NIO Day 2023 kicked off on December 23, 2023, with the theme “Upward”. NIO presold its new flagship sedan ET9 and unveiled four core technologies applied to it, as well as the official debut of the fourth-generation NIO Power Swap Station and ultra-fast charging. The next morning, we interviewed NIO’s founder, chairman, and CEO, William Li, and NIO’s co-founder and president, Qin Lihong. During the interview, the two founders stated that the ET9 is not only the result of NIO’s technological innovation, but also a microcosm of China’s transition from a major automobile country to a strong automobile country in the intelligent electric vehicle industry. It is a milestone in the process of the entire intelligent electric vehicle industry participating in the global competition of intelligent electric vehicles. NIO’s foundation is technological innovation, and the hope is for more and more friends to understand the real NIO.
Interview Transcript Reporter: NIO Day 2023 has ended. How do you feel now? Are there any impressive stories within NIO in 2023?
Li Bin: The overall evaluation of the ET9’s appearance yesterday was quite high. I think the ET9 is not only the crystallization of NIO’s own technological innovation, but also a microcosm of China’s intelligent electric vehicle industry transitioning from a major car country to a strong car country. It’s not just an achievement of NIO, but also a milestone for the entire intelligent electric vehicle industry in the process of participating in the global competition of intelligent electric vehicles. We are challenging the executive flagship market. The executive flagship has always been a flagship of technology. Without breakthroughs in technological innovation, the product cannot be sustained. At the press conference, we introduced the latest achievements of NIO’s technological innovation through innovations in four aspects, including intelligent driving chips, full-range 900V, Tianxing smart chassis, and flagship safety. However, due to time constraints, many innovative points were not mentioned. In fact, we have 52 configurations and functions that are leading in the same class, including 17 global patent applications related to ET9. Our release yesterday also allowed everyone to understand NIO’s foundation, which has always been technological innovation. From day one, our team has been determined to do positive research and development. For example, the electric drive system is self-developed and self-made, and the three-electric and three-smart systems have been self-developed since the beginning. NIO has pieced together all 12 full-stack technologies related to intelligent electric vehicles. The ET9 is the crystallization of our technological innovation and investment. The foundation of NIO is technology and products. We cannot neglect our efforts in products and technology, especially technological innovation, just because our service is doing well. It’s like we can’t forget that our charging is also the most diligent among all car brands in the country, with the most determined layout and the widest coverage of charging piles. I feel that more and more friends are getting to know the real NIO, which is quite important to us. There are many memorable moments in 2023. The most impressive one for me is when Li Bin said, “Let’s go to Xiamen” last week and we just went. Normally, such a big event would require planning and preparation one or two months in advance, but we just went for it. Our brand is confident in technology and faces the outside world with sincerity, which may also be a microcosm of many things today. The final result was quite perfect. Looking back on this year, the entire NIO company and our team have basically withstood the test of pressure and physical strength. This is also a microcosm and a deep feeling for me this year. Whether it’s an individual or a company, you need to be able to handle pressure fully, and face and embrace change with sincerity based on your own foundation and background. There were many interesting things during the 150 battery pack car test. For example, when I started driving, I set the speed at around 90 km/h and just ran as much as I could. I didn’t necessarily have to run 1000 kilometers because it was minus 2 degrees when we set off that day, and there were two people and equipment weighing over 190 kilograms in the car. The main reason I drove at 90 km/h was for safety. I had to drive, give interviews, chat, and control the pedals at the same time. Without the assistance of enhanced navigation, I definitely couldn’t have driven. This little story shows that driving with the assistance of AI can greatly improve safety on the highway. You don’t really need to rush on the highway, you don’t have to drive at 120 or 110 km/h. It’s not just about saving fuel costs, it’s mainly about safety. The story reflects how I think and how our company does things. When others criticize us for the 150-kilometer endurance and 90 km/h speed test, the problem is that the standards for each endurance test are always different. That was the real driving situation for me that day, considering that I had to chat and livestream while driving and considering traffic safety. This is being responsible for myself and for others. I think this was a very real situation for me that day.
