Li Bin draws his sword, LeEco charges forward

Author | Chai Xuchen Editor | Zhou Zhiyu The sales system was overwhelmed, and the market response to LeDao exceeded expectations this time. Three weeks ago, at the LeDao L90 technology launch event, Nio Chairman Li Bin delivered an almost 3-hour long speech, introducing the various technological accumulations behind this innovative large-sized SUV. On the evening of July 31, the L90 officially debuted, with a price reduction of 14,000 yuan, bringing the starting price of this pure electric mid-to-large SUV to 265,800 yuan, on par with the Tesla Model Y. Under the battery rental (BaaS) model, the entry price further dropped to 179,800 yuan. This means that the L90 not only fully covers the price range of 200,000-300,000 yuan but can also compete with BYD Song Plus. Among products in the same price range, most competitors focus on five-seat models, while the LeDao L90 offers six-seat and seven-seat options. After the launch event, long queues began to form at LeDao stores in multiple locations, with many already-ordered car owners returning to experience the vehicle again. LeDao Vice President Xia Qinghua candidly stated, "In Nio's ten years, this is the first time I've seen the sales system overwhelmed; the L90 has really taken off!" Family scenarios require emotional value the most, and LeDao has finally met the emotional needs of family travel with the L90. Moreover, Li Bin has learned many lessons from the production, sales, and operational aspects of the L60 in the past, starting to heed advice and prepare production capacity in advance. After the pre-sale announcement and before the official launch, LeDao prepared 600 test drive vehicles across more than 400 stores nationwide. In the delivery phase, Li Bin did not choose a defensive strategy of taking orders before production; instead, he opted for proactive production and prepared a large number of vehicles in stock. Once, the brand that seemed "aloof" has now shown great sincerity. This counterattack by the L90 has rekindled market confidence in the LeDao brand and Nio, with its Hong Kong stock price soaring 8.6% the next day. Investors believe that the L90 is not only set to shake up the family segment but also symbolizes Nio's determination to rewrite its fate. In fact, in Li Bin's plan for Nio in 2025, the sales target of 440,000 vehicles will be shouldered by LeDao. Indeed, Nio currently needs a blockbuster product desperately. The military order to turn a profit in Q4 still stands, and to some extent, the L90 will determine the direction of Nio's fate. This launch event also showcased Nio and Li Bin's "heeding advice" and changes. Expectations have been fully set, and Nio has once again welcomed a valuable opportunity for a surge. In a post-event interview, Li Bin told Wall Street Insights, "The reason we are still very determined to pursue the pure electric route is that we know in 2023 what kind of cars we will produce by 2025 and 2026, and what kind of user experience we will create by that time." In Li Bin's view, the entire Nio has a long-term vision regarding product innovation. "In two or three years, everyone will understand the significance of the phrase 'solving the battery life issue is urgent,' but by the time we get to that point, trying to find solutions will be too late. We predicted ten years ago that solving the battery life issue through battery swapping was necessary; this is what everyone refers to as Nio's long-termism." It can be said that Li Bin's ten-year blueprint is finally coming to fruition, and he has repeatedly emphasized that the core focus this year is to improve efficiency. Under the leadership of the L90, Li Bin still has the new Nio ES8, ES9, and the Lido L80 products ready to launch in the second half of the year. The entire Nio company achieving profitability may be just around the corner, and all of this will be revealed in the second half of the year. Below is the transcript of the dialogue between Wall Street Insights and Nio Chairman Li Bin, Nio President Qin Lihong, and Lido President Shen Fei: Question: Is there hope for profitability in the fourth quarter at this pace, and does Nio have confidence in creating a second blockbuster? Li Bin: The L90 will definitely help us achieve sustainable and stable operations for the company because it is a very important strategic product for both Nio and Lido, and it is a revolutionary family large three-row SUV. This is a qualitative change that has occurred after ten years of technological innovation and continuous investment in infrastructure, so we are confident about achieving profitability in the fourth quarter. This is also a very unified goal across the company, and we have made many adjustments and efforts for this. As for the future, we have fully demonstrated with the Lido L90 that relying on technological innovation and infrastructure can bring great imagination to large vehicles. The Lido L90 is just our first large vehicle; there are several more large vehicles to come from Nio. We have learned some lessons from the second-generation product platform, and there may be many aspects, such as space, that do not meet the needs of Chinese users well, including the lack of infrastructure support for large vehicles at that time. So the upcoming all-new ES8 will fully prove why large three-row SUVs have entered the pure electric era. I believe the Lido L90 and the all-new ES8 will lead large three-row SUVs into the pure electric era, and we are very confident about this. Question: What is the thought process behind the pricing of the L90? Qin Lihong: Actually, pricing at the last moment is a very simple matter. Understanding costs and market competition makes it easy to set a price that has both gross profit and competitiveness. But what is truly worth discussing is how we can set this price while ensuring the company still has reasonable profits. This is the result of Nio's long-termism over the years. If we did not have the 900-volt platform and did not achieve scale, costs might not come down. After accumulating technology, manufacturing, supply chain, and quality systems to a certain extent, the company's cost capabilities have significantly improved, making more competitive pricing possible. This is also what we hope media friends will explore and think about regarding the launch of the Lido L90 Question: The marketing of the Ledo L90 feels very well-structured