Weilai cars are getting more and more expensive

Pay for the “spirituality”.

Text丨Wu Xiaoyu

Editor丨Wang Hailu

The price rise of parts, the adjustment of product positioning, and the multi-product and multi-SKU strategy lead to high supply chain costs and other comprehensive factors are making Weilai’s cars more and more expensive.

On NIO Day in Hefei, when NIO founder and chairman Li Bin announced the price of the new product EC7 at 488,000 to 578,000 yuan, there was little applause at the scene. “There was no cheering at the price release at Weilai’s first press conference.” A Weilai car owner said on the car fan group.

“The product is good, but expensive.” Another car owner sighed similarly.

Five years ago, NIO released its first mass-produced car, the ES8, with a starting price of about 450,000 yuan. Right now, only five-seater SUVs ES7 and EC7 are available at this price. The starting price of Weilai’s new generation ES8 has risen to 530,000 yuan, which is 80,000 yuan more expensive than the old model-equivalent to the price of a Volkswagen Polo.

The price of the 2022 ES6 and EC6 has also increased by nearly 30,000 yuan compared to the price when it was just released. ET7 rose by 10,000 yuan.

Not long ago, Li Bin said in an internal speech on Weilai’s 8th anniversary that the cost of each car this year has increased by 30,000 to 40,000 yuan due to rising prices of components such as batteries. Weilai did not pass all the costs on to consumers, resulting in a reduction in gross profit of billions.

Due to the price increase of batteries, most new energy car companies have raised their prices this year, but NIO’s overall price segment has increased the most. Correspondingly, Weilai must provide a better product experience to match the rising price and defeat competing products.

It’s not easy. From January to November this year, NIO’s best-selling ES6 had an average monthly sales of just over 3,000 units. In the market of 300,000-650,000 yuan, Weilai has deployed 7 products, and the total sales volume is lower than the ideal of only 2 products.

In five years, ES8 has increased by 80,000

Weilai’s early product strategy learned from Tesla, driving high and going low. First released the EP9, a luxury supercar with a level of tens of millions, in London, breaking the lap record of the Nürburgring Nordschleife. But the role of this car is mainly for brand marketing. Weilai’s first mass-produced car is the large seven-seat SUV ES8 released at the end of 2017. It is priced at about half of the Model X, 448,000-548,000 yuan. interval.

In 2018, Weilai delivered more than 10,000 ES8 units, and also accumulated the first batch of seed users.

After that, NIO successively released five-seat SUV ES6 and EC6, covering the market of RMB 350,000 to RMB 500,000. The size of ES6 is one size smaller than ES8, and the price is 90,000 yuan lower. After its launch, the sales volume quickly surpassed ES8 and became Weilai’s most important product. In 2021, a total of 91,429 units of NIO’s three products will be sold, of which 41,474 are ES6.

2022 is a big year for Weilai’s products. Models on the NT 2.0 platform have been launched one after another. In March this year, the sedan ET7 was delivered. In the third quarter, the five-seat SUV ES7 on the same platform and the sedan ET5, which is slightly smaller than the ET7, began to be delivered. In addition to the EC7 just released this year, the overall price range of Weilai’s “7 series” products is in the range of 450,000 to 550,000 yuan, basically occupying the original market of ES8, which also makes the price of ES8 further increase.

As the flagship product, the ES8 has been released for 5 years, and 4 generations of facelifts have been launched, and the price has continued to rise. At the end of 2018, Weilai launched the six-seater version of the ES8, which starts at 456,000 yuan. At the end of 2019, the six-seater and seven-seater versions of ES8 have improved appearance, upgraded digital instrument panel, and the price has increased by 20,000 yuan. Since May 2022, due to the price increase of core components; Weilai will upgrade the smart hardware, including 8155 chip, 360 surround view camera and 5G module, etc. The price of the two versions of ES8 has been raised by another 30,000 yuan. On NIO Day this year, Weilai canceled the seven-seater version, and the price of the six-seater version continued to rise by 20,000 yuan, and the starting price reached 528,000 yuan.

