Author | You Li

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The latest buzz in the new energy vehicle circle is undoubtedly NIO's launch of the new brand Ledao.

The first reaction from industry insiders was, "Li Bin wants to seize the opportunity for family happiness." Indeed, at the launch, Li Bin admitted that his inspiration for the name came from "family happiness and proper household management."

More interestingly, Ledao "collided" with many competitors in one fell swoop.

First, there's Lixiang. The official announcement of Ledao fell on "International Family Day," targeting primarily family users, directly facing off against Lixiang's "dad car" positioning. The advertising slogan of family happiness can also be seen as a direct message to families with children and the middle class.

Next is Xiaomi. During the Xiaomi SU7 launch, Li Bin began to give oral exposure to Ledao, saying that the pricing of Xiaomi SU7 was out, and it was so fierce that NIO didn't know how to price its sub-brand cars next. When officially launched, Ledao's President Ai Tiecheng announced that the pre-sale price of Ledao L60 starts at 219,900 yuan, approaching Xiaomi SU7's price but still 30,000 yuan cheaper than Tesla Model Y.

This also brings up the main competitor that Li Bin wants to anchor in his heart: Tesla. At the launch, Li Bin directly challenged, "Ledao will be longer, wider, and have a larger space than Model Y." Challenging Musk has always been a proven way for Chinese new energy automakers to attract attention, but it still seems a bit subtle when applied to the usually reserved Li Bin.

Through NIO's moves to build momentum for Ledao and Ledao's "crazy collisions" with other brands to make a sound, we can see NIO's pressure in recent years and the anxiety brought to Li Bin by cumulative losses exceeding 80 billion yuan. Finding a second growth curve to make up for the funding gap is Li Bin's solution for NIO, but whether it can truly be realized remains to be seen in six months.

1

New cars fail to boost NIO's stock price

The day after Ledao's new product launch, NIO's US stock price fell by about 8%—nearly $1 billion in market value evaporated, reflecting investors' attitude towards NIO's search for a "second growth curve."

The coldness of the capital market contrasts sharply with the enthusiasm of the consumer market.

On the day of Ledao's new product launch, NIO, which is known for "never releasing order posters," revealed through Ledao President Ai Tiecheng that Ledao's order volume exceeded expectations by 2 to 3 times, greatly exceeding NIO's team's设想.

While the situation seems promising, Li Bin remains tight-lipped.

He said that he would not make Ledao's order and delivery information public within the next year but would reserve it for internal use. Such "mystery" may pique the curiosity of onlookers, but it may not be a good thing for investors who pursue transparency, fairness, and low information gaps.

Senior US stock investor and new energy vehicle industry analyst Wang Shuping mentioned that competition in the new energy sector is becoming increasingly fierce, especially in the 200,000 to 300,000 yuan SUV market targeted by Ledao, where the competition is particularly intense. New brands should seize the opportunity to build their reputation on the highest-profile launch day. "Hiding and not disclosing order numbers and not making new momentum moves will soon make consumers forget who Ledao is."

There are also views that Ledao's actual sales data may not be as good as advertised.

"In the past two years, we have seen through many new energy manufacturers' tactics. As long as enough qualifiers are added and the niche market segment is small enough, everyone is number one. Only they know how much real fighting power there is in the actual data."

However, based on the established facts, the core reason blocking Ledao's "big kill" is still time.

According to Li Bin, Ledao's new cars will officially go on sale in September and complete the first batch of deliveries in September. The current announcement is just an advance preview for Ledao by NIO.

According to previous information disclosed by Qin Lihong, co-founder and president of NIO, NIO has wanted to create the Ledao brand for a long time, starting its planning almost 10 years ago and officially launching it 3 years ago.

Counting the time, we will find that NIO had the idea of making an affordable car almost since its inception, but today, after 3 years, Ledao is still only a "concept car," while Xiaomi Automotive is truly a "strong player" that has completed the entire process from preparation to delivery in 3 years.

The longer it takes from appearance to delivery means that Ledao will provide "blood transfusions" to NIO's main brand later. Even Li Bin himself said that the mission of the NIO main brand is to pursue gross margin, while Ledao is pursuing sales volume and quickly expanding scale to increase revenue. The longer the delivery time, the more disadvantageous it is for NIO.

