<img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/5467b729-56d4-411b-88ce-a9a8411fb341.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/5467b729-56d4-411b-88ce-a9a8411fb341.png"/>Author | Chai XuchenEditor | Zhou ZhiyuAfter four years, the Beijing Auto Show has returned, but things are different.Four years ago, Nio was hot, with a market value exceeding 900 billion RMB, shining brightly at the auto show; four years later, Nio has experienced ups and downs, and at the auto show, they focused on their car manufacturing. Of course, Chairman Li Bin still appeared with his optimistic demeanor, filming short videos with Wang Chuanfu, Lei Jun, and Wang Feng during the auto show.On April 25th, at this year's Beijing Auto Show, only the new model ET7 was unveiled by Nio. As a high-end executive sedan in the 400,000-500,000 RMB price range, this is not a high-volume model. Nio's focus is on how to establish a strong presence in the luxury car sector, solidify its brand image, and lay the groundwork for the next stage.In a post-event interview, CEO Qin Lihong &#34;Versailles&#34; told Wall Street News that at this stage, Nio is not overly concerned about sales volume, but aims to capture the core market stronghold of BBA - executive sedans, and secure a place. He frankly stated that although the Chinese automotive industry has been very vibrant in recent years, it has not made significant achievements in this area, which is a tough nut to crack.Li Bin said that two years ago, the Nio ET7 entered the market and became the best-selling pure electric sedan in China with a total sales volume of 30,000 units.However, the current monthly sales volume of the ET7 in the hundreds is facing increasing competition from the mainstay of BBA executive cars, with monthly sales levels of 10,000-20,000 units. Perhaps only by narrowing this gap can Nio potentially catch up with BBA as a whole.Regarding the sales of the old model ET7, Li Bin admitted that judging demand in the high-end market is not easy. In the past two years, he mistakenly believed that the era of intelligent driving would arrive quickly, thus neglecting the experience of the second-row seats in the ET7. This wrong judgment prevented the old ET7 from gaining more favor from 56E car owners. And this is just one aspect; the executive sedan sector is a comprehensive arena that tests products, services, brand, and more.Therefore, Nio has directly transferred the seats of the unreleased flagship ET9 to the 2024 model ET7, attempting to strike at the same level; at the same time, Nio's self-developed intelligent driving system, nationwide battery swapping infrastructure, and increasingly sophisticated service system are all preparing comprehensively in their respective roles.It can be said that the new ET7 is Nio's renewed understanding of the high-end market, launching another fierce attack to overturn BBA, and preparing to dominate the high ground of Mercedes-Benz S-Class, BMW 7 Series, and others with the release of the flagship ET9 next year.As for the market's concerns about scale, Qin Lihong calmly stated that Nio has its own pace. In the process of gradually establishing an impression of a high-end brand, the foundation laid in technology, service, and infrastructure over the past two years will drive rapid growth of the second and third brands, as Li Bin puts it, a &#34;leap from a standing start&#34;Qin Lihong revealed that LeDao will launch its brand and products in mid-May, with specific listing and pricing to follow later. However, in terms of power supplementation and intelligence, it may have a product strength that far surpasses second-tier new forces.Li Bin and Qin Lihong have already been depicting the spectacular scene of Nio's &#34;autumn harvest&#34; in the second half of the year to the outside world.The following is a transcript of the conversation with Nio's Chairman Li Bin and President Qin Lihong (edited):Q: What is the significance of the ET7 for Nio?Qin Lihong: In fact, both high-end and high-volume European and American high-end brands, the most fortified segment market is executive sedans. Although China's automotive industry has been very prosperous in recent years, it has not made much progress in this area.After two years of ET7 being on the market, with a cumulative sales volume of 30,000 units, the number may seem insignificant, but it has already taken the top spot in the Chinese market. The mission of the ET7 is to directly challenge the core and most fortified market of European and American high-end brands through product strength and service.Nowadays, everyone is pursuing various shortcuts, but for us, quantity is not important. We believe that establishing a beachhead in this market can make a foothold and have a presence.Li Bin: Two years ago, we realized that for Nio to truly become a high-end brand, it must enter the executive market and have heavyweight products. This is why we planned the ET9 and upgraded the ET7, reflecting the transformation of our entire brand temperament and core users towards the high end, which is also a competitive necessity.Nio has always been paving the way for the Chinese automotive industry in the high-end market. The average price of the ES8 was over 400,000 RMB, and Chinese brands did not dare to enter this market before. The competition in the 345C segment (BMW 3 Series, Audi A4, Mercedes-Benz C-Class) is too fierce. The executive sedan market is the core fortress market of BBA. For the Chinese automotive industry, this is the toughest nut to crack, and Nio is willing to take the lead.Now, the ET7 has entered the core executive car market of BBA. We hope that the previous 56E (BMW 5 Series, Audi A6, Mercedes-Benz E-Class) will truly become 567E. Our Nio SUVs have performed well, but the executive sedan market is a market that particularly tests product services, brand comprehensive factors. Although our sales volume has a climbing process, we have momentum and confidence.Q: The new version of the ET7 Executive Edition has undergone significant changes in design style, product definition, and compared to the old version. Can you talk about these changes, the reasons behind them, and the lessons learned?Li Bin: When defining the ET7 in 2020, I was too optimistic about autonomous driving, thinking that in the future, people basically wouldn't need drivers, so the second row wouldn't be important. This was our biggest lesson.The core reason why Chinese automotive brands break through in the high-end executive market is still the insufficient understanding of user needs. This is actually quite difficult, how to translate needs into products, truly make the entire team deeply understand user needs, not just in terms of functionality, but more in terms of emotional and sensory needs. The learning process is longer than we imaginedSometimes, when the match between technology and user experience is not well grasped, problems are prone to occur. The difficulty in making cars lies in making judgments for the next few years, not