We have always done things like this, but now hard work may not be visible, and even hard work may be easily misunderstood. NIO is often overshadowed by the relatively binary emotions of today. We still hope that people will increasingly understand what kind of brand NIO is, and what real NIO is.
Reporter: What did you think of when you decided on the theme of “Upward” for NIO Day 2023? And are you a bit idealistic, but now is there some restraint, is there some reflection?
Li Bin: I think the theme of “Upward” not only reflects NIO’s current mentality, but also reflects the expectations of NIO’s users for the future. I think it is also the general mood of society. Over the past period of time, the uncertainty of the world has become increasingly greater. In the past few years, a lot has happened in the world. In such a large environment, it is normal for everyone to have feelings of unease. Everyone actually encounters their own pressures to solve, not just me, or NIO’s colleagues, or NIO’s users, or everyone here, the pressure is actually more or less greater than before. Faced with such pressure, most people’s answer in their hearts is definitely not to give up or escape, but to choose to face it. The understanding of upward is a spirit of initiative and responsibility. Everyone’s understanding of upward is different, but the emotional aspect of upward I think is generally the same, that is, facing pressure, facing challenges, facing one’s own inner self, maintaining initiative, maintaining a sense of responsibility, whether it is for oneself, for the family, or for society, we should strive to push ourselves in a positive direction, and promote a positive attitude towards society. The more of this emotion, the better, whether it is for an individual, a company, a family, a country, society, or humanity, this is our very real idea. When this theme was proposed this year, the entire company, including the users, had no doubts at all. This year, we indeed did not achieve our established goals. There are external environmental reasons, as well as reasons within the company. Of course, there are many shortcomings in terms of awareness of uncertain environments, including risks, and the organization’s ability to prepare. For various reasons last year, we made 10 billion more than expected. It doesn’t mean much to talk about this kind of thing, but when reflecting on ourselves, there are many, many areas that we need to correct. We have been constantly reflecting, introspecting, continuously improving, and formulating our own organizational capacity enhancement plan internally.
We are confident in ourselves. This year, our growth rate is still higher than the industry’s. In the high-end market for smart electric cars, our sales have surpassed those of gasoline cars in well-developed areas. We have performed well in the Yangtze River Delta. We must objectively recognize our strengths, weaknesses, and areas for improvement. We need to stick to our original intentions and take decisive action to address any issues. Our logo emphasizes action. We believe in a balanced approach, where vision and action are equally important. As a global startup based in China, we want to turn this cultural heritage into the driving force of our company’s spirit. Li Bin said we rarely mention who is not on this list. The automotive industry has never been a winner-takes-all. It is a long and tough competition. A few years ago, it may have been hard to imagine that BYD would have the opportunity to produce 3 million vehicles a year. Globalization has been brewing for nearly twenty years. We said 25 years ago that we would enter the finals, but I never said when the finals would end, because the finals have no end. I think competition is ever-changing. Don’t forget because of temporary achievements, or belittle yourself because of temporary setbacks. You need to know what you want to do, where your goals are, where your shortcomings are, and where you need to improve. You need to be practical. In terms of the global situation, I think that around 2035, five of the top ten global car groups will be Chinese brands. Everyone has a different answer for which five. We are striving to be one of them. Chinese car companies are all new forces. Qin Lihong: All Chinese car companies are new forces in the global market.
Li Bin: By new forces, I mean that all Chinese car companies have grown up in the past one or two decades. The backbone of the Chinese car companies is the first generation. Many state-owned enterprises are the first generation, full of passion, and rich in practical experience and entrepreneurial passion in the past one or two decades. New forces are names given by other media friends for the sake of dissemination, but if we look at it, they are all new forces. If we finally count them all, the new forces list will include all Chinese companies, which is more scientific. In terms of the mentality of the market, healthy competition will make China’s auto industry better. We also call for not attacking each other, and not engaging in vicious competition without a bottom line. This may really lead to the loss of China’s auto companies today.
