Participants:
- William Li, Founder, Chairman, and CEO of NIO
- Qin Lihong, Co-founder and President of NIO
- Wang Qiyan, Vice President of Digital Systems at NIO
- Li Tianshu, Vice President of Product Experience at NIO
- Ren Shaoqing, Vice President of Intelligent Driving R&D at NIO
Question:
Hello, Mr. Li. Today’s Tech Day showcased NIO’s extensive technological capabilities. With the current trend of ambitious car companies investing heavily in self-research and production, is there a risk that this investment might require a long-term commercial model to sustain itself? Could it impact NIO’s original profitability plans?
William Li:
It’s not too much of a concern. If you look at our R&D expenses, 60%-70% are fundamental, not tied to any specific model or brand. These technologies are applicable across all brands and models.
This is a characteristic of smart electric vehicles. Previously, platform-level technologies in the automotive industry were also developed, but today’s smart EV platform technologies are an order of magnitude more advanced.
For example, SkyOS can serve as the base for all models and brands, making our R&D investment very efficient.
However, the difficulty lies in setting up the foundation, which is slightly more challenging and requires a longer investment period.
For instance, the investment in SkyOS is substantial and continues to grow monthly. This is something not every company is willing to do, especially traditional automakers who focus on components.
We, as a smart EV company, should look at things in a decoupled manner. Our full-stack technology diagram shows a layered and decoupled approach.
Even if NIO were to sell a million units annually, our investment in fundamental R&D wouldn’t increase significantly. This is the benefit of a well-developed platform in smart and electric vehicle technology.
NIO has always pursued an extreme approach in this regard. For example, our battery packs are decoupled from the car, meaning one battery pack specification can be used across one to two generations of models.
In the future, once battery forms stabilize and high-voltage platforms are standardized, even four or five generations of models can use the same battery pack, similar to how AA batteries haven’t changed much over the years. This underlying platform capability is something NIO has been continuously building over the years.
At first, it may seem like a lot of money, but once you start operating this way, things become easier as you progress.
I often use the analogy of building a foundation. The depth of your foundation depends on whether you’re building a five-story building or a hundred-story skyscraper.
We aim to lay the foundation for a hundred-story building. Once above ground, each floor can be constructed quickly. Not every company is willing or able to do this.
As mentioned, not every company can survive to see the results.
I believe that over time, models like the NIO ET9 will gradually show their value.
Question:
NIO has never advocated for competing on price. What is NIO competing on, considering we see NIO has many patents?
William Li:
Talking about patents can sometimes seem excessive. The quantity of patents is one thing, but quality is another. It’s challenging to evaluate quality. In the end, a company must rely on its foundational technical capabilities to win long-term competition.
Does your product meet users’ needs? Is your service efficient and satisfactory? Can you achieve your own set goals?
At NIO, our vision is to create a unique NIO community culture. So, we look at a company’s long-term competitiveness from four dimensions: technology, products, services, and community. This is how we assess areas for improvement and areas where we’re doing well, iterating accordingly. Thank you.
Question:
I remember hearing the terms “core” and “soul” today. What distinguishes NIO’s SkyOS from systems like Xiaomi’s Surge and Huawei’s HarmonyOS? How does its development differ from smartphone or PC operating systems?
William Li:
Leading tech companies increasingly recognize the importance of operating systems. Each company’s approach differs.
For NIO, we focus on the car, emphasizing stability, data throughput, bandwidth, and latency, crucial for vehicle safety and performance.
While we also explore panoramic connectivity and devices like the NIO Phone, our core remains centered on automotive applications.
Each company’s unique DNA shapes its approach. NIO’s DNA focuses on user benefits, such as zero ads and pre-installed software, differing from others.
While we learn from others like HarmonyOS, there are significant differences.
Question:
SkyOS was demonstrated today, showing its integration with various functions, including battery swapping. Does NIO plan to share SkyOS technology with other companies?
William Li:
Today’s smart electric vehicles use various systems, often fragmented, leading to inefficiencies.
NIO’s SkyOS is an original, comprehensive operating system tailored for vehicles, providing superior performance in critical areas.
Internally, we use SkyOS for multiple brands and models, ensuring high efficiency.
