eastwest connect

Qin Lihong, president of NIO media interview: ES6 and ET5 will become the “leaders” of the entire product line | NIO is in the state of exiting the corner and will accelerate next from the second half of this year


It is learned on April 21 from China Times that at the 2023 Shanghai Auto Show, the new ES6 equipped with NIO’s next-generation intelligent system “Banyan” made its debut, and reservations were opened simultaneously. The new car will be officially released and delivered in late May.

At the same time, the 2023 NIO ET7 was officially released at the auto show. It is understood that the 2023 ET7 brings more than 15 product updates and upgrades, but the price remains unchanged.

Qin Lihong, co-founder and president of NIO, said in an interview with a reporter from China Times: “ES6 is a debut today, and there is not much information released, but there is no doubt that ES6 and ET5 will become the “leaders” of the entire NIO product line.”

Rhythm of products and sales

According to public data, NIO’s first-generation ES6, which was released on NIO Day in 2018, has delivered a total of 127,400 vehicles as of March 2023, accounting for almost one-third of NIO’s cumulative sales. Therefore, it is reasonable that the new ES6 is expected to help NIO’s sales to further increase.

Qin Lihong told the reporter: “ET5 mainly focuses on sedans, ES6 focuses on SUVs, one is a medium-sized sedan and the other is a medium-sized SUV, both of which are the largest product segments in the high-end market, and ES6 has accumulated more than three years in the past three years. More than 120,000 models were sold. When ES6 was first released, NIO was still a very new company, but when the (new) ES6 arrived, the product line framework of our 2.0 technology platform had already been formed.”

According to official data, in the first quarter of 2023, NIO delivered a total of about 31,000 new cars, a year-on-year increase of 20.5%, in line with its expectation of delivering 31,000 to 33,000 vehicles in the first quarter. But objectively speaking, although NIO’s delivery volume in March reached about 10,400 vehicles, there is still a significant decline.

The unveiling of the new ES6 now means that NIO’s product layout is moving forward in a big way this year, and the filling of the product matrix is bound to lead NIO’s development into an accelerated stage. According to Qin Lihong, NIO still has two new cars this year, both of which are new products based on the second-generation technology platform, which will be released in June and July respectively. After the launch of the two new models, all NIO products based on the NT2.0 platform will be released.

“I remember discussing such a problem with the media at the Chengdu Auto Show last year: a product has to slow down when it is cornering. But I don’t think this process will be smooth. Now NIO is in the state of exiting the corner, and it will accelerate next. NIO will complete all the switchovers in July. Summer is the off-season for the automotive industry. We will stabilize and enter a new speed and level from the second half of this year. This is the approximate rhythm of our products and the market.” Qin Lihong said.

Brand positioning

When talking about brand positioning, Qin Lihong described NIO’s current market position in China as “a 1.5-tier luxury brand”. He bluntly said that although there is still a gap with the first-tier brands, it has surpassed the sales of second-tier luxury brands. He also said that the sales in the first quarter of this year definitely exceeded Lexus. If there are no major surprises, the total sales in the Chinese market this year should exceed Lexus.

In Qin Lihong’s view, NIO’s main benchmarks are mainstream high-end brands represented by Mercedes-Benz, BMW, and Audi. The mainstream high-end brands basically have two levels: one is brands represented by BBA (Mercedes-Benz, BMW, Audi) with annual sales of hundreds of thousands of vehicles; the other is second-tier luxury brands with annual sales of more than 100,000 vehicles, or even a little less. The biggest gap and shortcoming between NIO and BBA is that BBA is a high-end brand that has fully established consumer awareness around the world.

Qin Lihong said with a smile: “What NIO needs most is time. A car is a comprehensive product. In addition to physical attributes, it also has multiple attributes such as service, spirit and emotion, and personal identity. Therefore, a decision to buy a car is the result of mixing various attributes. They have been working for a hundred years, and you nevertheless need to work for at least ten years, otherwise there is no such cheap thing.”

Will not engage in price war

One month before the auto show, the auto industry started a vigorous price war.
This also caused the entire auto industry to fall into a “melee”. In this context, this year’s Shanghai Auto Show is also seriously involved in the competition, with more than 1,000 auto companies competing for excellence, and new products emerging one after another. Many companies have entered the new energy track with all brands and car series. Therefore, some industry opinion pointed out that after the auto show, more new products will flood into the new energy market, coupled with the continuous drop in the price of battery-grade lithium carbonate, the future market may form a wave of price war dominated by new energy vehicles.

In this regard, Qin Lihong expressed different views to the reporter: “I don’t think there will be a new round of ‘price cuts’ for new energy car companies. At present, the entire industry in the vehicle new energy business is losing money. Enterprises should pay more attention to factors such as product definition, configuration research, energy system, battery, and three-electric system intelligence. Among all the factors that enterprises pay attention to, price must be ranked last. For new energy car companies, they should pay more attention to product definition, research on three-electric systems, intelligence, energy systems, etc., and take a long-term view.”

In his view, the price war in the first quarter of this year has been the most ferocious one in the past ten years. However, in the first quarter, China’s passenger cars (sales) dropped by 14% compared with last year. Therefore, it proves that the price war does not necessarily bring short-term sales. On the contrary, it confirms that as the level of competition increases, the price of each brand will return to the value itself. What car companies should really start is the value war.

Qin Lihong affirmed: “Nio will not participate in a price war, and NIO’s pricing will be in place in one step.” He said frankly that NIO does not have much gross profit, and companies with a gross profit of 30%-40% may be able to reduce it a bit. After all, some companies set their annual goals too high and are under pressure. Some companies may be facing a window period of transformation and elimination of model technology. But all in all, the current price war is clearly stirring the market.
Qin Lihong expressed sincerely: “We very much hope that with this Shanghai Auto Show as a turning point, all brands can return to the essence of products, technical services, etc., letting the market calm. This is good for consumers as well as individual brands and the industry as a whole. “

Whether it is dealing with price war or other variables in the future market, Qin Lihong’s strategy is: “The NIO brand is ready to wait for greater opportunities and challenges in the market segment to which we belong. For the lower market segments, we will successively launch sibling brands within the NIO Group, and each brand will develop its own market segment, which will form a synergy in the future. “