Some time ago, the news that NiO was still listed in the United States with huge debts once again triggered a discussion on the future of the auto industry. As a company that lost 10.9 billion yuan in four years, it is still in the market, mainly because it has never run out of money. Weima, Xiaopeng, E-Coffee, Singularity, Knight and other new forces of car making are basically relying on huge amounts of financing to maintain the research and production of enterprises. The new force of car making is favored by market capital, in the final analysis, because of the prospect of the new energy vehicle market. At present, in the new energy vehicle market, in addition to niO and other new car manufacturing forces, there are many car companies from the transformation of traditional car companies.
Interests and pressure coexist, traditional car companies to fight in the new energy market
According to the data of China Automobile Association, in 2017, China’s annual total sales of new energy vehicles totaled 777,000 vehicles, with a year-on-year growth of 53%. The reason why the new energy vehicle market can have such a scale is related to the following factors.
First, the double integral policy is an important reason to promote the expansion of the new energy market. If a car company’s double score is positive, it not only shows that the car company has practiced in environmental protection and innovation, but also can improve its reputation and increase sales. If the double score of a car enterprise is negative, the car enterprise has to bear a series of consequences, such as: need to buy points from the car enterprise with positive points, be criticized by the notice, the new car cannot be declared, high fuel consumption models are discontinued, etc.. In the trial operation of the double points policy in 2017, maserati China Co., LTD. ‘s double points are -29276 and Mercedes Benz China Co., LTD.’ s double points are -35697. In order to achieve good results in the official implementation of double points in 2020, launching new energy vehicles is undoubtedly a good choice. The introduction of double integral policy is a great opportunity for traditional car enterprises to transform to new energy.
On the other hand, the emergence of new forces in car manufacturing has also prompted traditional car companies to turn to new energy. New energy market is a piece of fat, first come, first served, the new force of car manufacturing has taken a step to appear in the market, if the traditional car companies do not transform, will miss the huge new energy market. Zhu Huarong, president of Changan Automobile, once said: traditional car enterprises will die if they do not accelerate the transformation, and state-owned car enterprises will die if they do not reform. It can be seen that traditional car enterprises are eager to reform and join the new energy market. There are already many examples of successful transformation in the market. For example, BaiC, a fortune 500 company, has made all-out efforts to enter the new energy market and announced that it will no longer produce fuel cars after 2025. Another example is BYD, whose battery technology is the top level in China, and its move into the new energy market is a good fit.
In addition, according to the data released by the state in 2017, the national crude oil production reached 191.5 million tons, down 8.18 million tons or 4.1% from the previous month. In addition, along with the contradiction between rising oil demand and its own production decline, China’s crude oil dependence even reached 69% in 2017, which shows that the domestic energy structure is in urgent need of change. And lithium and other materials needed by new energy vehicles, China’s reserves are very rich, so the development of new energy is natural. In addition, fuel vehicles emit a lot of exhaust gas, causing serious pollution, while the harmful emissions of new energy vehicles have little or even zero emissions. According to the data released by the Ministry of Industry and Information Technology in 2017, the emission reduction of pure electric vehicles is nearly 50% than that of passenger vehicles. Car companies are also fulfilling their social responsibility of environmental protection by developing new energy, saving energy and reducing emissions.
In addition to national pressure, competition between old and new vehicles and changes in the energy structure, there are two reasons for the continuous expansion of the market size of new energy vehicles. On the one hand, traditional car companies do not want to be eliminated, on the other hand, new car companies to build their own brands. With more and more traditional car enterprises to the new energy transformation, the first step into the new energy market of the new forces will bear more and more pressure.
However, among these new forces of car manufacturing, there are also some well-developed enterprises, such as NIO and WeIMar. Take NiO for example, it only took four years to complete the process from PPT in the window to mass production of vehicles. Besides, NiO has been listed in the United States not long ago, and its practical actions show that the power of new car manufacturing forces should not be underestimated.
Nio is a unicorn, why can be so fast?
On September 12, 2018, NiO raised $1.8 billion and went public in the United States, with an offering price of $6.26 per share and closing at $6.6 per share on that day. Nio’s IPO is the first of its kind in the U.S. and the largest by a Chinese automaker.
Nio’s successful listing has caused a huge sensation in the automotive industry. A company with no experience in auto production has become an industry unicorn with a valuation of $6.4 billion in just four years. What makes NiO so successful?
Reason 1: “not poor money”. “Building a car is very expensive,” said NiO CEO Bin Li. “You’d better not come in without 20 billion yuan.” Nio has never been stingy with huge expenses such as research costs and building power stations, because it is “not short of money”. Nio was born with a silver spoon in its mouth, backed by Internet giants such as Tencent, Baidu and JD.com. It has a star aura and traffic aura. In addition, NIO also has strong financing ability, which is often determined by the prospect and market capacity of an enterprise. From its establishment in 2014 to the end of 2017, NiO has raised nearly 20 billion yuan successively, and raised another 1 billion dollars when it went public in the United States, indicating that the enterprise has sufficient funds.
Reason two: The strong join forces. In April 2016, NIO selected JAC as its OEM, and the two sides reached a cooperation scale of about 10 billion yuan. The reason why we choose JAC in OEM is that JAC has more than 50 years of car making history and rich experience. And now JAC is in the international advanced level in battery assembly, three-power system and other aspects, but also has a highly automated new energy vehicle factory. In addition, as an old brand automobile company, JAC fans naturally pay close attention to its trends at any time. The cooperation between the two will bring a group of potential consumers to NIO.
