NIO has finally gone public, where will its next life-saving straw be?

On the morning of September 12, Eastern Time, NIO successfully went public with an issue price of US$6.26 per share. A total of 160 million shares were issued, raising more than US$1 billion.

With this money, NIO can finally take a breath.

As of the end of June this year, NIO only had 4.48 billion yuan on its books, despite the fact that NIO had previously raised more than 17 billion yuan in financing. NIO lost more than 3 billion yuan in the first half of this year alone.

This $1 billion is indeed life-saving money for NIO.

Although it was successfully listed, the start was not satisfactory.

I still remember that when NIO submitted its IPO in August, it planned to raise $1.8 billion. Now the $1 billion is almost half off, which is really not much.

Even more embarrassing is that NIO's stock price fell below its IPO price at the opening, closing at $6. Fortunately, NIO's stock price has since recovered and has not remained depressed.

Tesla has been around for many years, but it still hasn’t made a profit. NIO’s strength and influence are far inferior to Tesla’s, so it’s not surprising that it was coldly received by the U.S. capital market right after its listing.

This year, Chinese companies frequently went public in the United States. I guess the U.S. capital market has become somewhat tired of this trend. Moreover, most companies have not performed well in the stock market after going public. Obviously, now is not a good time to go public.

However, it is not suitable to go public now, but we have to go public with all our strength. Not to mention that the money in our hands is almost spent, before winter comes, everyone wants to prepare some food for the winter.

Now that the listing has been finalized, NIO still has to deal with those old problems that cannot be avoided.

As of August 28, NIO has delivered 1,381 ES8s, with nearly 15,000 more to be delivered. NIO claimed to deliver 10,000 ES8s this year, but now that three quarters of the year have passed, it is 80% impossible to achieve the goal. Of course, it is not just NIO that is missing the deadline; difficulties in mass production and delivery are a common problem for new car manufacturers.

Is changing the power route a blessing or a curse?

Mass production and delivery are current problems, and the battery swap model may be a hidden worry for NIO in the future.

Unlike most new car manufacturers and traditional car companies, NIO has never given up the battery replacement route. The only domestic company that also insists on the battery replacement route is BAIC.

Battery swapping can solve the pain point of slow charging, but the construction cost of a battery swapping station is much higher than that of a charging station. Currently, there are far too few charging facilities, and it is even more difficult to popularize battery swapping stations. The cost of building a battery swapping network by enterprises is very high, and the investment recovery period is too long.

Since battery swapping technology requires uniform battery specifications, different companies cannot share a system. Car companies can only build their own battery swapping networks. BAIC's main product is low-end electric vehicles, and the volume is large enough, so it may be more cost-effective to build a network by itself. NIO is positioned at the high end, and it is difficult for its sales volume to reach the same level as BAIC. If the volume cannot be increased, the cost of battery swapping will remain high. Not only can companies not afford it, but consumers will also find it difficult to accept it.

Battery swapping technology also drags down the range of NIO cars. To cater to future low-end models, NIO also installed low-energy density batteries on the ES8, and plans to use the same batteries for all future models. The actual range of the NIO ES8 was previously reported to be only 178km, and the weak battery was the main reason.

At present, battery technology is still in a period of change and renewal. High-nickel batteries and solid-state batteries are being actively developed, and battery energy density will be further improved. At this time, the battery level of high-end models is limited to a lower level, and the endurance of NIO cars in the future may not be able to compete with mainstream electric vehicles.

The longer you persist in battery swapping, the greater the losses will probably be.

Where did the money go?

NIO went public four years after its establishment, while Tesla took seven years.

Weilai is also burning money faster than Tesla. Looking at Weilai's cost structure, brand marketing and daily management expenses account for a large part, which is basically equivalent to R&D investment. In the first half of this year, sales management expenses even exceeded R&D expenses.

Weilai's money was not wasted. The 80 million yuan press conference and the experience stores in the CBD areas of core cities such as Beijing, Shanghai and Guangzhou have attracted enough attention for Weilai. According to surveys and statistics from some media, Weilai is currently the most well-known new car brand.

NIO has used money to build brand awareness and create a luxurious and high-end brand tone.

But selling cars is not selling advertisements, and doing business cannot just make a profit. Without enough deliveries, you can only keep raising funds and borrowing debts; without sales and profits, no matter how beautiful the business blueprint is, it is just empty talk. Failure to build cars, not building them fast enough, or not building them well enough will kill a car company.

Internal troubles are not resolved, and external troubles are frequent

We don’t know how long NIO will be able to burn through the billions of dollars it has received this time, but NIO’s competitors are indeed increasing.

NIO is positioned as a high-end electric vehicle. There are few high-end competitors in the Chinese electric vehicle market, and most are mid- and low-end products. Although NIO's positioning as a high-end vehicle is risky, it is ultimately targeting a blue ocean market. Once successful, the returns will be very generous.

However, this situation will not last long. In September, BBA collectively unveiled their new pure electric vehicles, filling the long-standing gap in the field of high-end new energy vehicles.

Mercedes-Benz EQC will be put into production and sold in China at the end of 2019. Audi's e-tron electric car will be launched globally on September 17 and will be localized in 2020. BMW iX3 is scheduled to be launched in 2020 and will be produced by the Shenyang plant after it goes into production.

Some time ago, BBA only announced plans to build new energy vehicle factories in China, and now the specific product launch time has been announced. In total, NIO will have to face competition from BBA in one or two years. If NIO cannot seize this period of time and quickly mass produce to seize the market segment, it is likely to be very passive in the future.

What are the advantages of new car-making forces?

In fact, the challenge from traditional car companies has already begun. The Marvel X, a pure electric SUV recently launched by SAIC Roewe, is priced at around 300,000 yuan after subsidies, which is in the same price range as the NIO ES8.

What's more interesting is that SAIC Roewe has also launched a "Super User Service Plan" for Marvel X. This service plan includes a series of services such as charging and power delivery services, maintenance services, roadside assistance, door-to-door pick-up and delivery, vehicle traffic flow, and vehicle cleaning.

This is very similar to the various supporting services of NIO ES8. The good news is that NIO is being imitated; the bad news is that NIO's additional services cannot form a competitive barrier. Traditional car companies can also provide them if they want to.

New car manufacturers believe that another competitive advantage they have over traditional car manufacturers is that their cars are more intelligent. SAIC's Internet cars have sold hundreds of thousands of units, and Marvel X is also a smart car. Traditional car manufacturers have not ignored the trend of car intelligence.

On the contrary, the vehicle manufacturing capacity and cost control capabilities of traditional car companies are what new car-making forces cannot have in the short term. The advantages previously promoted by new car-making forces are gradually being overtaken by traditional car companies, and in terms of the hard power of automobile manufacturing, new car-making forces still have a big gap compared with traditional car companies.

As a star company among the new forces in the automotive industry, NIO has gained a breathing space by relying on the financing from the IPO. But once the money is used up, if NIO cannot establish its own competitive barriers, what else can it do?

We saw him build a tall building, and we saw it collapse. Whether these tall buildings built by new car manufacturers are solid or not will probably be revealed in a year or two.

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.