this time. Are there any measures or adjustments in response? Li Bin: The entire approach to launching smart electric vehicles has indeed changed significantly compared to before, as the market is very dynamic, and we have learned many lessons. The principle is to focus on listening and advising, correcting mistakes when they occur, solving problems, and establishing some inventory of vehicles so that display and test drive cars can be available earlier. This will be the fastest vehicle for us to ramp up production. The rhythm of communication and offline experience has also been tightened, including delivery. Today, after this meeting, several of us will go to various places to interact with users. This is indeed beneficial, and Nio will also tighten these matters starting from the L90. Question: The Ledo L90 is delivered immediately upon launch. Does this mean that future Nio products will have the capability for immediate delivery upon launch? Li Bin: Immediate delivery upon launch is a choice; it cannot be called a capability. Launching a bit later allows for some production beforehand. This capability may not necessarily be in production but more in demand—whether there are enough buyers and the accuracy of your demand forecasting. Managing the automotive supply chain is very complex because its lead time is very long, with some needing to prepare production capacity months in advance. The ability to predict the matching of demand and supply chain is crucial. Therefore, immediate delivery and volume are two capabilities reflected: the first is sufficient demand, indicating that your product is good and priced correctly; the second is good foresight, where demand forecasting and supply chain management must keep up. Question: The Ledo product seems to be more down-to-earth in terms of product strength and market strategy positioning. How do you consider these aspects? Qin Lihong: Yesterday, Sha Yi, as one of our first car owners, attended. Sha Yi came alone, while he and Hu Ke appeared as a family, which provides a different interpretation of the brand. Additionally, the three families are different; there are three-generation households, very impressive families with four children, and couples like Sha Yi and Hu Ke who share loving stories about joy on the road with their families. We faced some challenges for a period and have reviewed them. The core reason is that we temporarily deviated from the basic principles of our brand at one stage. Now with the L90, everyone feels that Ledo's momentum has returned because we have gotten back on track and presented it with better execution and more creative methods, which is a significant gain for us. Question: The large three-row SUV market is heating up, but most are range-extended with fuel tanks. How do we consider this in the L90? Li Bin: Regardless of how the market changes, competitiveness is still the most important. The technical route, product planning, and product definition fundamentally determine the competitiveness of this vehicle and its upper limits. From the development of the entire automotive industry, there is one thing that is undisputed: ultimately, new energy will definitely be in pure electric mode. The reason we have been talking about smart electric vehicles from the beginning to now may lie in differing judgments about what the most suitable technical route is for the foreseeable future From 2022 to 2025, range-extended and plug-in hybrid vehicles have indeed seen particularly good sales. During this transitional period, many successful products have been launched, which are related to the usage environment of cars and consumer policies. Previously, the charging and battery swapping infrastructure was not very convenient, and some owners of gasoline-to-electric vehicles had not experienced it before, making them hesitant to choose pure electric. Therefore, products that can run on both gasoline and electricity have better met the psychological needs of users during this transitional period. However, since range extension is a transitional product, it is important to determine when this transitional period will end, which involves assessing the technological route. Nio has insisted on a pure electric route from the very beginning and has not considered turning back, which has been a painful process. In 2022, the cost of lithium carbonate surged tenfold, increasing the cost of a Nio vehicle by 40,000 yuan. For range-extended and plug-in hybrid vehicles, the impact was minimal, and these vehicles enjoyed the same tax benefits. At that time, it could not be proven that pure electric vehicles were significantly more valuable than range-extended or plug-in hybrids. But why are we still firmly committed to the pure electric route? Because we know what kind of vehicles we will produce by 2025 and 2026, and what kind of user experience we will create by that time. At that point, we will know that our technological accumulation in electrification will allow us to create a front trunk of over 240 liters, which can truly solve space pain points and accommodate a large three-row SUV. Our product innovation involves an overall judgment of the technological route. We are looking far ahead in this matter, and in two or three years, everyone will understand the significance of the statement "solving the battery lifespan issue is urgent." However, if we wait until that time to find solutions, it will be too late. Therefore, solving the battery lifespan issue through battery swapping is something we predicted eight or ten years ago, which is what everyone refers to as Nio's long-termism. When technological innovation, the popularization of charging and battery swapping infrastructure, and changes in user mindset and consumer psychology come together, they can truly push large three-row SUVs into the era of pure electric vehicles. Q: What else should a large three-row pure electric SUV have to succeed, besides price? Li Bin: Defining automotive products is quite challenging. You cannot offer everything to users at a very low price; you must understand what the users' real needs are and prioritize them accordingly. This time, the entire product team at LeDao conducted research nationwide at the beginning of the product definition, visiting a total of 2,000 user groups. There are some things that cannot be discovered without going on-site and having face-to-face communication with users. There