for the present.Question: Since March or April, the overall market's consumer demand has been weakening. How is Nio responding?Li Bin: Nio's market share in the high-end pure electric market above 300,000 RMB is very stable, at over 40%. The breakthrough of pure electric vehicles in the high-end market is still progressing slowly. That's why we recently introduced a 1 billion RMB subsidy for oil-to-electric vehicle replacements, hoping to accelerate the process of transitioning to electric vehicles in the high-end market.In the Jiangsu, Zhejiang, and Shanghai regions, starting from September last year, our sales have exceeded those of similarly priced gasoline cars from BBA, and this trend has been maintained until now. We need a bit more patience to do this well; it's not possible to move as quickly as the market for cars priced at tens or hundreds of thousands.Question: It was mentioned before that the market will be very active in the next two to three years. How did this activity come about? Nio has been doing a lot during this time, why are we going against the trend?Li Bin: During such a market transition period and a period of major technological changes, for traditional gasoline car companies, it is very difficult to change anything after investing funds, the only option left is to lower prices. Additionally, new entrants are definitely also competing for market share, and often they believe the best shortcut is to lower prices and achieve their expectations through price wars.The automotive industry has its own rules, there is a time lag from investment to output, and there will definitely be a time lag of several years. If we don't invest today, we will definitely have nothing to do in the future. Our investments in research and development and infrastructure cannot be considered countercyclical.I see the changes in this industry cycle, and we need to ensure that we have appropriate and competitive product technology and service systems participating in this cycle, including the upcoming LeDao, which are all related to market development.For Nio to become a high-end brand, it needs to be pioneering. A follower can never achieve a high-end brand. Originality and leading innovation are very important. Adding simple features to a refrigerator is not enough; in this market, what matters more is operational efficiency and execution.LeDao is a follow-up strategy, so we don't need to educate the market. Ensuring that a 200,000 RMB car is the best is sufficient. In fact, when Nio is strategizing, we choose what to do and what not to do. In some areas, we need to lead, and in others, we need to follow. Even if we make entry-level cheap cars, we have our own differentiation. Therefore, what LeDao does is called a standing start.Question: In the current competitive environment, what are Nio's advantages?Li Bin: Over the past two years, we have invested over 24.2 billion RMB in research and development, which has definitely translated into our competitiveness today. In addition, the investment in a nationwide charging and battery swapping network is also very significant. We believe that as competition intensifies, everyone will increasingly recognize the momentum Nio has built in technology, infrastructure, and service systems.Furthermore, we have over 300 Joy Drivers providing services nationwide. Nio has spent many years on this, giving us more confidence in entering the executive sedan market. These are things that everyone is gradually seeingQuestion: Previously, you interacted with Lei Jun and mentioned that Xiaomi is under a lot of pressure for its IPO. Is this true or just a joke?Li Bin: It's okay. There is still a lot of room for growth in the penetration rate of pure electric vehicles. Leador and Xiaomi are more like teammates. The more pure electric vehicles there are, the higher the market acceptance will be, which is beneficial for us. Although the penetration rate of new energy vehicles has exceeded 50%, there is still a lot of room for growth in the penetration rate of pure electric vehicles. We hope to see more and more players entering the pure electric vehicle market.Question: It's been said that after Xiaomi entered the car manufacturing industry, many automotive industry leaders are experiencing traffic anxiety. Do you have this anxiety?Li Bin: I used to not be very active on social media, mostly posting advertisements, so I was often criticized. But now I think it's good to have a platform to communicate with everyone.Nio has made a lot of innovations that many people don't quite understand, and this is something Nio needs to change. Increasing our visibility and letting more people know about us is also something we need to work on. Although we know that Huawei has strong competitive capabilities in its ecosystem and Lei Jun's traffic is very high, in the end, we still need to focus on the quality of our business. We are very confident in our direction and core capabilities.Qin Lihong: In the past, many users said that we buried the meat in the rice and didn't promote it. How do we promote it? Today, everyone's paths are different, but we still follow our own path and do a better job of promotion, from the &#34;walk away&#34; live broadcast at the end of last year covering 1044 kilometers, to a series of recent actions we have taken, all are moving in the same direction.Question: The current environment is generally about cost reduction, but Nio has always been very generous in research and development investment. How are these investments implemented, and how are the results of these investments measured and evaluated?Qin Lihong: Different brands insist on their own brand values and experiences while competing on costs. We don't want to fall into another path, where costs are reduced through marketing bubbles and other methods, appearing to reduce costs but actually reducing quality.Li Bin: Simply lowering prices may truly lead to irreversible consequences in the end. The experience of China's motorcycle industry in Vietnam has also reminded us that in the end, no one can make money. From a global perspective, China's automotive industry accounts for over 20% of revenue, but in terms of profit, it's only 2%-3%, a difference of 400 billion and over 10 trillion.We have dug a deep foundation. Once the foundation comes out of the ground, the buildings that can be built are very tall. There are second brands, third brands, including ET9. In the next year or two, everyone will see the results of the investments made in the past few years, the third-generation technology platform, which will definitely set a new benchmark for global intelligent electric vehicle technology.Qin Lihong: Our industry is at a crossroads now. Having such a globally mainstream, technology-intensive leading industry is a once-in-a-century opportunity. We hope that all peers and practitioners actively participate in the competition.(Contributions to this article were also made by Zheng Qiao)

Nio aims to break through the core stronghold of BBA