There are many reasons for the increase in the overall price segment of NIO. Among them, the external factors are mainly affected by the epidemic, and the cost of core components such as batteries has skyrocketed. In December this year, Li Bin complained about the price increase of bulk commodities at the annual meeting of the future stars of Chinese enterprises. “Compared with the beginning of the year, the price of lithium carbonate has increased by five times, which has increased the cost of each car. Tens of thousands of dollars.”

In addition, Weilai’s products have been upgraded to the NT 2.0 platform, and the cost of the vehicle has also become higher compared with the previous generation platform. NIO ET7 is the first car of the NT 2.0 platform. It is equipped with a chassis domain controller developed by NIO and a second-generation electric drive system. The total power is 480kW, and the acceleration from 100 kilometers is only 3.8 seconds. The electric drive system of the first-generation platform has a maximum power of 400kW.

In terms of autonomous driving, the NT 2.0 platform is equipped with the NIO AQUILA super-sensing system and ADAM supercomputing platform developed by NIO. There are 33 perception hardware, including 1 high-precision lidar. The supercomputing platform is based on 4 NVIDIA Orin chips, with a computing power of 1016TOPS. The first-generation platform adopted the solution of the supplier Mobileye, configured with 23 sensing hardware, equipped with the EYE Q4 chip, and has a computing power of only 2.5TOPS.

In addition to platform upgrades, Weilai has many products and many SKUs, which also leads to low-scale procurement of some components and difficult cost allocation. Weilai has 6 products on sale this year, and the sales volume of each product is not too much. Among them, the best-selling Weilai ES6, the number of insurances in the first 11 months was about 40,000, EC6 was about 17,000, and ES8 was about 14,000. Several new cars launched this year, ET7 delivered about 22,000 units in 9 months after its launch, ES7 delivered about 10,000 units in 3 months, and ET5 delivered about 4,200 units in 2 months.

In pursuit of personalization, NIO has the most SKUs among the three new forces. NIO ET5 has 9 colors, 4 types of wheels, 2 types of battery packs, 27 types of interiors, plus 5 options, with a total of 120,000 SKUs. This also increases supply chain management costs.

The number of products has increased, but sales have not kept up

According to Weilai’s official data, in October this year, Weilai’s average selling price reached 466,000 yuan. In November, Weilai co-founder and president Qin Lihong said that in that month, Weilai accounted for 77% of the domestic pure electric vehicle category of more than 400,000.

The market of “more than 400,000 pure electric vehicles” does not include hybrid vehicles, and one of the big variables is ideal. Ideal L9 has sold nearly 30,000 units in the past 3 months, surpassing the combined annual sales of ES8 and ES7, and is currently the top seller of SUVs with more than 400,000 units.

According to the report of Kailian Capital, in November this year, the total sales volume of the new energy passenger vehicle market of more than 400,000 was about 330,000, and NIO sold 9,167 vehicles that month, accounting for about 27.5%.

Weilai’s target market is not more than 400,000 yuan, but more than 300,000 yuan. However, among the 7 models currently released by Weilai, 6 models are priced at more than 380,000 yuan. At present, there is only one car under 380,000 yuan, the ET5, which will also be the cheapest car under the NIO brand in the next few years.

Putting 6 products in the market of more than 380,000 yuan, Li Bin explained in an interview with the media: To be a high-end brand, appropriate richness is needed. “The more high-end the car, the more the demand for personalization; the more it is aimed at the mass market, the more focused the capabilities need to be.”

Weilai has more products, but the sales of a single product are not satisfactory. In the past three months, Weilai’s overall monthly delivery volume was only more than 10,000 vehicles. Among them, ES8 has an average monthly coverage of less than 1,000 units, ES7 and ET7 have more than 3,000 units each, and ES6 and EC6 have more than 3,000 units combined. ET5 is still in the ramp-up period of production capacity, and the delivery volume in November is less than 3,000 units.

