The future is good, including NIO, but does NIO still have a future?

First of all, this article does not mean to denigrate NIO. It just shares my own opinions based on publicly available information to see if NIO still has a future.

Let us first take a look at Weilai’s sales and financial reports in 2018 and 2019.

In 2018, NIO sold 113.48 million vehicles (delivered), all of which were ES8 models. Total sales were 4.8525 billion, accounting for 98.0% of total revenue, with a loss of 9.5956 billion. (If 2016 and 2017 are included, NIO has accumulated losses of approximately 17.23 billion yuan in the past three years.)

In 2019, NIO sold 20,565 units throughout the year. Among them, ES8 sales were 9,132 units and ES6 sales were 11,433 units (delivered). Total sales were 7.3671 billion, with a loss of 11.0792 billion, a year-on-year increase of 22.4%.

From the data point of view, NIO's losses are expanding, but the launch of ES6 has increased NIO's sales in 2019. It can be said that the delivery of ES6 is gradually supporting Weilai's sky. Although Weilai still loses money on each car sold, the increase in sales has increased Weilai's cash flow. Automobile companies are asset-heavy companies and are heavily dependent on cash flow.

Although NIO Chief Financial Officer Feng Wei expressed satisfaction with the 2019 financial report data, there are still many difficulties and uncertainties for NIO.

The difficulties come from its own financial situation on the one hand, financial institutions (markets) on the other hand, and the automobile consumer market on the other hand.

As of December 31, 2019, NIO’s cash and cash equivalents, restricted monetary funds and short-term investments totaled 1.056 billion yuan, equivalent to about half of the amount at the end of the third quarter. The sudden epidemic must have also disrupted NIO's strategic plan and increased the company's need for cash (this is mainly because revenue has significantly decreased, while fixed expenses have basically not changed much). Without money or cash flow, NIO would be miserable. What I have to say is that NIO is still the best among domestic Internet car companies, including products and services.

On the other hand, NIO’s new round of financing has not stopped. At 8 o'clock on March 5, NIO issued an announcement on its investor relations website, announcing that it had once again completed a convertible bond financing project of US$235 million. This is NIO's third financing success within a month, and it will start from 2020. Since the beginning of the year, it has raised US$435 million.

Although I raised money, I encountered a circuit breaker in the US stock market. NIO’s latest stock price is currently US$2.84 per share, which has fallen by almost half from its highest point.

What should be noted here is that the previous stock price of NIO was not high (we can also see from the stock price chart). On the day when the news that NIO’s China headquarters will be officially settled in Hefei was announced, NIO’s stock price Bucking the trend, it rose by 13.4, and once rose by more than 30 before the market opened. However, what no one expected was that after the epidemic shut down, Weilai’s stock price fell back to its previous level. Citi analyst Jeff Chung also downgraded NIO's stock rating from "buy" to "neutral."

Finally, let’s talk about the domestic automobile consumer market.

If lack of money can be solved through loans and financing, then I am afraid that no one in the consumer market can help NIO.

Although vehicle electrification is the mainstream voice now, "full electrification" will certainly not be completed in recent years. There are many reasons involved, so I won’t go into details here.

I would like to mainly talk about the following aspects.

At the beginning of the birth of domestic electric vehicles, we can see many domestic car companies involved in this field, such as BAIC, JAC, Zotye, Geely, BYD, Chery, etc. A number of Internet car companies have also emerged, such as NIO, Xpeng, Qiantu, Ideal, WM Motor, etc.

What now? Except for BYD, traditional car companies have very few product lines for electric vehicles, and some car companies have even stopped making them. However, some Internet car companies are short of money and have gone bankrupt.

In the early stage, subsidies are sufficient, and the state supplements local subsidies. Product technology and some support requirements are not strict and standardized. It is a barbaric growth period. During this period, traditional car companies had great influence, complete production lines, and quick responses, so they received a lot of subsidies. Internet car companies do not have any advantages, so they receive almost no subsidies.

After a period of development, product technology requirements have improved, and policies have become more and more standardized, those inferior electric vehicle products have gradually been eliminated. However, the corresponding subsidies have also gradually decreased, and many car companies have Withdrew from this "game", or only left one or two products.

Internet car companies that are actually engaged in technology-based car manufacturing have also survived at this stage after painful development. They seem to have seen hope, but I think this is just the beginning of the "most difficult stage." .

First of all, we must admit that Weilai’s ES8 and ES6 are very good, and the prices are not outrageous or even a little low. It seems that there are no competitors in the market. But if you think about it carefully, it is not that there are no competitors, but that the competitors have not yet exerted their strength.

From a price point of view, Weilai ES8 and Mercedes-Benz EQC are basically in the same price range. Although the ES8 is larger and has better technological equipment, the Mercedes-Benz EQC is not bad at all. In addition, if I have a Mercedes-Benz before, why should I choose Weilai?

In addition, even if the cruising range is no longer the focus of users' concern, maintenance is an important point that cannot be ignored but is often ignored. Just imagine, when we drive to a smaller city, the car suddenly has a problem. If it is a large manufacturer such as a traditional car company, the 4S shop network is developed and is still penetrating downwards. It will be very convenient to repair the car. For car companies like Weilai, it is difficult for the dealer network to develop significantly in a short period of time, and it is very difficult to repair cars.

Large OEMs such as Mercedes-Benz, BMW, Audi, FAW, GAC, SAIC, and Dongfeng can be said that they have not really made efforts in the field of electric vehicles, but they have definitely been going crazy in the past few years. Carry out talent reserve and technology reserve.

So when electric cars such as the Mercedes-Benz EQC, Audi e-tron, and Porsche Taycan were launched, they actually sent a signal to the market: "I can make electric cars, and they are very powerful. This is just the first generation." Products will only be stronger in the future.”

Friends who pay attention to cars will definitely know that Toyota and Hyundai have made achievements in hydrogen energy (hydrogen fuel cell) vehicles. This will inevitably stimulate other major traditional car companies to accelerate the research and development of hydrogen energy technology. If Weilai does not have a good way to turn losses into profits, it will be difficult to invest in the research and development of new technologies, and the gap will widen.

Going back to the question at the beginning of the article, "Does NIO still have a future?". I think it is possible, but it is difficult. Weilai needs to seize the time to increase the gross profit margin of bicycles and increase the company's overall profit margin. Now is the best opportunity for Weilai. The buffer period and development period are combined into one.

When a new round of policy guidance is released, Weilai’s opponents will all appear on the scene, and each of them will have extraordinary strength.

This article comes from the author of Autohome Chejiahao and does not represent the views and positions of Autohome.