are more and more pure electric large three-row SUVs. In terms of making the vehicle larger and more comfortable for passengers, many products have already done very well. However, when it comes to usability and addressing the pain point of insufficient storage space, there are still gaps, which is also why the L90 is so popular. Therefore, it is essential to truly understand the users' needs. This has been our focus over the past few years—getting close to users, understanding them, fully exploring their needs, and using our technological innovation and engineering capabilities to set a challenging goal Qin Lihong: The product definition of the L90 was established in the second half of 2022. We can recall that in the past two to three years, we have been moving forward under pressure. We believe that the L90 is a product that serves as a clarion call for both Nio and the industry's technological transformation. Q: Recently, Nio's stock price has performed strongly. Can it reach new highs again? Li Bin: The capital market is still looking forward to seeing Nio's execution capability. I believe investors recognize Nio's overall strategy, technological route, and system, but our execution capability and operational efficiency have always been a concern. In the past, we indeed did not deliver a sufficiently good performance in this regard. I think now everyone hopes to see our execution capability. This year, Nio needs to improve its operational efficiency and execution capability, mainly focusing on operational efficiency. The execution capability around operational efficiency needs to be enhanced. We have made many changes, and we want investors to see our progress quarter by quarter. Actions speak louder than words; it’s important to deliver numbers in the end. Q: Will there be any changes in the pricing logic for the Lido, Nio, and Firefly models in the future? Li Bin: Many people ask if we have racked our brains over pricing, but actually, we haven't. When defining the L90, we set a cost target and sought the optimal solution under this cost target. This reflects our systematic capability. Some costs are reduced through R&D, some through supply chain strategies, and some by optimizing the configuration to reduce costs as much as possible. Nio is different from what many people think in many aspects. For example, all battery packs for the Lido are universal. Don’t underestimate this; it can reduce costs. By considering all these factors together and setting cost targets in each area, we can achieve our goals. Q: Earlier, Brother Bin mentioned the L80 and ES8, and there will also be the ES9. Nio will soon have nine SUV models. Is it necessary to develop so many SUV products for the market above 200,000? Models like the ES7 and EC7 have not sold well, with the EC7 possibly only selling a few dozen units. Should the SUV product lineup be integrated moving forward? Li Bin: We haven't actually added too many model lines because we currently have three brands. The Nio ES9 is indeed a new product model, while the other SUVs are iterations of existing products. Of course, we will still focus on the main-selling models, and there won't be significant changes in direction and strategy. From the perspective of the automotive industry, it is reasonable for high-end brands to have more models and more personalization. Many high-end brands have a few main-selling products that account for 70-80% of their sales. The key is how the R&D efficiency behind it supports this. All our vehicles share the same intelligent architecture, and even the first and second-generation platform vehicles use the same battery packs. Our digital architecture is highly reusable, and the overall R&D efficiency is not an issue. There is no need to personalize the tuning of engines like in the traditional gasoline vehicle era; the matching efficiency is very high. Therefore, we will continue to adhere to this direction for the Nio brand, and the Lido products will be fewer We will pursue a larger quantity for each model, with Firefly being more extreme, as there is only one product and one model. Q: Many leading brands are now starting to produce pure electric large three-seater vehicles. Does this mean that the trend for pure electric vehicles will be smoother than before? Li Bin: I believe that with the development of technology to this point, the pure electric technology route is increasingly able to provide large three-row SUVs and spacious SUVs with an experience that meets user expectations, as the pure electric architecture has a natural advantage in solving user space. I think the LeDao L90 is the critical point for switching from range-extended to pure electric. It can be said that the pure electric architecture, compared to range-extended and plug-in hybrids, can bring advantages in space, usage costs, maintenance costs, as well as advantages in intelligent architecture and lightweight design, etc. These advantages existed before, but now, with the advancement of pure electric technology, they are becoming more significant. On the other hand, with four to five million public charging piles and thousands of battery swap stations nationwide, the experience advantage of refueling is basically approaching zero, and this Delta difference is becoming larger. The L90 indicates that this critical point has already occurred in the large three-row field. Q: Many car companies are now talking about their AI direction, and other competitors are discussing computing power. How does Nio think about this? Li Bin: Last year at NIOIN, we talked quite comprehensively about Nomi Intelligence, turning the entire car into an AI intelligent entity, and SkyOS, which is a native AI-oriented global operating system for the entire vehicle. In terms of hardware capability, the world's first automotive-grade 5-nanometer intelligent driving chip, Shenji 9031, also places us in the first tier among global automotive companies in terms of hardware capability. I believe we have created many achievements in the chip field that are worthy of industry recognition. Of course, there is also the Nio World Model, whose overall architecture is definitely more advanced than other intelligent driving models seen by others, and the world model is also at the forefront of the entire AI field. Risk Warning and Disclaimer The market has risks, and investment requires caution. 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