We are open to sharing our system, starting with internal use and then with partners. Eventually, we may open it to other automakers, similar to our approach with battery swapping stations.
Question:
How is the recent organizational adjustment in NIO’s intelligent driving team structured, and what prompted it?
Ren Shaoqing:
Today’s theme is AI-native, and intelligent driving systems are evolving from separate modules (e.g., perception, fusion, planning) to an integrated model. Previously, different teams focused on specific tasks; now, we aim for a unified, end-to-end approach.
The organizational changes align with this technical shift, enhancing development efficiency and effectiveness.
Question:
NIO’s technology and innovation often require long-term investment before yielding results. Do you feel this focus on long-term value creation might be disadvantageous in the short term?
William Li:
There are lessons learned regarding product definition and user-perceived value. While long-term foundational investments are crucial, high-value, high-perception features should also receive attention.
For example, the ES8 is an example of a comprehensive, well-defined product offering.
However, fundamental technology has no shortcuts. NIO’s commitment to forward engineering since 2015 is evident in our robust foundation.
We can learn from others in certain areas, such as enhancing product appeal with user-friendly features.
Question:
Regarding intelligent driving, how does NIO view the industry’s competitive landscape, especially compared to companies like Tesla, which focuses on pure vision-based systems?
William Li:
More reliable sensors and greater computational power are generally beneficial. The role of technologies like LiDAR varies depending on the model and stage.
Using safety features as an analogy, more airbags can be beneficial, but the layout and specific application matter.
For NIO, LiDAR is standard on our third-generation platform, addressing various perception needs. Different brands and models will have different configurations based on their target markets and pricing.
Overall, the key is to provide accurate and reliable information, regardless of the specific technology used.
Question:
Considering NIO’s long-term technical investments, how does the company balance visible value creation with these foundational efforts?
William Li:
We acknowledge that certain high-perception features and experiences could have been emphasized more in product definitions.
However, NIO remains committed to foundational technologies, as these will bring long-term benefits. It’s essential to balance both high-perception and fundamental investments.
Our forward engineering approach, from the bottom up, provides a solid foundation for innovation and development.
Question:
How does NIO view the notion of a “moat” in the intelligent driving industry, considering companies like Xiaopeng Motors highlight this concept?
William Li:
We view the industry as a long-term marathon, where early claims of a “moat” may be premature. The rapid evolution of technology means the competitive landscape is still in its early stages.
NIO focuses on continuous, diligent development, staying true to our core principles and technologies. We recognize the industry’s long-term nature and are committed to playing the long game.
Question:
With a significant proportion of NIO’s customers transitioning from traditional high-end brands like BBA, what do these customers value most in NIO?
Qin Lihong:
NIO customers, especially those transitioning from traditional luxury brands, value several key aspects:
- Range and Charging Solutions: NIO’s comprehensive charging and battery swap infrastructure alleviates range anxiety for customers transitioning to electric vehicles.
- Intelligent Features: Many luxury cars have limited intelligent features, whereas NIO offers advanced smart experiences that appeal to tech-savvy users.
- Brand and Community: NIO’s focus on building a high-end brand community resonates with customers, ensuring they don’t feel a downgrade in quality or status.
These factors collectively attract customers from traditional high-end brands to NIO.
William Li: We have a slogan: “BBA’s next car is NIO.”
Question:
In 2024, NIO isn’t releasing any new models. Will the current lineup, including the 2024 versions, support sales growth?
Qin Lihong:
Our sales have been steadily increasing. We aim for long-term growth rather than rapid spikes. Since May, we’ve reached a stable level of around 20,000 units per month.
We don’t release weekly sales forecasts or unauthorized data. Our focus is on sustainable, high-quality growth.
William Li: Quarterly financial reports provide a more accurate picture of performance than weekly updates.
Question:
How do potential geopolitical issues, such as U.S. chip policies, impact NIO and the Chinese EV industry?
William Li:
U.S. restrictions on Chinese chip access have already impacted the industry, particularly in cloud-based training chips. While this poses challenges, we are exploring alternative solutions, including leveraging collective intelligence and focusing on end-side chips.
Overall, we are prepared to adapt to changes in the geopolitical landscape.
