NIO Inc.'s R&D investments have reached a critical moment where they must continuously contribute to the profit statement.
Recently, NIO Inc. officially launched its all-new ES8 and opened pre-sales. Following the product launch on the 21st, US stocks surged 9.27%, Hong Kong stocks closed up 11.12% on August 22nd, and US stocks rose another 14.44%. As of press time, the company's total market capitalization reached $14.1 billion (approximately 100.9 billion yuan), returning to a trillion-yuan market cap for the first time in nearly a year since October last year.
Compared to the second-generation ES8, the all-new ES8's starting price has dropped by nearly 100,000 yuan. However, NIO Inc.'s Chairman and CEO William Li stated in a subsequent media briefing that compared to the second-generation product, the all-new ES8's gross margin is not lower than the second-generation ES8. Li told reporters that amid the increasingly fierce elimination competition among new energy vehicle startups, NIO Inc.'s R&D investments have reached a critical moment where they must continuously contribute to the profit statement.
Where Do Cost Savings Come From?
In the first quarter of this year, NIO Inc.'s vehicle gross margin was 10%, which had a significant gap compared to leading new energy vehicle companies Li Auto, XPeng, and Leapmotor during the same period. The gross margin of each new NIO Inc. model attracts significant market attention, and under the 100,000 yuan price reduction, how much gross margin the all-new ES8 can maintain has drawn particular market focus.
Li believes this pricing is not merely for current market competition, but because the cost structure allows for reasonable gross margins to achieve this point. He summarized three methods NIO Inc. currently uses to achieve cost reduction: supply chain optimization, economies of scale, and R&D cost reduction.
After XPeng Motors brought in Wang Fengying, the company's operational efficiency and profitability improved significantly, which once prompted netizens to suggest "Li Bin should manage the supply chain." However, Li responded directly this time, saying that while supply chain cost reduction is certainly one method of overall cost reduction, "supply chain partners also need to make money. If they can't make money, this business is unsustainable."
In Li's view, R&D cost reduction, which has been overlooked by many, may be more important. For example, the Shenji chip "actually saves a lot of money, much more than people imagine"; and the 900-volt rear electric drive system, "the R&D costs of this system can be amortized across multiple NIO Inc. vehicle models."
Li stated that while the original ES8 product also had technological innovations, due to the market scale still being in the early climbing stage, massive R&D investments made the company's development quite challenging. "Indeed, we can't go back to the past. If time could return to 2018, if we hadn't wanted to be first in every aspect back then, the price might have been cheaper."
Reassessing Pricing Strategy
Under the nearly 100,000 yuan price difference, did NIO Inc.'s all-new ES8 "backstab" existing users? Li responded to this by saying, "Many existing users advised me not to care too much about their feelings. NIO Inc. surviving is the most important thing."
Nevertheless, Li still discussed reflections on the second-generation ES8's pricing. He believes that NIO Inc. indeed made some mistakes in cost structure and product definition for the previous second-generation ES8. At that time, the pricing gap between ES8 and ES6 meant that NIO Inc. lacked products in the 400,000 yuan high-end market's main segment.
Li recalled that when the first-generation ES8 was launched, due to new energy vehicle subsidies, it was a product with a 400,000 yuan baseline. When launching the second-generation ES8, considering reasonable gross margin issues, the car's price went up. "Its cost target setting had problems," Li said.
In the first quarter of this year, NIO Inc.'s revenue was 12.035 billion yuan, up 21.46% year-over-year; net loss attributable to shareholders was 6.891 billion yuan, with losses widening 31.06% year-over-year. The deteriorating financial statements deepened market concerns about fourth-quarter profitability. NIO Inc. also began comprehensive cost control and management efficiency improvements from the first quarter, an initiative called "organization transformation for user value creation with full employee participation."
After the first quarter report, NIO Inc. provided relatively optimistic guidance for the second quarter of this year, expecting total deliveries of 72,000 to 75,000 vehicles, up 25.5%~30.7% year-over-year. Although the second quarter financial report has not yet been released, according to statistics, NIO Inc.'s three brands delivered a total of 72,056 vehicles from April to June this year, meeting delivery expectations.
Wind data shows that from the release of the first quarter report to August 22nd, NIO Inc.'s US stock price has risen 80%.
Currently, NIO Inc. is intentionally downplaying "loss" and "cash-burning" labels, instead emphasizing financial language closer to traditional automakers such as "controllable costs," "healthy gross margins," and "R&D returns." Li stated that the company has experienced ups and downs and various cycles in the capital market. At different stages, investors will have different views and judgments, but ultimately the company must return to its fundamentals, which is what investors care about most.