On Financing: Opening RMB Financing Channel
Recently, NIO has been constantly announcing financing. Did it meet your expectations?
This is the result of our plans.
Will this storm around Chinese concept stocks affect this financing?
In March and April, more or less all Chinese concept stocks have been affected, so it has certainly affected us too. It affected our valuation. Black swans just keep on coming and there is nothing you can do but to accept it.
NIO also has to invest RMB 4B into NIO China. Was this the plan before the talks?
Not entirely and for two reasons. First, we hoped to have more shares in NIO China. Second, our follow-up overseas fundraisers, including March convertible bond fundraising, still need to enter China to be used, so NIO itself has the need for capital injection.
Earlier, Hefei government posted a microblog saying operative revenue 2020 target for NIO is RMB 14.8B and three models in the market. Is that true?
These are probably their nice wishes or something they wrote while outlining the project, some kind of estimate.
Did NIO’s preferences related to capital change in 2020? It seems that the company did not have deep financial connections to local governments before.
Since 2019, we have started to work in this direction. This is one of our established strategies. Since our US IPO in 2018, US-China relations and global political situation have significantly changed, so we were certain that we need to open RMB fundraising channel.
Opening RMB fundraising channel has to start from some strategic investors that have industrial needs. Once we have their financing, we have a RMB fundraising channel and can turn to Chinese domestic investors.
Earlier, NIO’s contacts with E-Town Capital have received a lot of public attention. Are these contacts completely over now?
After signing with Hefei, we will certainly not cooperate with other local governments in this manner. However, we do not exclude possibility of other types of cooperation with many other RMB investors.
On Competition: A Bit Cruel, But Fun
Government has issued a new subsidy policy. How much good did it bring to NIO?
We are happy to see that the government encourages battery swap technology as battery swap vehicles can still enjoy subsidies. This also shows that our technology development direction was correct. We are happy to see that the country encourages battery swap technology and vehicle-battery separation.
Nowadays, everybody is nervous about Tesla cutting its prices. They feel like this is the a huge blow to the Chinese new energy vehicles. Where do you stand on that?
We will not cut prices. We cannot cut prices and that would be contrary to our principles. The new subsidy policy is good for consumers and there is nothing bad for consumers with Tesla cutting prices.
Does Tesla price going below￥300K bring pressure to EV startups?
But what can you do? Everybody is increasing their product and service ability. It is a bit cruel, but also fun.
This year’s competition is more cruel to NIO or you can relax a bit?
Last year, we already started to pressure tests. We have entered into survival mode before others, so this year is no more difficult than the last one. Compared to last year we built some immunity.
Now that you received RMB 7B, everybody is saying that you said goodbye to being broke. Is this a fair assessment?
We have already entered refined operating mode last year and we will certainly stay in this mode. Few years ago, we made time window our most important target and strategic consideration. Now we want to increase gross margin, increase company’s operating efficiency and make sustainable operation our important goal. At this moment, precision with which we spend money must be a lot higher.
Can you give us an example?
I have said it in March during earning conference call, our 20Q1 loss estimate is over 35% lower compared to Q4 last year.
On Team: Many Improvements in Many Aspects
After new CFO took over, it feels like NIO received a lot of good news from capital market. What specific corrections did NIO make to financing or business models?
Everybody saw the results. After things that our entire team experienced last year, no matter if it is CEO or our original team, we have made many improvements in various aspects. For example, we have intensified communication with the investors, strengthened management efficiency, operative efficiency and so on.
Since 2020, EV startups have been constantly making adjustments to their teams. NIO has also seen a few senior executives leave. Does this imply NIO’s internal structural adjustments or are there different expectations from future developments?
People come and go. I would not put too much into it. Besides, we have many excellent people on our team and some of them need to get the chance to progress.
Senior executive leaving the company does not affect confidence into NIO?
NIO got listed a year ago. Every person makes its own choices. The company is currently making more optimized departmental restructuring. When you have a lot of factors together, a little bit of (employee) turnover is normal.
NIO’s organizational adjustments in 2020 seem to be big? What is the main idea behind them?
Of course they are. Company cannot stay the same forever. Main idea behind the organizational adjustments is refined management, improved operations.
What is the current progress on organizational framework adjustments?
Basically, it is completed.
The team has entered a relatively stable period?
You can say that.
Original source: http://www.iceo.com.cn/com2013/2020/0507/307437.shtml
Author: MA Jiying, GUO Jiaying
English translation/edit: MoneyballR
