That ES8 is losing sales to his younger brother ES6 is no secret, but it seems that NIO was not prepared for this outcome.
From not enough production capacity to pressure on inventory
Outside SE part of the fifth ring road in Beijing, on both sides of Ronghua West Road, there are 120 ES8s parked on a wasteland. On the east side of the road there are five rows with 70 brand new units — most of them still have plastic protective covers on front seats and on the sides of the vehicle. On the other side of the street, there are another 40 ES8 units parked. The guard responsible for this piece of land says that this used to be a parking lot for commuters in nearby offices, but a month ago, ES8s started to appear.
I often see tow truck bringing in or taking out vehicles, said the guard.
Why are so many ES8s parked here? We went to the nearest NIO delivery center in Yizhuang to find the answer. An employee there said that the storage of delivery center is on the 3rd floor and that the cars are usually delivered directly from factory and left on the third floor. Nowadays, the cars are coming faster out of the factory and there is no space on the third floor, so the wasteland is a temporary storage area.
These are leftover cars waiting to be sold, explained the employee.
NIO’s official response was that these cars have multiple purposes. Since Beijing is logistics distribution center for three provinces in NE China — Shandong, Shanxi and Inner Mongolia, they leave the cars here before they deliver them to buyers. Also, some of them are test vehicles, display vehicles and some are used for VIP members, etc.
Car maintenance records left inside the vehicles show that vehicles entered the storage as early as April 24th, while the latest entered on September 4th.The form has time of vehicle’s PDI, charging and cleaning.
What you saw is maintenance record for our test drive vehicles. Also, unlike gasoline vehicles, electric ones need to be regularly charged as to protect the battery, NIO explained.
However, we have not received an answer from NIO on inventory details before publishing the article.
After ES8 entered the market, NIO was saying for quite a while that insufficient production capacity started to affect deliveries. Now it seems that their biggest problem is inventory.
Delivery center employee explained that currently NIO delivers close to 20 units per day in Beijing and most of them are ES6. Employee at NIO HOUSE on Oriental Plaza told us that ES6 sells two to three times more than its predecessor.
Various signs all point to one thing — ES8 is not selling
Based on NIO’s delivery results, the company delivered 4,799 vehicles in Q3, +47% YoY. However, among 4,799 vehicles, only 603 were ES8 model. ES6 made 87.4% of NIO’s sales in the past three months. Judging from these numbers, ES6 sells six to seven times better then his older brother.
ES6 is the NIO’s second mass produced model that entered the market end of last year and officially started with deliveries in June this year. This 5-seat SUV has 510 km range, 4.7 second acceleration to 100 km/h and a RMB 358 K starting price. In comparison, ES8’s starting price is RMB 448 K, range is 425 km and it accelerates to 100 km/h in 4.4 seconds.
NIO really hopes that ES6 will not only improve gross margin and cost efficiency, but also to increase the sales. As Li Bin said: “ES6 is NIO’s strategic product with an aim to enter even more specific market.”
Except being slightly smaller than ES8, ES6 is cheaper and has better capabilities, offers better driving experience, and it does sell better. But this has caused problems for NIO as ES8 sales started to drop since ES6 began with its first deliveries in Q2.
Last December, when ES6 was launched on NIO Day, NIO’s founder and CEO, Li Bin invited the first owners of ES8 as guests. The owners were excited and could not stop applauding. But, when ES6 and its price were revealed, the applause was not so loud anymore. That night, quite a few ES8 owners were not happy about what they saw.
Li Bin later said that it is really not easy telling owners of the first model that the other model is also good.
When speaking of difference between the two models, NIO center salesmen will only say that ES8 is bigger than ES6, but they will add that actually not a lot of people have the need for the car of that size. In fact, some users on company’s app said that despite being anti-ES8, they are crazy about ES6, that they even dream about ES6.
NIO already started to deal with ES8 sluggish sales
Last month, NIO started offering various perks in 22 cities around China. However, since the company earlier announced that it will guarantee for resale price of its EVs and not lower the prices, it limited the ways to clean the inventory.
The problem with ES8 reflects the trouble of EV startups with rapid technology upgrades. Last July, after it released G3 2020 version, XPeng faced class action from the buyers of its first model, who said they were clearly defrauded as the new model had longer range and lower price.
Maybe it is because of this that Lixiang recently decided to skip 2019 version and deliver 2020 version to all customers, including those who paid for 2019 one.
Knockout match between EV startups is getting uglier as the year ends
As a first EV startup share, NIO’s performance is far from ideal. Financial reports show that Q2 recorded RMB 1.509 B in revenue, -7.5% YoY, and RMB 3.286 B in losses, +83.1% YoY.
Beginning of the month, Bernstein’s analyst, Robin Zhu, estimated that NIO has enough cash to keep it going for several weeks, which might mean that over a hundred ES8 in stocks are putting even more pressure on NIO’s cashflow.
Author: ZHANG Nan
Source: IYIOU
Link (Chinese): https://www.iyiou.com/p/115483.html
Translated: Moneyball
