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author/dong yuqing

on september 29, nio announced that it would cooperate with three existing shareholders of nio holdings co., ltd. - hefei jianheng new energy automobile investment fund partnership (limited partnership), anhui high-tech industry investment co., ltd., and sdic investment investment management co., ltd. signed a strategic investment agreement. according to the agreement, strategic investors will invest rmb 3.3 billion in cash to subscribe for newly issued shares of nio china, and nio will also invest rmb 10 billion in cash to subscribe for newly issued shares of nio china.

this is not the first time that nio and anhui have joined hands. since the cooperation in 2020, nio's local investment territory in hefei has continued to expand. in mid-august this year, the first mass-produced vehicle of nio's second brand ledo l60 was rolled out in hefei, anhui. wire. according to reports, orders for ledo l60 exceeded expectations after its launch, and nationwide delivery began on september 28.

01 received blessing from anhui again

although it has joined the leading camp, weilai has been in a situation of "looking for money" in the capital market.

it orange shows that weilai has raised a total of 17 financings since its establishment, 10 of which occurred after the ipo in 2018.

in the financing history of weilai, the most critical financing is related to hefei.

in 2019, changes in the international situation led to a downturn in the u.s. stock market. nio's stock price fell from its peak of $10 to a low of $1.32 in october, with more than 80% of its market value evaporating. at the same time, government subsidies for electric vehicles were cut; the company also experienced multiple spontaneous combustion incidents of batteries have raised public doubts about the quality of its products. these negative incidents have caused nio's market confidence to be frustrated and its operations to be in trouble.

li bin later shared that this year he traveled all over the country to seek capital help, and hefei was the 19th city li bin found.

after the two parties contacted, hefei conducted intensive research and evaluation on nio and finally decided to take action.

in april 2020, the weilai china project was officially signed, and hefei invested rmb 7 billion in it. this was crucial to weilai at the time. it not only provided financial support for weilai, but also helped weilai establish a r&d and production base, deepened cooperation with local industry chain companies such as jianghuai automobile, and laid the foundation for weilai’s subsequent development. development laid the foundation.

as nio settled its china headquarters in the hefei economic development zone, nio has subsequently completed the establishment or relocation of many core business entities such as r&d, sales services, r&d and manufacturing of key components, and autonomous driving.

since then, the development of new energy vehicles in china has surged at a speed far exceeding expectations. the settlement of nio has quickly established the reputation of hefei's new energy automobile industry.

by 2023, the revenue of hefei new energy automobile industry cluster enterprises will reach 350 billion yuan. the annual output of new energy vehicles reached 746,000 units, a year-on-year increase of 1.43 times, accounting for more than 8% of the national total, and the output ranked among the top five cities in the country.

02 nio’s profit torture

back to the original question, why is weilai, which has been established for ten years, still raising funds?

on september 5 this year, weilai released its 2024 q2 financial report. what is eye-catching is that both revenue and delivery volume hit new highs, and net loss narrowed significantly by 16.7% year-on-year. this quarter, nio's delivery volume was also good, with a year-on-year growth of 143.9%. in addition, nio has achieved an average monthly delivery volume of more than 20,000 units for four consecutive months.

despite the frequent positives, every time nio releases a financial report, a core question always surfaces - when will nio become profitable?

especially in 2023, nio's et5 coupe, for which it had high hopes, has difficulty in delivering. it has changed from "difficulty in delivery" to "difficulty in sales." the main model es6 is waiting for a facelift, which has led to a decline in nio's sales. a sharp decrease from the end of last year. at that time, the industry raised many questions about nio’s high r&d and sales expenses, with annual r&d and sales expenses exceeding 10 billion.

at that time, in order to quickly withdraw funds, weilai joined the price war, which increased its sales scale. in july of that year, a key amount of funds came from the middle east. nio received a us$738.5 million strategic equity investment from abu dhabi's sovereign fund cyvn. the other party also spent us$360 million to acquire some old shares from tencent. in december, cyvn once again invested approximately us$2.2 billion in nio, greatly supplementing nio's cash reserves.

weilai has insisted on pursuing long-termism internally. li bin himself has repeatedly emphasized weilai's attitude towards returns on various occasions, "i think if we make a lot of money at our current volume, there will be problems. the industry is capital-intensive and technology-intensive. it is a dense, talent-intensive industry with a very long industrial chain. companies in the industry have experienced decades or hundreds of years of history. some time ago, i had a test drive exchange with yin tongyue, the founder of chery, and i said, mr. yin, you have been doing well recently. he said that i have been in business for 27 years, and the first 24 years were miserable. the last two or three years have been slightly better. i think this is a true portrayal of the automotive industry. there are no quick wins, no luck, even for tesla. , it was only 16 years after its establishment that it became profitable.”

for this reason, weilai has also entered many tracks that require high investment and long payback periods, such as battery replacement and chips. all of these have dragged down weilai's financial performance.

however, the knockout round of china's new energy vehicle industry is entering an unprecedented fierce battle, and weilai has to adjust its pace. such as cutting or postponing projects that cannot increase the company's gross profit within three years, merging overlapping departments and positions, reforming inefficient internal work processes and division of labor, and eliminating inefficient positions to improve operational efficiency.

in a previous financial report meeting, li bin mentioned that if it can achieve 30,000 monthly sales and a gross profit margin of 20%, the nio brand will be able to achieve profitability.

what was before nio was a multiple-choice question. as of june 30, 2024, nio held 41.6 billion yuan (us$5.7 billion) in cash and cash equivalents, restricted cash, short-term investments and long-term time deposits.