Question:
Can you share the journey of developing SkyOS, including the challenges faced and its impact on the industry?
William Li:
NIO started developing SkyOS around 2020, with a strong focus on foundational software capabilities. Our team, including key members from Silicon Valley, emphasized the need for an original system to support cross-domain functions and integration.
SkyOS represents a significant long-term investment, focusing on building a solid foundation. We are committed to this path, ensuring a comprehensive and high-quality platform for our vehicles.
The decision to develop SkyOS was driven by a clear vision of the future of intelligent vehicles and the need for a unified, efficient system.
Question:
Does NIO have plans for further developing household products or expanding into areas like shared charging solutions?
William Li:
While we’re exploring various technological innovations, our primary focus remains on automotive applications and enhancing the car experience. We do not currently plan to enter the household product market or compete in areas like shared charging solutions.
Our strength lies in creating seamless experiences in the automotive space, and we will continue to build on that.
Question:
How does NIO’s intelligent driving and AI strategy compare to competitors like Huawei and Xiaopeng?
William Li:
The intelligent driving and AI space is highly competitive, with each company adopting different strategies. NIO focuses on building a comprehensive technology stack, including foundational software, hardware integration, and user experience.
Our approach emphasizes long-term sustainability and user satisfaction. While we recognize the strengths of our competitors, we remain confident in our strategy and continue to innovate across all areas.
Question:
What role does NIO’s phone play in the company’s ecosystem, and how does it compare to other market players?
William Li:
NIO’s phone is an integral part of our ecosystem, providing a seamless experience between the car and mobile devices. Unlike many other phones on the market, NIO’s phone emphasizes a pure, ad-free user experience with deep integration into NIO’s vehicle features.
While we don’t aim for high volume, we focus on delivering a premium experience, particularly for NIO users. The phone’s hardware and software are carefully curated to align with our brand values and customer expectations.
Question:
How does NIO handle compatibility with third-party components and standards like AUTOSAR?
Wang Qiyan: We’ve developed tools to convert existing standards to work with SkyOS, but our system is designed to handle more complex applications and data processing needs. While short-term solutions exist for compatibility, our long-term goal is to provide a robust, native environment for automotive applications.
Question:
What are the unique advantages and challenges NIO faces in developing an automotive operating system?
Qin Lihong: Developing an operating system like SkyOS is a crucial step towards becoming a leading automotive power. It allows us to control the entire user experience and ensures our vehicles meet the highest standards.
William Li: SkyOS improves user experience and vehicle safety, enhancing our long-term competitiveness and profitability. It allows us to standardize components, reduce costs, and improve quality across our vehicle lineup.
The primary challenge is the substantial upfront investment required for development, but we believe this will pay off in the long run.
Question:
How does NIO plan to manage the training and development of AI models, considering the limitations in computational resources?
Ren Shaoqing: NIO uses a combination of edge and cloud-based computing, leveraging collective intelligence to gather and refine data. This approach helps us focus on the most valuable data, optimizing our training processes and reducing dependency on extensive computational resources.
William Li: We aim to make our training processes as efficient as possible, focusing on quality over quantity.
Question:
Is NIO planning to make its car-phone integration features available on other smartphones?
William Li: Our NIO Phone offers unique hardware features and deep integration with our vehicles. While some features may eventually be available on other devices, our primary focus is providing the best experience on NIO’s own hardware.
Question:
How does NIO view the long-term investment in automotive operating systems, and what is the expected return on investment?
William Li: The investment in automotive operating systems is significant but necessary for maintaining a competitive edge. NIO’s strategy is to invest in foundational technologies that will yield long-term benefits, including improved profitability and user experience.
We are committed to this path, recognizing that it is essential for achieving our vision of becoming a leading player in the intelligent electric vehicle market.
Question:
What can customers expect from NIO’s upcoming technologies and products, and how does NIO plan to communicate these developments?
William Li: We plan to release several significant updates and new technologies in the coming quarters, including advancements in intelligent driving and user experience.
Our goal is to provide our customers with a comprehensive and enjoyable experience, leveraging our technology stack to deliver innovative solutions. We will continue to engage with our customers and the public through events like NIO IN to share our progress and vision.
