NIO's new brand, Alps, is about to make a strong debut, aiming to take a foothold in the home market and challenge Tesla.
Li Bin, chairman of NIO, revealed in a recent earnings conference that the company's core strategy for 2024 is to drive the growth of the Alpine brand. Although NIO's net loss last year was as high as 21.1 billion yuan, the company did not back down and was determined to expand into new areas.
The Alps brand, a new masterpiece of NIO, is scheduled to be officially unveiled in the third quarter of this year, and large-scale deliveries will begin in the fourth quarter. Li Bin said that Alps will have an independent sales network, parallel to the NIO brand, but will share part of the after-sales system and most of the battery swap stations. This strategy aims to reduce operating costs and increase efficiency while maintaining brand independence.
The Alps brand is focused on the home market and has set a long-term profit target of more than 20%. Its first model will be modeled after Tesla's Model Y and claims to cost 10% less than Tesla. In addition, Alps plans to launch an SUV model aimed at large families, which is currently in the development stage and is expected to be launched next year. A third model is also in the works.
In the current fierce competition in the automotive market, the Alps brand has made sales a top priority and plans to establish no less than 200 brand sales stores by the end of the year. This shows NIO's strong desire and determination to gain market share.
However, NIO is also facing significant financial pressure. It is expected that the revenue in the first quarter of this year will be 10.5 billion yuan to 110 billion900 million yuan, far lower than market expectations. The more than 3,000 salespeople that NIO recruited in the second half of last year had to generate more cash flow for the company before the dual-brand sales could be launched. For automotive companies in asset-heavy industries, the scale of cash flow is crucial and is the cornerstone of their sustainable development.
China's auto market is experiencing an unprecedented war, and major car companies have cut prices. On March 1 alone, 9 car companies, including Chery, Changan Qiyuan, and Zhiji, announced price cuts or limited-time discounts. BYD has also launched the "Glory Edition" of a number of models to further explore the ** of hybrid products. The joint venture car companies are not to be outdone, and Volkswagen Lavida has reduced its price by more than 240,000 yuan, Xpeng G6 price reduction of 20,000 yuan may continue until the end of this month.
However, NIO sticks to its main brand margins and is unwilling to sacrifice profits for market share. Li Bin made it clear that the NIO brand will not launch a cheaper model than the ET5, but will adhere to the gross profit orientation. This strategic decision highlights NIO's commitment to brand value and profit margins.
Despite the many challenges, NIO still has some financial reserves. NIO's cash reserves (including cash and short-term and long-term investments, excluding restricted cash) at the end of the year were approximately RMB55.2 billion. The arrival of funds in the Middle East has eased the pressure on NIO's cash flow to a certain extent. However, NIO has 9.8 billion yuan of borrowings due within a year, 29.7 billion yuan of accounts payable to ** merchants, and 15.5 billion yuan of accrued expenses and other current liabilities — a total of 55.1 billion yuan — which does not include the 13 billion yuan of long-term borrowings. Therefore, NIO needs to actively look for new growth points to alleviate financial pressure while maintaining brand value and profit margins.
The launch of the Alps brand is significant for NIO and is expected to be a key step in NIO's growth. However, in the face of fierce market competition and financial pressure, it remains to be tested by the market whether NIO can successfully expand into new areas and maintain stable brand value and profit margins.