After nearly two months, Li Bin, Chairman and CEO of NIO, once again issued an internal letter.
This is the first internal letter from NIO in 2024, with a focus on summarizing issues and proposing new requirements. Li Bin stated that 2023 will be a challenging and unforgettable year for NIO. "Our overall performance did not meet the expected goals, and there are many lessons that need to be summarized and reflected on. We need to improve our organizational capabilities as soon as possible," said Li Bin.
In 2024, Li Bin hopes that NIO's business will be more focused, clarifying NIO's three "high priority items" for 2024, namely ensuring long-term investment in core key technologies, ensuring leading advantages in technology and products, and delivering on time and with quality. Ensure that sales and service capabilities can cope with fierce market competition, and sales can be quickly converted into sales. Ensure that the research and development of 9 core products from 3 brands are progressing according to schedule.
It is worth noting that cost reduction and efficiency improvement are still topics that NIO cannot avoid, and NIO has not yet achieved a breakeven point.
In 2022, Li Bin stated that NIO could achieve a break even in the fourth quarter of 2023. In the third quarter of 2023, NIO suffered a loss of 4.56 billion yuan. Although the loss had significantly narrowed, the cumulative loss in the first three quarters still reached 15.66 billion yuan.
"The company's resources are limited, and we are still bearing the losses caused by research and development and infrastructure investment. We need to continuously improve our financial performance to support the sustainable development of the company. We have a responsibility and obligation to make good use of every penny of investors and shareholders," Li Bin said in an internal letter.
Previously lost orders due to insufficient sales capacity
Among the three "high priority items" of NIO in 2024, sales can be quickly transformed into sales or a top priority.
Previously, the failure to enhance sales in a timely manner had caused NIO to lose many orders. In December 2023, Li Bin stated that the biggest mistake in 2023 was not starting to increase sales in February, resulting in many orders being lost from June to July due to a lack of timely follow-up.
The ET5, which started delivery in September 2022, was supposed to be a key model for NIO's sales growth, but sales declined due to orders not being fulfilled in a timely manner. From June to November 2023, the monthly sales of ET5 did not exceed 3000 units.
Therefore, NIO began to vigorously enhance its sales capacity in the third quarter of 2023.
Li Bin revealed during the Q2 2023 financial report conference call that NIO is expanding its sales personnel and sales outlets based on monthly sales of 30000 vehicles. At the same time, it hopes to increase sales and expand into lower tier markets by recruiting former Mercedes Benz and BMW sales personnel. At present, the adjustment of sales channels has shown initial results.
However, it will take time to generate sales revenue. "Currently, NIO has around 5700 sales consultants, of which over 3000 are newly hired. It will take some time to develop sales capabilities, and it takes about 6 months for a salesperson to mature." Li Bin once pointed out that in the second quarter of 2024, NIO's recent efforts to build sales capabilities will gradually mature, and monthly sales are expected to enter an upward channel based on 20000 vehicles, And continue to maintain a market share of about 40% in the high-end electric vehicle market.
There may still be no price war in 2024
In 2023, NIO's sales performance was impressive, with a total of 160000 vehicles delivered throughout the year, only achieving about 65% of its sales target.
In 2024, the competition in the smart car industry is becoming increasingly fierce, and NIO may face greater challenges.
Li Bin stated in an internal letter that NIO will face stronger competitors, an increasing number of excellent products, a more intense price war, a more complex public opinion atmosphere, and an uncertain macro environment. Every colleague should have sufficient mental preparation, give up their illusions, and face challenges directly.
At the media communication meeting in December 2023, Li Bin also pointed out the need to give up illusions about the external market in 2024 and the internal exchange of price for quantity. The competition in 2024 will definitely be very fierce, but no matter how fierce it is, NIO will not adopt a price for quantity approach.
"Not engaging in a price war effectively ensures that NIO's gross profit margin returns to double digits," Li Bin has publicly stated.
In the third quarter of 2023, thanks to the increase in average selling price, continuous reduction in vehicle costs, and economies of scale, NIO's gross profit margin for vehicles increased to 11%.
NIO CFO Feng Wei has stated that in September and October 2023, NIO completed the issuance of convertible senior bonds with a principal of $1.15 billion, further strengthening the company's balance sheet and providing impetus for the company to compete fiercely.
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