Betting on ES6, NIO’s turning point moment

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Those who are familiar with NIO’s new car habits can easily detect the difference: On the evening of May 24, NIO released the new ES6, based on NT2.0 (NIO’s second-generation technology platform), priced at 368,000-426,000 yuan. It is 18,000 yuan cheaper than the starting price of the 2022 model, and it can be delivered the next day. The impatient car owner had posted a delivery certification photo that night.

The product has been upgraded, the price has been lowered, and the delivery time has been significantly shortened. All the differences convey an attitude: as Weilai’s best-selling car, delivery began in June 2019, and a total of 127,000 vehicles have been sold. Weilai hopes that the new ES6 will once again support sales and become a “popular model”. A Weilai employee commented on this product with “very important, very important, very important”.

Especially during the period when Weilai’s sales continued to fall. According to data from the Passenger Federation, in April 2023, Weilai’s sales volume fell out of the top ten new energy vehicles, behind Chang’an, Great Wall, Nezha, and Xiaopeng, which was the lowest sales in the past year.

The downward trend must be stopped, and the sooner the inflection point comes, the better. Weilai needs a high-volume product to increase sales, catch up with competitors, and seize users and confidence. The new ES6, which is released and delivered, will immediately take on this task.

Lower price for higher sales

If you are enthusiastic and eager enough for the new ES6, Li Bin will officially release it at 8 pm, and the first batch of users will be able to rush to the store for a test drive that night, and pick up the car the next day—four days before the press conference, the real car has already entered Nearly 300 stores.

Weilai hopes to maximize the enthusiasm of users to buy this car and maintain it as much as possible. The longer the waiting time, the more enthusiasm will be consumed.

The premise is to give users the motivation to buy first. The most effective means is to reduce prices. Compared with the 2022 ES6 (starting price of 386,000 yuan), the starting price of the new ES6 has dropped by 18,000 yuan, and it has increased by 10,000 yuan compared with the first-generation ES6 released in 2018 (starting price of 358,000 yuan).

The most important change of the new ES6 is that it is equipped with a NIO self-developed chassis domain controller and a second-generation electric drive platform, and the zero-to-hundred-speed acceleration time has been improved from 5.6 seconds in the current model to 4.5 seconds. In terms of intelligent driving, four Orin chips are equipped as standard, and lidar is added. Li Bin said that in July, the official version of NOP+ based on BEV will provide services, and the high-speed pilot battery swap will be the first to open 40 high-speed swap stations in the third quarter of this year. Urban NAD will open a small-scale experience in Shanghai in the near future. In terms of smart cockpit, the NIO smart system Banyan 2.0.0 will be installed for the first time, adding functions such as power-on path planning and “exclusive service” applications on the car terminal.

This is the first time that Weilai has cut prices during model replacement. In the past, the inertia was that product upgrades and prices rose. The flagship product ES8 has been released for 5 years and has undergone 4 facelifts. The starting price has only risen but not dropped. In December 2022, the ES8 based on the NT2.0 platform will start at 528,000 yuan, which is 80,000 yuan more expensive than the first generation.

Not only is it cheaper than the previous generation, another condition for NIO to convince consumers is that it is also cheaper than competing products. NIO defines ES6’s competing products as BMW X3 (suggested retail price starting at RMB 399,000) and Mercedes-Benz GLC300 (suggested retail price starting at RMB 479,300). However, users also consider the ideal L7, a five-seater SUV released three months ago, priced at RMB 319,800 to RMB 379,800.

The price cut isn’t particularly surprising. In mid-May, NIO launched an ES6 price collection in the community, and the lowest price among the options is below 368,000. This is also the most voted option by users. Based on this, many users speculated that the price of ES6 will drop to 368,000 yuan, which has sparked some controversy.

The price drop of battery raw materials has left room for concessions to car companies. As the main raw material of batteries, the highest point of lithium carbonate in 2022 is close to 600,000 yuan/ton. Li Bin once complained publicly, “Compared with the beginning of the year, the price of lithium carbonate electricity has increased by more than five times, and the cost of each car has increased by tens of thousands. “.