Nio has a high starting point, strong financing ability and experienced JAC OEM for it, so it can develop so smoothly and become a unicorn car company. However, with the improvement of NiO’s popularity, more and more people are focusing on it, and its problems are gradually exposed.
Though a collection of thousands of pet, nio is not immune from difficulties
Since its birth, NIO has received investment from domestic venture capital groups and Internet enterprises in terms of economy, and cooperation from gaC, JAC and other automobile enterprises in terms of technology, which can be said to be a collection of thousands of favors in one. But this well-cared for “little brother”, in the development of a lot of troubles.
First, it has not obtained the qualification to produce electric cars. Nio currently produces cars in partnership with JAC, a move that has both advantages and disadvantages. The advantage lies in that through OEM, NIO can launch related products as soon as possible and layout the market as soon as possible. The disadvantage is that NIO has to pay a large sum of money for OEM alone every year, and consumers will have a vague concept of the brand. After all, the final label of NIO is “JIANGhuai NiO”, and outsiders will mistakenly think that NiO is a model produced by JIANGhuai. In the long run, it is not conducive to establishing a high-end brand image of NiO.
Second, auto parts and technology are too dependent on the outside. Almost all of NIO’s accessories are purchased or even imported. According to the list of mainstream suppliers of NIO ES8 released by NE Research Institute, NiO is self-sufficient only in motor, battery and instrument, and in intelligent interaction of core technologies, most of them are imported. In the long run, NIO will be in a passive position and subject to cooperative enterprises everywhere. If cooperative enterprises fail to deliver accessories in time, niO’s production efficiency will be affected and product delivery will be delayed eventually.
Third, the quality of products can not be assured. In April, an ES8, one of NiO’s first deliveries, was rear-ended by a bus. After the accident, the staff found that the engine hatch, net and front bumper of the car were deformed, while the NIO ES8 is equipped with a safety assist system. According to the staff, the accident was caused by the system’s misjudgment of the road conditions, in other words, a bug in the safety system. The accident has made pre-ordered owners suspicious of its quality. This shows that NiO is not reassuring enough in terms of smart technology and security.
Fourth, the industry competition is fierce. Traditional car companies such as BAIC and SAIC have started mass production of new energy vehicles, and new forces such as Xiaopeng, Weimar and Lead have emerged one after another. At present, in the new energy market car manufacturing enterprises like crucian carp across the river, the competition is quite fierce. The increasing number of entrants means niO will get less and less of the “cake”. In addition, NIO does not have an advantage in price. The prices of Xiaopeng and Weima, both new forces in car manufacturing, are only half or even one third of niO’s. In terms of brands, the models of the old car companies are updated faster than NIO, and they still have a number of fixed followers. Taken together, Nio has little advantage in terms of price or brand.
From the above analysis, it can be seen that NIO has big and small problems from the most basic security, to key technologies, and then to market competitiveness. While four years of development have given it shape, NiO still has a long way to go, and it needs to address these pain points to win the future.
There is a long way to go, but how will NiO pursue its future?
According to the data released by China Automobile Association in July this year, the production and sales of new energy vehicles in the first half of the year were 413,000 and 412,000 respectively, up 94.9% and 111.6% year-on-year. According to its forecast, by 2020, China’s sales of new energy vehicles will exceed 2 million, and the year-on-year growth rate of future sales will exceed 40%. The prospect of new energy vehicle market is good, it is the battle field. In order to achieve better development in the market, NiO needs to make corresponding adjustments according to its own pain points. Only in this way can NiO dominate the market.
First of all, NIO should not just “hang” on the high-end line. Nio takes the high-end route and prices its products higher. Nio ES8, which was launched earlier, is priced between 450,000 and 550,000 yuan. But look at other peers, such as BYD, low to 79,800 BYD Song, high to 369,800 E6, involving all levels of consumers. Therefore, NiO should properly adjust the price of high-end products, and actively launch mid – and low-end products to fully enter the market.
Second, strengthen its research in artificial intelligence. This has two benefits. First, it improves security. When customers buy a car, the first thing they care about is the safety of the product. However, accidents occurred in the first batch of vehicles delivered by NIO cannot reassure consumers. Therefore, NiO should reflect on and improve its shortcomings in anti-collision system. Second, save technology cost. Nio relies on external purchase for key technologies such as voice interaction and in-control. Nio can invest in AI technology and increase research efforts, so as to reduce costs and dependence, while improving safety and reassuring car owners.
Finally, production plants should be built. The tail of NIO is marked with four words “JIANGhuai NiO”, which creates a big psychological gap for consumers. Some car owners will choose to remove the word “Jianghuai” from the tail mark. Therefore, in order to gain more market share and go further in the market, NiO should not excessively rely on JAC, but also need to get the production qualification as soon as possible, build its own factories and build its own brand.
In a word, with the continuous expansion of the market scale of new energy vehicles, the market competition will be more and more fierce. Under such circumstances, niO needs to improve its core competitiveness, actively upgrade its products, enhance its brand influence, and solve a series of problems such as safety and technology if it wants to stay behind the market development. At present, the future development of NiO is still uncertain. Its life and death depend on whether it can play its cards well. If it plays well, it will become the next Tesla, and if it plays poorly, it will become the next LeEco.
Article/Liu Kuang public number, ID: Liukuang110, this article is the first Chinese fir car network