Setting aside commercial concerns and analyzing from a branding perspective, Li Bin's layout is actually wise.

Adhering to the positioning of a "luxury brand" makes it difficult for NIO to increase sales through price reductions, subsidies, and other methods like other new energy manufacturers. Launching a sub-brand is undoubtedly a favorable way to seize new market share. On the one hand, Ledao, with a broader target customer base, can sell more cars to reduce future losses, and on the other hand, it can further expand NIO's advantages in battery swapping and improve brand efficiency.

However, analyzing from a product perspective, Ledao's positioning is somewhat awkward.

Compared to Tesla Model Y, Ledao does have advantages in space, intelligent driving, and range, but for newly launched models, the entry-level version of ZM-L6 is priced at 199,000 yuan and has new solutions in front suspension, lithium iron phosphate batteries, and lidar. In terms of cost-effectiveness alone, Ledao may not be the best choice.

In addition, Ledao also faces fierce competition from models like AITO M7, Xpeng G9, and Tengshi N7 in the same price range. The 200,000 to 300,000 yuan price range is a major segment of the new energy market and also the most bloody battlefield.

While Ledao's current rival seems to be Tesla Model Y, in reality, it is Tesla's cheaper models that will inevitably be launched in the future, as well as domestic cars from Xiaomi, Lixiang, and Xpeng.

As domestic new energy manufacturers gradually move onto the right track, they are always ready to compete. To gain a share in this field, Ledao still has a long way to go.

2

The tightening of the "NIO 10,000" spell

According to NIO store sales staff, Ledao's marketing method did not follow NIO's usual approach. "NIO is still fully self-operated, but Ledao will introduce dealers, expand sales scale through the dealer system, and establish independent stores, completely distinguishing itself from NIO's brand."

Interestingly, Huang Guangyu recently announced his intention to enter the vehicle sales field, perhaps seeing Ledao's sales pain point. When all entrepreneurs flock to the vehicle manufacturing sector, the vehicle sales sector has become a scarce resource, and Ledao may urgently need a role like Huang Guangyu.

Such a different positioning may be because Li Bin does not want Ledao's "downmarket" brand tone to affect NIO, but on the other hand, it also proves that NIO's main brand performance has failed to give the group a sense of security.

According to the 2023 financial report, while NIO's revenue of 55.6 billion yuan hit a new high, its adjusted net loss also reached a record high of 18.357 billion yuan. The former increased by 12.9% year-on-year, while the latter increased by 51.1% year-on-year, expanding by nearly 4 billion yuan on top of last year's loss.

Why can't NIO, with prices in the first tier, make money? Wang Shuping believes that the answer lies on the surface. The high-end positioning is the reason for NIO's continuous huge losses. "It has trapped itself in the framework of extreme service."

NIO has always been known for its service, matching its positioning as a high-end luxury car with on-demand and unexpected response speed, which has put tremendous pressure on NIO's survival. According to financial report disclosures, NIO's automotive business gross margin has fallen below 10%, 4.2 percentage points lower than last year's gross margin of 13.7%.

NIO itself has realized this problem, and the management has repeatedly stated publicly that NIO will focus on improving gross margin and revenue. In the fourth quarter, the gross margin slightly recovered to 11.9%, but it is still a distance from its own target of 15% and has not yet recovered to the 2022 level.

Compared horizontally with its "old rival," Lixiang Auto's gross margin in 2022 was 22.2%, setting a new record. Before that, from 2019 to 2022, Lixiang's gross margins were -3.2%, 16.37%, 21.33%, and 19.41%, respectively, showing a relatively stable growth trend and consistently higher than NIO's.

In the first quarter of 2024, Lixiang Auto's gross margin slightly declined to 20.5% but still led the pack of new force automakers, surpassing Tesla's first-quarter gross margin of 17.4% by 3.1 percentage points.

With low gross margins, NIO's sales volume has also suffered setbacks, undoubtedly posing more challenges to self-financing.

In 2023, NIO sold a total of 160,000 vehicles, which, combined with 120,000 vehicles in 2022 and 90,000 vehicles in 2021, barely matches Lixiang Auto's sales data of over 370,000 vehicles. The year-on-year increase in annual sales (30.62%) was also lower than the industry average sales growth rate (37.9%).

