Introduction:
On March 5th, NIO released its financial reports for the fourth quarter and full year of 2023, with a revenue of approximately 17.1 billion yuan, a year-on-year increase of 6.5%; The total annual revenue was about 55.62 billion yuan, a year-on-year increase of 12.9%.
On that day, the US stock market far across the ocean gave feedback on NIO's performance, and NIO's US stock closed up 2.81.
It is worth mentioning that NIO's gross profit margin for the fourth quarter of the year was 11.9%, reaching double digits for two consecutive quarters. Industry insiders analyze that the high gross profit margin is primarily due to the technological dividend brought by high R&D investment, as well as the high-end positioning of NIO, which has a high average price per bike and is not affected by price wars.
Data shows that NIO invested 3.97 billion yuan in research and development in the fourth quarter, exceeding 3 billion yuan for the fifth consecutive quarter; The cumulative R&D investment for the whole year was about 13.43 billion yuan, exceeding 10 billion yuan for the second consecutive year. Overall, NIO is in a period of high research and development investment, and has even given up short-term profits in order to accumulate technological dividends.
1、 Industry Transformation: Measuring Enterprises with Technology, Not Profit
According to data from the China Association of Automobile Manufacturers, the sales of electric vehicles in China reached 9.5 million units in 2023, a year-on-year increase of 37.9%, accounting for a high proportion of 31.6% of the same period's automobile sales, becoming a key force in the overall sales of the high-speed vehicle market.
As the penetration rate of electric vehicles gradually increases and competition on the track intensifies, the impact of technology on enterprise competitiveness is becoming increasingly significant, and many new industrial forces are focusing on technological innovation.
On March 5th, Zhang Yuzhuo, the director of the State owned Assets Supervision and Administration Commission, stated in the first "ministerial channel" centralized interview activity of the two sessions that three central automobile enterprises will be separately assessed for their new energy vehicle business, and their current profits will no longer be assessed. Instead, their technology, market share, and future development will be assessed.
This feature is reflected in NIO. Data shows that from 2020 to 2023, NIO's R&D investment was 2.49 billion yuan, 4.59 billion yuan, 10.84 billion yuan, and 13.43 billion yuan, respectively, far higher than its competitors among new forces.
According to statistics, NIO has invested approximately 43 billion yuan in research and development since 2016, making it the car company with the highest R&D investment among new forces. Ouyang Minggao, an academician of the CAS Member and vice chairman of the China Electric Vehicle Hundred Talents Association, affirmed the rationality of Weilai's 10 billion yuan annual R&D investment when talking about the development prospect of electric vehicles.
On February 27th, Academician Ouyang Minggao pointed out at the results press conference and expert media exchange meeting of the China Electric Vehicle Hundred People Conference Forum (2024): "The new technological revolution generally has three stages: the first stage is to build a platform for technology, the second stage is to define products for scenarios, and the third stage is to create value through models.". From the perspective of the entire industry development stage, China's electric vehicle industry is currently in the first stage of technology construction platform. This is a matter of spending money, for example, NIO invests billions of dollars in research and development every year, which is reasonable
It can be seen that both industry manufacturers and experts have reached a consensus on the importance of strategic investment and technological foundation in the electric vehicle industry.
2、 Is the technological dividend approaching?
The development of anything must follow the cyclical laws of development. Losing money in the early stage and making money in the later stage have almost become the only way for many large Internet companies. The underlying logic is that "technology investment has a certain return cycle". In the early stages of development, enterprises must increase strategic investment, enhance core competitiveness, and build a technological moat to obtain long-term, healthy, and sustainable development momentum.
The cyclical nature of technology investment returns is also testing China's electric vehicle industry. From a global perspective, except for Tesla, which has been deeply cultivated for many years, Chinese pure electric vehicle companies are generally losing money due to being in a strategic investment period. Academician Ouyang Minggao said, "International major manufacturers can basically not invest in fuel vehicles. With years of accumulated experience, brands are concentrated in monetization, so of course they make money. We are in the investment period, and they are in the monetization period, so of course, this contrast will occur."