For comparison, Lixiang, which has only two cars, delivered 112,000 vehicles in the first 11 months of this year. The average sales volume of L9 in the last three months was 9,463 units. Li ONE and the L8 that replaced Li ONE delivered a total of 83,622 units this year, with an average monthly sales volume of 7,602 units. At the Guangzhou Auto Show, Liu Jie, Vice President of Sales of Ideal Auto, said that the sales volume of Ideal will exceed 20,000 in December.

If only products and prices are combined, it will be difficult for Weilai to show an advantage over competing products. For example, the same six-seater SUV, the price of the ideal flagship product L9 is 460,000 yuan. The ES8, whose wheelbase is 145mm smaller than the L9, costs about 530,000 yuan for the low-end version and 640,000 yuan for the top-end version.

Qin Lihong responded in an interview with the media. He believes that compared with the positioning of the L9 baby car, the NIO ES8 covers more comprehensive scenarios, including family needs, social needs, and business needs. An ethos that transcends the physical scene”. Although in order to obtain “spiritual temperament”, they need to pay at least 70,000 yuan extra.

Not only the flagship product ES8, the price of NIO’s five-seat SUV ES7 and EC7 is even higher than that of L9. The ideal five-seater SUV L7 is similar in size to ES7, and its starting price is 46,200 yuan lower than ES6.

Of course, the ideal is a range-extended car, with a battery of only 44.5 kWh and a pure electric cruising range of 215 kilometers, and the cost is lower than that of Weilai. The starting version of Weilai is equipped with a 75 kWh battery pack, and the cost of the battery is more than 30,000 yuan higher.

Of course, the audience of mid-to-high-end cars is not only concerned about cost performance. NIO also provides the best energy replenishment experience at this stage, the most “meticulous” service system, and the most “luxury” brand and product tonality, which cannot be ignored for mid-to-high-end users. But at least in terms of sales volume, it is not enough for Weilai to complete this year’s sales target.

Li Bin said that Weilai’s sales volume this year does not fully reflect the demand situation. In fact, there are not many days when the Hefei factory continues to produce normally at full capacity. The amount of more than 10,000 reflects the output. At the same time, there is a process of switching from NIO’s first-generation to second-generation products. When the production capacity ramp is over, NIO will drive out of the curve.

He set a goal of surpassing Lexus for 2023, that is, annual sales of more than 200,000 vehicles, nearly double this year. In the first 11 months of this year, Weilai delivered a total of about 106,700 vehicles, a year-on-year increase of 31.8%. Cumulative sales volume of Lexus was 168,600 vehicles, down 16.45% year-on-year.

Li Bin said in an interview that by June 2023, the delivery volume of NIO will be supported by 8 models. “There will always be a Model Y from NIO.”

NIO is in urgent need of a “boom”. ET5 is expected to be a “explosive model”. Qin Lihong previously stated that ET5 has reached a stable state and can compete with BMW 3 Series, whose monthly sales are between 10,000 and 15,000 vehicles. In the first half of next year, Weilai will also launch the “Safari Edition” of ET5.

An insider close to NIO said that the safari version has optimized the narrow space of the ET5, but the price will be much higher than that of the ET5, which starts at 330,000 yuan. After Tesla’s latest round of price cuts, the starting price of Model Y has dropped to 288,900 yuan.

Products under the Weilai brand will not drop below 300,000 yuan. In Li Bin’s plan, the market of 200,000 to 300,000 yuan belongs to NIO’s sub-brand Alps. The first mass-produced car is expected to be released next year and delivered in the second half of 2024.

In that year, the elimination of smart electric vehicles will enter a critical stage, and Weilai will also complete the product layout, with the goal of achieving overall profitability. To achieve this goal, Weilai must impress more people with products that match the price.