Colleagues,
The next two years will be the most fiercely competitive period of transformation in the automotive industry, with the external environment filled with tremendous uncertainty. In order to qualify for the finals, we must further improve our execution efficiency and ensure sufficient resources are allocated to key businesses.
In the midst of fluctuating sales and frequent layoff news, on November 3rd, Li Bin issued an internal letter titled &#34;Organizational Optimization and Two-Year Priorities&#34; to sound the alarm for the company and initiate actions to improve organizational efficiency.
In the letter, Li Bin did not shy away from NIO's current situation, stating, &#34;This year, we delivered 5 new products, but our overall performance still falls short of our expectations.&#34; He mentioned that after two months of analysis and discussions, as well as two weeks of planning, the company is now focusing its business and planning on the following areas:
Firstly, ensuring long-term investment in core key technologies to maintain a leading advantage in technology and products; ensuring sales and service capabilities can withstand fierce market competition; ensuring the timely launch of 9 core products from 3 brands.
In terms of organizational efficiency, merging redundant departments and positions, transforming inefficient internal workflows and divisions of labor, and eliminating inefficient positions; in terms of resource efficiency, delaying and reducing investments in projects that cannot improve the company's financial performance within the next 3 years.
According to the above plan, Li Bin stated that the company will reduce approximately 10% of its positions, with specific adjustments to be completed in November. He emphasized that this adjustment will affect some colleagues, but it is a difficult decision that the company has to make in the face of intense market competition.
Insiders close to NIO revealed to Wall Street News that this round of layoffs mainly targets departments that do not generate revenue and may involve businesses such as batteries and mobile phones.
As the &#34;Hotpot&#34; of the automotive industry, Li Bin has ambitious plans, and under his leadership, NIO has rapidly expanded. In terms of business, developing high-end smartphones, researching and developing 150-degree large batteries, aggressively building battery swap stations, accelerating international expansion, and mass-producing chips are all current key tasks for NIO. Each one is an important part of improving user service experience and also a huge burden in terms of manpower and financial costs.
As a result, NIO has become the company with the most employees among NIO, Li Xiang's Ideal, and Xiaopeng. According to financial reports, as of the end of last year, NIO had a total of 27,000 employees. In comparison, Ideal had 19,000 employees and Xiaopeng had 16,000.
However, in terms of investment direction, compared to Ideal's &#34;ALL IN&#34; factory and capacity, which achieved over 40,000 deliveries in October, and Xiaopeng's intensive efforts to improve efficiency, surpassing the 20,000 mark, Li Bin's extensive investment has not translated into actual sales. In October, NIO delivered only 16,000 vehicles.
It is worth noting that NIO's second-generation platform and its entire product lineup were already assembled at the beginning of the &#34;peak season&#34; for the automotive market in September and October. Li Bin even hired senior sales personnel from BBA at a high price to provide support. Looking back at the second-quarter earnings report, Li Bin set a goal that once all NT2.0 models are delivered, the company will be able to achieve a monthly sales volume of 30,000 vehicles, and the company's gross margin is expected to return to 18%-20% from single digits.
However, the reality is clearly not as rosy as Li Bin imagined. Although NIO's sales in July successfully exceeded 20,000 units with the help of the popular ES6 model, the following three months saw a fluctuation back to the range of just over 10,000 units.
The continuous pressure on NIO's finances is evident in the fact that their expenses exceed their income.
Since the second half of last year, NIO's cash on hand has decreased by over 6 billion yuan each quarter. As of the end of June this year, NIO's cash and cash equivalents amounted to only 31.5 billion yuan. As a result, financing has become a necessary option for NIO. On September 19th, NIO announced plans to issue a total of $1 billion in convertible bonds.
Although Li Bin is skilled in the capital market, it is no longer a time when hot money is abundant. NIO, which still wants to secure a spot in the finals, needs funds to keep flowing.
At NIO's Tech Day on September 21st, Li Bin told Wall Street Journal, &#34;R&amp;D investment will account for more than 20% of revenue each quarter, and we will continue to maintain this level of investment in R&amp;D in the future.&#34; He stated that this is money well spent, as it is the basic guarantee for NIO to participate in the intense competition in the next stage. After experiencing the darkness of 2019, he will also protect the boundaries of the company.
Now, as competition becomes more fierce and differentiation progresses rapidly, elimination is always lurking. Li Bin, who is determined not to give up, must heal his wounds and gather strength, &#34;hold onto his wallet&#34; and make a full sprint in sales.

09866

I also want to qualify for the finals.

NIO "A Healing Process"