Reporter: There are many things on the ET9 lidar and 4D imaging radar. Is the purpose to test the L3 driver’s license?
Li Bin: China’s regulatory authorities have started issuing such test licenses, and we are actively preparing for it. It’s just a test. We actually obtained the first national open road intelligent connected vehicle test license issued by the Shanghai Municipal Government in 2018. In recent years, various test licenses have been issued everywhere, and some are gradually being unified. I think this is a good thing, and we will actively apply for it.
Reporter: Will the battery switch company make the next generation of vehicles thinner, so that the vehicle’s seating and floor will be lower? Is the battery switch system compatible with the first, second, and third generations? Is it compatible with NIO’s stations and current models?
Li Bin: The entire battery pack of the 900V high-voltage architecture is much thinner. We will use the latest battery technology to make the battery pack thinner, giving the entire vehicle design more freedom. Most of the stations deployed this year are third-generation stations, which are backward compatible. Second-generation stations are also backward compatible. Each station itself is for exclusive or shared use, and we will deploy it flexibly according to user needs, just like private and public clouds. Qin Lihong: The first-generation stations are now entering a phase of gradual retirement. NIO’s stations and vehicles, different stations and different vehicles, we always have to consider their compatibility. From the third-generation station onwards, they are compatible with multiple battery packs, multiple vehicle models, and even multiple brands. The parameters of each station can be adjusted, and the already deployed stations can also be modified.
Reporter: Many people don’t understand why the information about ET9 was released so early. What is the strategic value of ET9 for NIO?
Li Bin: When we release flagship cars, the rhythm is usually about a little over a year. Because we have a heavy release every NIO Day, we also thought about it for a long time. The video of the champagne tower yesterday was shot by a trial car. From the perspective of the progress of R&D, the car’s development is much faster than everyone imagined, because this car has been developed for two years. This is a car that has been completely reshaped from the soul, brain, and body. If you look at it, you will see that the design is not revolutionary, but iterative and evolutionary. It is not revolutionary or disruptive. As an executive flagship, it still needs a long warm-up period. Yesterday, we only released 20-30% of the content, there is still 70-80% of the content left to be discussed.
Reporter: How does Nio respond to market changes? Are there any investments in some innovative companies or component suppliers to reduce production costs, and will Nio’s new car manufacturing costs decrease as a result of investment in the original midstream and downstream industry chains?
Li Bin: Nio has always focused on innovative and transparent supply chains from day one. The innovative supply chain is easier to understand. Both large and small companies want the best technology, not just to reduce costs, but mainly for the best technology. For example, we have introduced many top global partners in the all-aluminum body, including from production processes to material integration. We also invest in some small innovative companies, such as HiWay Technologies, which initially helped us develop the NOMI car-level screen. At that time, when we approached this company, they only had a dozen employees, and now they are a major company in China that specializes in automotive screens, with billions of dollars in revenue. In 2015, when we looked for external cooperation for air suspension, we found that the other party’s OTA software upgrades were too slow. We decided to develop our own ICC second-generation platform. We used our self-developed ICC integrated chassis control system, with Baolong helping us with integration. We do the core control ourselves, which opens up the supply chain. This is the meaning of a transparent supply chain – building core capabilities around intelligent electric vehicles, not necessarily self-produced, such as seats. The seats of the cars released this year have made great progress in terms of comfort and functionality. Our self-developed team established two years ago is now delivering results, including the seats of the ET9, and even the small tray has many self-developed patents. There are more than 20 self-developed patents for the seats. We are still exploring how to combine many of the technologies within the seats with intelligence, how to define cars with software, and how to integrate them with the central computing unit. This is the benefit of full-stack research and development. 1. This is not a system that can be used directly, but it is used by decoupling it, for example, who makes the seat frame, who makes the comfort system, who makes the mask, who does the final assembly, who does the PCBA, breaking it down and redefining it, we call it a transparent supply chain, an innovative supply chain. Currently, NIO Capital has invested in more than 70 companies in the industrial chain. Some of the companies invested by NIO Capital may not have been thought of by you, such as Ningde Times before its listing, we supported it when Zhongchuangxinhang was listed, as well as Xinyi and one of the world’s leading companies in high-nickel materials, Rongbai Technology, which makes battery production line equipment, and many other companies supported by Tudatong, which makes laser radar. It is very important to promote the development of the entire industry by supporting entrepreneurial companies.