Indeed, "accumulating grain extensively, building walls deeply, and slowly becoming the king" is still the best path for industrial development. New energy vehicle companies must adhere to a long-term strategy to confront the cyclical test of the industry, exchange time for space, and exchange strategic research and development investment for broader development space in the later stage.
In fact, after years of development and accumulation, the technological dividends brought by its strategic investment in the electric vehicle industry have already emerged. Taking NIO as an example, by maintaining a high R&D investment standard of 3 billion yuan per quarter, as of the end of January 2024, NIO has a total of approximately 8500 global patent applications and authorizations, with multiple technologies being pioneering in China/the world, and leading new forces in patent numbers. Among them, more than 1600 patents related to battery swapping have been obtained.
In 2023, NIO released 12 full stack technology layouts for intelligent electric vehicles, and officially released the first vehicle wide operating system SkyOS · Tianshu for automotive companies. It also released the first self-developed 5nm vehicle level intelligent driving chip - the Shenji NX9031, self-developed 900V high-voltage architecture, SkyRide · Tianhang intelligent chassis system, and flagship safety standards.
Based on its technological research and development advantages, NIO had a pure electricity market share of 40.5% in China in the second half of last year with an average transaction price of over 300000 yuan, far exceeding BBA. Even in the face of frequent price reductions by BBA's high-end electric vehicles, NIO's insistence on not engaging in a price war and continuing to lead the high-end pure electric market also confirms the value of NIO's commitment to investing in technology and services.
3、 Breaking through the cocoon and becoming a butterfly with battery swapping, NIO integrates into the overall national situation
NIO's almost obsessive investment in technology has also promoted the overall expansion of its battery swapping business. As one of the few brands that has put battery swapping technology into practical operation, NIO has completed large-scale construction of battery swapping stations. Last year, 1035 new battery swapping stations were built globally, with a total of 2350 completed.
Thanks to NIO's convenient energy replenishment experience and its "peak shaving and valley filling" effect on the power grid, it has currently received recognition and support from national policies, industry giants, and capital.
At the beginning of 2024, four ministries issued the Implementation Opinions on Strengthening the Integration and Interaction between Electric Vehicles and the Power Grid, and two departments issued the Guiding Opinions on Strengthening the Construction of Peak shaving, Energy Storage and Intelligent Dispatching Capacity of the Power Grid, aiming to promote electric vehicles to participate in power system regulation through various forms such as orderly charging, vehicle network interaction, and battery swapping mode. At present, NIO's V2G has been involved in building a new type of power system.
On February 26, 2024, Nanwang Energy Storage Technology and NIO Energy signed an agreement to cooperate in multiple fields such as virtual power plants and battery swapping business. Prior to this, NIO has reached cooperation with multiple national teams and private giants such as Changan, Geely, Jianghuai, Chery, etc. to accelerate the standardization of battery swapping in the entire industry.
In addition, NIO has also been highly regarded by internationally renowned capital. In July 2023, Abu Dhabi investment firm CYVN completed a strategic investment of approximately $1.1 billion through targeted issuance of new shares and transfer of old shares. In December, CYVN completed another strategic investment of approximately $2.2 billion in cash through its subsidiary CYVN Investments. As of the end of 2023, NIO's cash reserves amounted to 57.3 billion yuan.
Conclusion:
As the saying goes, sharpening a knife does not hinder the woodcutter. The electric vehicle industry is an irreversible trend in the current development of automobiles, and with the rapid development of the new energy market, the high-end pure electric market is about to usher in a major explosion. For car companies, this is both a challenge and an opportunity. Whoever can adhere to long-term principles, strategic investment, and technological foundation will gain a first mover advantage in competition.
On the day of financial report release, NIO announced that a new brand targeting the mass market will be launched in the second quarter, with the first product to be launched in the third quarter and large-scale delivery in the fourth quarter. Previously, Li Bin, founder and CEO of NIO, stated, "2024 and 2025 will be two years of explosive growth in the high-end pure electric market, and the qualification competition will enter the later stage. I am very confident in this."