eastwest connect

NIO management media communication responding to: “increasing price against the trend” by 30,000 yuan benefits reduction | autonomous driving


It is learned on April 11 from Red Star News that on April 10, NIO announced that it will adjust the rights and interests of new car buyers to replace batteries. There will be no more free home charging piles and installations, and fewer free battery swaps.

At the same time, NIO announced that the enhanced navigator assistant NOP+ will be released and subscribed on July 1, supporting monthly subscriptions at a price of 380 yuan per month.

At a time when car companies are cutting prices and promoting sales, why does NIO increase prices in disguise through benefits reduction? Li Bin, CEO of NIO, and Qin Lihong, President, answered questions at the media communication meeting.

NIO bucks the trend and raises prices by 30,000
Power swap rights are gradually declining

Qin Lihong admitted: “It is true that the adjustment of our rights and interests means a little price increase.” But also emphasized that NIO “is not using its own strength to fight against the general trend of the industry, its value is worth the money. When we made this series of rhythm arrangements, we did not expect so many companies to cut prices this year.”

Why choose this point in time to announce the adjustment of rights?
Qin Lihong pointed out that the second quarter of this year is the moment when NIO’s official products switch out. Five new cars will be released in the next three months, and two new cars that have already been released will be delivered.
By July, the eight new models of the second-generation platform covered 80% of the high-end market user needs. “We need to make it clear to everyone before the overall switch of the second-generation platform.” The reason why it started on June 1 is to give new and existing users enough expectations.

Li Bin specifically mentioned that NIO’s gross profit margin is under great pressure, and the reduction of two free battery replacements will reduce expenses, which is part of the company’s long-term financial plan.

In recent years, the rights and interests of NIO to battery swap have been gradually declining. In August 2019, NIO launched an unlimited number of free battery swap services, which will be adjusted to 6 free battery swaps in October 2020 and 4 in August 2021.

Li Bin said that the purpose of free battery swap is to cultivate users’ habit of battery replacement. In the long run, on-demand use and gradual rights decline is the direction. Qin Lihong also said that in the future, the power swap service will definitely become a form of full charge.

Qin Lihong said that the four free battery swaps can basically meet the daily needs of 95% of users, and the average cost of a paid battery swap is about 100 yuan. “The decline in battery swap rights, plus the two-year free NOP+, roughly calculated at least 30,000 yuan. We can say that NIO has bucked the trend and increased its price by 30,000 yuan, and users who have already bought NIO cars will not be affected; Users who are hesitating can save 30,000 yuan by buying earlier.” He pointed out, “The decline in rights and interests is indeed not as good as before, but compared with competing products, we (offer 4 free battery swaps every month) are still the best.”

Wang Chuanfu of BYD said that autonomous driving is “fooling”
How does NIO think of it?

Regarding this disagreement, Li Bin believes, “The definition of autonomous driving and assisted driving may be different for everyone, and how to evaluate it is each company’s own strategy.” He proposed the significance of autonomous driving around 2017: free up time and reduce accidents, and using these two criteria to evaluate the progress of NIO technology.

“Currently, we are very confident in realizing autonomous driving in certain scenarios relying on the capabilities, algorithms, and operations-related capabilities of the second-generation platform’s intelligent hardware,” he said.
NIO’s assisted driving and intelligent driving technology stacks are completely self-developed from the bottom up. Every second-generation platform car is a data closed loop and has a systematic competitive advantage.

In Li Bin’s view, autonomous driving is a service rather than a function, because it requires continuous iterative optimization, involving the data closed-loop and operation of the car and the cloud. Looking to the future, computing power and sensors will continue to improve, performance per unit cost will continue to improve, algorithms and models will evolve at an astonishing speed, and it will take a process to achieve a balance between technological development and regulation and users.

“I don’t think the importance of intelligent driving can be overemphasized.
I’m not saying that higher-performance hardware must have a better experience, but there is no doubt that higher-performance hardware will lead to a higher ceiling.”

NOP+ adopts subscription model

The reason why the subscription model is adopted, Li Bin explained, “First, NOP+ and NAD share a technology stack, and the entire underlying foundation is the same. NAD is a subscription, so NOP+ is also a subscription. The second is that NOP+ requires the coordination of car-end and cloud data. In the long run, it is biased towards the role of data services, and the subscription method is better.
The third is that not every user of NOP+ has to subscribe all the time. If you don’t use highway or long-distance travel, you don’t need it. Therefore, the monthly subscription method is more flexible for users.”