Reporter: Are you worried that car owners will buy cars in 2024, and the technology carried by the purchased car models will be relatively backward when the delivery time for ET9 is 2025? How do you consider the problem of “upward brand, no reduction in car model price, and temporary inability to land new technology” when selling current car models?
Qin Lihong: First of all, whether ET9 is launched or not, we can say with great confidence that the 8 models currently on sale will be the main source of income for NIO in the next 1-2 years. Two years from now, our models on sale will still maintain a leading position in their respective sub-markets in terms of horsepower, computing power, materials, safety standards, design sense, and other aspects. Second, the entire smart electric vehicle industry is developing rapidly, and China is fortunate to be the center driving global development. We continue to break through new technologies, take the lead, and ensure that our current car models on the consumer market can still compete. When NIO defined the ET7 generation of cars, we made some forward-looking definitions. When we launched the ET7 in Chengdu, the groundbreaking feeling was no less than that of today’s ET9. We must continue to lead the industry in technology and philosophy, while ensuring that our current car models on the consumer market remain competitive. Li Bin: Even cars delivered five years ago are always new and useful, whether it’s a 150-degree battery pack or a software upgrade. This is also where NIO’s benefits and user value lie. NIO’s cars have always been upgradeable, and this is where we have a clear vision from the entire architectural perspective.
Reporter: How do you evaluate NIO’s preference for creating a new low-end brand rather than launching lower-priced car models? Are you afraid of affecting the high-end image of the brand?
Li Bin: We respect the basic laws of things. The price range that a brand can cover is limited, and the width of the price range that a brand can cover is also limited. We should follow this common sense and basic user consumption psychology. But with today’s smart electric cars, there are many things that different brands in different price ranges can share, such as the ability of intelligent driving, everything related to software in the cabin, and the operating system of the whole vehicle. These underlying technologies can be shared more than before, and the cost advantage is greater. On the software level, the software on the ET9 can be reused on brands in the mass market. But the high-cost hardware and configuration trade-offs are defined by the brand. For example, NIO brand does not use a single motor, because we attach great importance to driving redundancy. For brands in the mass market, performance, all-wheel drive, or redundancy safety are not high priority, but can make more full use of the advantages brought by configuration combinations. This is a very rational and practical choice. Reporter: How does NIO communicate with potential users to make it easier for them to accept this car’s atypical flagship sedan design? Li Bin: From the perspective of styling, there are three goals. First, when we defined the styling two years ago, we considered this point. Our users have an innovative and leading spirit, and consumers with a more conservative mindset will definitely not buy our car. Second, smart electric car technology brings breakthroughs to many things, such as the 200mm ground clearance of the ET9, which cannot be achieved without full active suspension. With full active suspension, the advantages of high seating capacity are reflected. Third, NIO’s design genes are about iterative evolution, not subversion. How to make a design that is not easily outdated, enduring, exquisite, and futuristic, is very important. From a styling perspective, the ET9 can stand the test of time. It is not flashy, but it has breakthroughs and is not bound by tradition. It is appropriate and composed, which is also very important from the perspective of an executive flagship. In today’s era, it is not like before where everyone must be very formal. Today may be more business casual, and it is difficult to grasp this middle ground. We believe that the ET9’s exterior design is well grasped.