Except for July, when sales exceeded 20,000 under the stimulus of price reductions and subsidies, most of the time sales hovered around 10,000. As a result, Li Bin and NIO gained the nickname "NIO 10,000," which was broken in June with shocking results—NIO only sold over 6,000 vehicles in June.

According to the conclusions drawn from the LandRoads automotive industry database, the monthly sales efficiency of NIO's current 8 models is around 1,500 vehicles, while at the end of the first quarter of 2024, the average monthly sales of 148 new energy vehicle models from 52 brands in China was 4,000 vehicles.

Selling less and earning less—these seven short words are almost a true portrayal of NIO's car sales and the exact reason why NIO urgently needs to launch Ledao to "save the market."

3

What are the differences between Li Bin, Li Xiang, and Li Shufu?

Among the "Li family" in the new energy vehicle industry, Li Bin was once the most successful. However, as "NIO-Xpeng-Lixiang" turned into "Lixiang-Xpeng-NIO," Li Bin gradually became the "younger brother" who needs to learn from Li Xiang and Li Shufu in the industry.

Wang Shuping analyzes that this is inseparable from NIO's competitive strategy.

Since its inception, Lixiang has adhered to a boutique strategy, spending three years from Lixiang ONE to Lixiang L9. Selling only one car in three years is probably something only Lixiang can achieve, but rather than firmly executing its own ideas, Wang Shuping believes that more attention should be paid to Li Xiang's accurate grasp of the target customer base and the exceptional product strength of the ONE series.

As a representative of new energy "luxury cars," NIO should be more suitable for a single-product strategy, which it has not adhered to.

Starting in 2023, NIO launched a sea of cars strategy, including ES6, ES8, ET7, and even NIO Phone. NIO's product line has become diversified and complex. How to form a product matrix, exert synergies, and focus R&D efforts to achieve more with less has become a problem NIO must face. Industry insiders believe that the lack of good linkage effects may be the fundamental reason why NIO remains in the trenches while Lixiang stands out.

Looking at Geely and ZEEKR led by Li Shufu, on May 10, ZEEKR went public in the US, taking only 3 years from its establishment to listing on the secondary market, becoming the fastest IPO new energy automaker in history. The prospectus shows that ZEEKR's automotive sales revenue in the past three years was 1.5443 billion yuan, 19.6712 billion yuan, and 33.9118 billion yuan, respectively, showing a steady upward trend.

Based on existing information, ZEEKR's average vehicle price is also increasing, reaching 265,900 yuan/vehicle, 273,400 yuan/vehicle, and 285,700 yuan/vehicle, respectively, occupying the mainstream market of 200,000 to 300,000 yuan.

From a market layout perspective, Li Shufu's advantage is also reflected in product positioning. The all-new ZEEKR 001 was launched in February this year, one month earlier than Xiaomi SU7. Both cars are "532" models (car length close to 5 meters, wheelbase close to 3 meters, starting price in the low 200,000 yuan range), but ZEEKR has carved out a new track.

It is understood that the all-new ZEEKR 001 is priced at 269,000 yuan, sitting between Xiaomi SU7 Pro (245,900 yuan) and Max (299,900 yuan). While Xiaomi only equips the Max version with an 800V high-voltage system, ZEEKR has made it a standard feature across the entire line. In addition, ZEEKR 007 also launched a rear-wheel-drive enhanced version in April, priced at 209,000 yuan, almost 10,000 yuan lower than Xiaomi SU7's starting price, clearly showing its ambition and attitude to seize market share.

While Li Xiang and Li Shufu have their own strategies, the battle for Li Bin is far from over.

On the one hand, it needs to be realized that a one-trick pony approach is becoming less appealing, and a multi-brand strategy will become a long-term development trend in the new energy sector.

After the MEGA setback of Lixiang's pure electric new car, Interface News reported that Lixiang's performance in the first and second quarters fell short of expectations. After ZEEKR's IPO surge, its performance has gradually declined, with the latest share price at 23.38 USD/share and a total market value of 5.789 billion yuan, nearly half lower than NIO's 10.081 billion yuan.

Financial report data shows that NIO's R&D investment reached 13.43 billion yuan, an increase of 23.9% year-on-year, exceeding 10 billion yuan for two consecutive years. Compared with Lixiang and Xpeng, even if