The burden of these tens of thousands of yuan is now greatly reduced: in 2023, battery-grade lithium carbonate will fall continuously, and the actual transaction price once dropped to 160,000 yuan/ton. “Later Auto” estimates that for every 100,000 yuan/ton drop in lithium carbonate, the battery cost per watt-hour will drop by 0.07 yuan. ES6 offers two versions of 75kWh and 100kWh, which can save 23,100 yuan and 30,800 yuan respectively.

When the cost of raw materials falls, the pressure on gross margin may be relieved if ES6 maintains its price. In the 2022 financial report, Weilai once used “the price increase of lithium carbonate” as one of the reasons for the sharp decline in gross profit margin. The gross profit margin of its vehicles fell from 18.9% in 2021 to 13.7%, which was lower than the ideal performance of 19.1%. Lai, Xiaopeng, and Ideal declined the most.

However, NIO chose to lower the price in exchange for higher sales of the ES6. A person from Weilai said that the pricing and market performance of ES6 are very important, and it is hoped that ES6 will bring about “shaking” changes.

Every link tries to grab users and reduce the risk of loss. This new ES6 is NIO’s first implementation of the “release and delivery” strategy. In the past, users had to wait patiently: ET7 was released in January 2021 and delivered in March 2022; ET5 was released in December 2021 and delivered in September 2022.

Save Weilai again

The special thing about ES6 is that it is not a product that Weilai can treat with a normal heart, because the most urgent goal is not to surpass the opponent, but to “save” itself.

This used to be Weilai’s best-selling product. It has been “rescued” once: in 2019, during the crisis period of Weilai, the delivery of ES6 began in June, supporting more than 50% of the sales volume that year. The advantage has been maintained for more than three years. In 2020, 2021, and 2022, ES6 will sell 28,000, 41,000, and 42,000 vehicles respectively, accounting for 63%, 45%, and 34% of Weilai’s total sales, stabilizing the bulk of sales .

Weilai’s situation today is of course better than that of the crisis in 2019. For example, the cash on the account is close to 40 times that of that year. But there is no room for too much optimism. Li Bin said in a face-to-face user event in April that the operation in the first half of 2023 will determine the mid-term direction of Weilai. If the work is not effective, 2024 may become 2019 again.

Before July 2023, Weilai will complete the switch of all models to the second-generation platform. It is understood that, in addition to the new ES6 released on May 24, the ES8 will be launched in early June, and the ET5 Safari Edition/Travel Edition will be launched in mid-June. The ES8 and ET5 Safari/Travel editions will also adopt the “launch and deliver” strategy.

In the past two or three months, the “short supply” of NIO models has seriously affected sales, making it the lowest sales in a single month in nearly a year. Starting from February 2023, Weilai’s sales began to decline continuously. In April, it sold a total of 6,658 vehicles, a month-on-month decrease of 35.85%.

The old-generation models ES8, ES6 and EC6 have been basically sold out since February, but the new models have not been connected yet. Only ET7, ET5 and ES7 are available for sale, which is “very passive”. Among them, the cheapest ET5 is the best seller, and it is also the only model below 400,000 yuan. However, it is difficult for ET5 to independently support the banner. The current best result is 7,594 units sold per month, which is still far from exceeding 10,000 units.

NIO President Qin Lihong once told “Later Auto” that in the second quarter of this year, NIO is still in the transition period from the first-generation platform to the second-generation platform, and in the third quarter, product sales will start to climb.

It is certainly not a good thing for the company’s own sales to decline, but what is even more frightening is that the opponent is making significant progress. From January to April 2023, ideal sales will continue to increase, with more than 20,000 vehicles delivered for two consecutive months in March and April. However, a Weilai employee reminded that Weilai’s opponent is BBA. The sales volume of BMW X3, which is regarded as ES6 competitor, was 13,000 units in April.

Li Bin has a more direct goal for sales. He said at the earnings conference call in March that NIO’s sales target for this year is to double last year. Based on the delivery volume in 2022, this number is 244,500 vehicles. One-third of the first 2023 has passed, and NIO has delivered 37,699 vehicles, with a progress of just over 15%.

In April when sales fell, Li Bin said that if Weilai still sells 10,000 per month in the future, he and Qin Lihong will go out to find a job. At the new ES6 press conference, some users joked, “Whether Brother Bin wants to assume the new position depends on this one.” This is a horrible joke. Both users and Weilai have recognized the importance of the new ES6.

Title map source: NIO

Reporter Li Zinan also contributed to this article

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