Qin Lihong: Since the project was launched, we have discussed the design concept of ET9 more in terms of inheritance and innovation. NIO is about to launch an executive flagship that will be different from existing mainstream executive flagships. It will combine business, leisure, and technology. Some things are constant, such as size, presence, comfort, safety standards, and on-board equipment, suitable for the needs of the target audience to travel, drive, work, and entertain in the car. Today’s smart electric vehicles, including the rise of Chinese brands, will definitely bring about new trends. We are still exploring, and it’s normal that not everyone will like it, and we don’t pursue that. Li Bin: Understanding the psychology of business executive flagship users, the real psychology of executive flagship users, is quite challenging. It’s not as easy to define as making an SUV with a functional orientation. When we talk about business executive flagship users, what they really care about, we believe, is the shape. It’s not so traditional, not bound by tradition, but it should also be appropriate. This is very important to executive flagship users. I feel comfortable driving the ET9, it matches the current era in all aspects. Its interior is exclusive yet open. If you go to the NIO House in Hongqiao, you can feel that it’s open, but also exclusive and harmonious. We have designed several private areas, but it also feels open. You don’t feel like you’ve entered a VIP room. From the executive bridge to the sky island, the native four-seat, executive four-seat layout of the ET9 reflects our orientation towards business, the scenes, psychology, and functions of executive flagship users, a comprehensive grasp of sensibility and rationality. ET9 is our real declaration of positioning NIO as a high-end core market brand. NIO’s users are as I mentioned yesterday, they are ambitious and responsible, a solid force in society, and what they care about is different from others.
Reporter: Which markets does NIO see as having the most potential, and what strategies will be used for focused development?
Qin Lihong: Market penetration is undoubtedly necessary, given China’s vast territory and large population, as well as multiple economic centers. Although NIO has positioned itself as high-end, we need to expand our network and increase the pace of market penetration. Maintaining the brand’s style and integrating it with local preferences during this process is the challenge we face. NIO operates a direct sales system, which is quite different from the dealership system, and this is a relatively new challenge. As for locations, wherever Mercedes-Benz, BMW, and Audi have 4S stores is worth our attention. We need to emphasize two things: market potential and store establishment, service, and supplementary capabilities. These comprehensive criteria must meet a certain minimum threshold, after which we will prioritize and then review the investment and execution plans. We aim to achieve nationwide balance and do as much as possible with the available funds. We don’t have a fixed list of five cities that we must enter next year; our work is based on weekly adjustments.
Reporter: Can you reveal the details behind the new financing from the Middle East, such as how long the negotiations took and what conditions were involved? Many people have been going to the Middle East this year to seek markets and funding. What observations does NIO have about this market?
Li Bin: China is currently engaging in high-level opening-up to the world. We aim to help global investors better understand China’s innovative investment opportunities. Chinese companies need to go global and engage in more exchanges. Investors and strategic investors in the Middle East have spent a long time understanding and researching us, and have gained a deep understanding of China’s industries. From initial contact to the completion of the transaction, it took three weeks for them to become our shareholders. This investment decision was easier for them to make than before, reflecting global strategic investors’ recognition of China, the smart electric vehicle industry, and NIO. This is a positive signal. The combined $3.3 billion investment represents the largest foreign direct investment in equity in China this year, if I’m not mistaken. People often say that NIO has strong financing capabilities, but it’s not NIO’s financing capabilities. It’s the investors’ recognition of NIO’s investment in R&D, brand value, and full-stack technology layout. Their judgment is different from a professional perspective.
Reporter: As CTO, what specific things have you done in the core technology of NIO in recent years? For example, are there any differences in some decisions you make compared to engineers, or what knowledge have you been catching up on?
Li Bin: I certainly don’t deal with the technical details. I care more about the architectural logic of technology and how they should be related to each other. I look at technical architecture at a higher level, cross-domain technical architecture, and full-stack technical architecture. This is something I’m relatively good at. Regardless of whether it’s from the perspective of a CEO or CTO, this is indeed the top priority. It’s actually similar to a company’s business model, these underlying things. In recent years, our vision has broadened. We initially divided the entire company into three major segments: intelligent, electric, and automotive. A few years ago, we made a major organizational change, flattening it all out. We broke down the intelligence part into several smaller parts, broke down the electric part into several parts, and flattened the automotive part. Flattening it has brought many advantages in terms of synergy and collaboration. This change shifts the organization’s structure from vertical to horizontal in terms of management.
