in Hefei, and from an efficiency perspective, we hope that our partners can be as close to us as possible. If we draw a 600-kilometer circle centered on Hefei, 70% of the materials and partners are located within this range.
Including some global suppliers, of course, many global partners also have production in China. Therefore, approximately 92% of the components come from local production, and about 8% come from imports. Including building materials, we purchase from about 800 suppliers.
From our current procurement, the top 10 suppliers contribute to 40% of the total procurement, and the top 40 suppliers among the more than 200 partners contribute to 80%. The aggregation effect is still relatively strong.Just now, Mr. Shen (Shen Yanan) talked about how from the perspective of the supply chain, many cooperation opportunities have been created and seen new developments. From the perspective of NIO, our battery pack production, motor and electronic control production are now self-sufficient. We have independently developed and produced our entire battery pack, BMS, motor, and electronic control.
We cover intelligent cockpit, vehicle networking, and L2 or L2.5 level automatic driving assistance system. This will involve many new and innovative partners. Previously, hardware was the main focus, but now it’s hardware, software, and services, which creates a new way of life.
Traditional auto companies used to focus mainly on hardware from a factory perspective, such as styling, powertrain, automatic chassis, and electronic and electrical systems. Therefore, the iteration cycle used to be quite long.
However, the way of thinking for iteration has changed now, as we have added a lot of software and chips. Therefore, the way of thinking about iteration has become very different.
NIO ES8 was first launched in June 2018. Software development started in October 2018, and from the earliest version 1.0 to version 6.5, software is updated approximately every 1-2 months with new features and experiences. Therefore, users are always looking forward to software updates. NIO extends iterative thinking to software and beyond.
In the current situation, it is necessary for automakers and partners to break the traditional “one-to-one” approach and adopt innovative collaboration models.
We will also seek more innovative partners. As Mr. Shen pointed out earlier, previously it was from consumer electronics to the auto industry. Now, throughout the entire electrification, intelligence, and networking process, we can see a lot of innovation. NIO has been searching for strategic partners who can grow and develop together with us.
Take NOMI as an example. NOMI was not provided by partners within the industry, but from feedback, everyone loves NOMI. Because of innovative products and innovative thinking, we have to find innovative technologies and partners to create and manufacture together.
We said that after the introduction of electric vehicles, the entire electric drive system became simpler than the engine and transmission system. Therefore, we said that the overall quality of the electric drive system would be much better. In fact, we still face many challenges. In the process of innovation in the entire supply chain, quality control of partners is particularly important.We hope our partners can join our development process as early as possible during the selection and development process, so that the front-end work can be done better and problems can be avoided. Throughout the entire process, we strictly apply the APQP process together with our partners to ensure things are done right.
At the same time, consistency must be maintained during the production process. It is not only necessary to closely cooperate with your tier-one suppliers, but also to pay special attention to ensuring that some of your partners can contribute to the quality of the product.
The above is a summary of Shen Feng’s speech.
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.