Of course, in terms of capability building, it’s different. We call it atomic capability. Doing things like constructing the bottom layer of atomic capability, even making seats, is atomic capability. Don’t talk about chips. Chips are typical atomic capabilities. Electric cores are typical atomic capabilities. I will build in the atomic capability and then decouple it in layers to build the entire company’s R&D system. Many things are my decision. There are many details, such as how big the battery pack should be. These decisions definitely come to me. There are also some things that car bosses must do, such as the direction of the styling, product planning, and many other things.
Reporter: What do you think of the current challenge of Chinese car brands moving up?
Li Bin: Moving up is a long process. It’s not something that can be achieved simply by launching a car, including entering the global market, which is also a very long process. There are objective laws that require time and patience. I think that Chinese car brands will eventually be able to achieve technological and brand advancement. But this process will be longer than everyone imagines, so we must maintain determination and patience. Without determination and patience, repeated back and forth running and jumping up and down will not work. I think this is the real challenge.
Reporter: Personally, I feel that the technology and design of the ET9 we saw yesterday are not as groundbreaking as the ES8 in 2017 or the ET7 in 2021. It seems that NIO is not as ahead as before. How do you see this issue?
Li Bin: 17 global first-launch technologies, 52 leading configurations and performance, and 525 patents. These are all solid evidence. There’s no need to fight back. Technology has a spillover effect. Some of the innovative companies we supported in 2015, now their technology is being used by many other car companies, but the original spirit of continuous technological breakthrough is not easy to learn. NIO, whether it is intelligent driving chips, smart hardware, operating systems, application software, electric-related things, batteries, electric drive, universal 900V, including the smart chassis seen yesterday, flagship vehicle safety, these breakthrough innovations will certainly be caught up with our current level, or the level that is about to come, but these things will not change NIO’s technical capabilities, technical background, our pursuit of the spirit of technological innovation is not something that others can simply copy. In fact, among these, technology, experience, and the standards of experience, many are not quite the same dimension. Many times, some simple explicit experiences are more communicated at this level, which is relatively easy to communicate. Indeed, it is becoming increasingly difficult to explicitly define the gap in the future. Objectively speaking, the understanding threshold for the seven-fold redundancy mentioned yesterday is a bit high, because for the vast majority of users, this is something they may never encounter in their lifetime. The gap between what can be perceived and the actual effect and technical content, especially in terms of safety and redundancy safety, is the largest. For example, NIO’s self-developed ISP chip has shortened the full link time by 75% compared to the general ones, which in the future, everyone may be competing for a two or three percent improvement, while NIO is at 75%. This technological breakthrough is huge. Qin Lihong: In fact, the information we talked about at the press conference yesterday is only one-third of what ET9 can communicate, but we think this one-third is a huge gap. The chip is just two words, 5 nanometers, automotive grade, 1=4, which seems simple, but is actually very difficult.
Reporter: Will the landing of this money from the Middle East have an impact on NIO’s future strategy, and where will this money be mainly used?
Li Bin: Investors are very supportive of NIO’s strategy and execution. This investment will not change our established strategy. We will continue to improve efficiency and adjust our development pace in a changing environment. This is a high priority. We prioritize high-priority items and postpone or suspend lower-priority items.
Reporter: There is a lot of attention on Alpine. Can you reveal where the 40 billion R&D investment will be used in the entire NIO system at this time?
Li Bin: Our second brand, VB cars, is progressing according to plan. The prototype verification work is going smoothly. We have ample time to continue optimizing the product before its launch to maintain its competitiveness in the market. The market is indeed very competitive. We believe it is important to enter at the right time. Some things need to be done first, like NIO’s current technological innovations. But some things need to be done later, such as entering mainstream and mass markets. Without continuous investment in research and development, it is impossible to establish leadership in technological innovation and high-end brands. Based on NIO’s research and development strength in smart electric vehicles, we believe it is very reasonable and timely to launch a second and third brand. We will work diligently to meet the expectations of our supporters by introducing products that better match their budget and needs. Our plan is to wait for everyone to see the products and then we can set the price. This is our current idea.