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Elon Musk's China Nemesis Survived Once, But He Has a Fight Ahead

(Bloomberg) -- William Li is being mobbed. At a gala dinner in Shanghai, the founder of Chinese elec

Elon Musk's China Nemesis Survived Once, But He Has a Fight Ahead

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{"i18n":{"language":"zh_CN"},"data":{"magic":2,"id":186808708,"tweetId":"186808708","gmtCreate":1623481993204,"gmtModify":1631892551311,"author":{"id":3577139149377347,"idStr":"3577139149377347","authorId":3577139149377347,"authorIdStr":"3577139149377347","name":"DSS","avatar":"https://static.laohu8.com/default-avatar.jpg","vip":1,"userType":1,"introduction":"","boolIsFan":false,"boolIsHead":false,"crmLevel":2,"crmLevelSwitch":0,"individualDisplayBadges":[],"fanSize":3,"starInvestorFlag":false},"themes":[],"images":[],"coverImages":[],"extraTitle":"","html":"<html><head></head><body>Cool</body></html>","htmlText":"<html><head></head><body>Cool</body></html>","text":"Cool","highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"link":"https://laohu8.com/post/186808708","repostId":2142271199,"repostType":4,"repost":{"id":"2142271199","kind":"news","pubTimestamp":1623395400,"share":"https://ttm.financial/m/news/2142271199?lang=&edition=full","pubTime":"2021-06-11 15:10","market":"us","language":"en","title":"Elon Musk's China Nemesis Survived Once, But He Has a Fight Ahead","url":"https://stock-news.laohu8.com/highlight/detail?id=2142271199","media":"Bloomberg","summary":"(Bloomberg) -- William Li is being mobbed. At a gala dinner in Shanghai, the founder of Chinese elec","content":"(Bloomberg) -- William Li is being mobbed. At a gala dinner in Shanghai, the founder of Chinese electric carmaker Nio Inc. can barely move forward in the buffet queue before being stopped for another selfie, handshake or hug. Swapping his usual attire of jeans and a T-shirt for a tailored grey suit and blue dress shirt, the tall 46-year-old happily obliges with a smile.\nLi manages to spoon a small amount of fried rice and vegetables onto his plate, but he’s not here for the food. Over the next three hours, Li&nbsp;poses for hundreds more photos, chatting with customers of the automaker&nbsp;he started&nbsp;just over six years ago and has built into a way of life —&nbsp;at least for the people who buy his cars —&nbsp;with clubhouses, a round-the-clock battery recharging service and even clothing, food and exercise equipment, all decked out in Nio’s geometric logo. As Li works the room, a video backdrop shows six performers, each wearing a different-colored Nio hoodie, singing a self-composed song dedicated to the company. “Meeting with Nio, we want to be better selves,’’ the not-so-catchy ditty goes.\nWhile other billionaire executives may cringe at spending their down time glad-handing customers, for Li this is core. Nio’s&nbsp;business model relies on creating a&nbsp;sense of allegiance among buyers, who then persuade friends and family to spread the word about its&nbsp;cars. Dubbed “Rippling Mode,’’ the strategy invokes the ever-widening circles caused by throwing a single stone into a pond, Li says. The scene in Shanghai was just what he&nbsp;was aiming for: a passionate customer base with the loyalty of Apple Inc. fans&nbsp;—&nbsp;and a dash of Elon Musk cult-of-personality thrown in.\nIt’s an approach that’s turned Nio into Musk’s most visible nemesis in a country that seems to be minting&nbsp;Tesla adversaries&nbsp;every other day. While other electric vehicle companies may pump out more cars&nbsp;aimed at the mass market, Nio is targeting the&nbsp;premium buyers that Musk —&nbsp;who established his first Gigafactory outside the U.S. on the outskirts of Shanghai in 2019&nbsp;—&nbsp;needs to realize his ambitions for global growth and long-term profitability. China is ground-zero in the transition away from gas-guzzlers to alternative-energy cars, with the government intent on dominating a new automotive era that has triggered an onslaught of investment over the past six months and that even the U.S. is now embracing.\nThe biggest car market on the planet, China is already the world’s largest for EVs. Sales will reach 2 million this year and surge to 6.2 million vehicles by 2025, when they will account for a quarter of all passenger car sales in the country, according to BloombergNEF.\nUrbane, early adopters in China’s biggest cities have been at the heart of that transition, and are prime targets for both Nio and Tesla. Nio’s premium ES6 SUV competes head-to-head with the sporty Model Y that&nbsp;Tesla started making in China last year. It’s a tussle that’s front and center for Li, who in an interview with Bloomberg talked about how the eldest of his two sons, a first grader, wants to follow in his footsteps.\n“One day he told me that he would study hard and work hard, helping dad beat Tesla when he grows up,” said Li. “It’s going to be too late, I said.”\nThese days, that prospect is looking less like wishful thinking.\nNio delivered more than 20,000 vehicles, all of them SUVs,&nbsp;in the first quarter at an average price of $68,000, while Tesla shipped&nbsp;around 17,000 of its Model Y sports utility vehicle in China, which&nbsp;starts at&nbsp;around $53,000.&nbsp;Nio's share of the overall China market for higher end&nbsp;cars is second only to Tesla, according to Kang Jun, an analyst at consultancy LMC Automotive, and it's set a “benchmark”&nbsp;for the wider EV space, “particularly in product and service innovation.”\nTesla&nbsp;has also faced a raft of setbacks of late in China, which accounted for more than 20% of all revenue last year. Increased scrutiny from local regulators has been accompanied by a rising backlash against Tesla and its cars, culminating in <a href=\"https://laohu8.com/S/AONE\">one</a> owner climbing on top of a Model 3 at the recent Shanghai Auto Show, claiming the company failed to address issues with her vehicle’s brakes. The protest, which went viral in China, unleashed a wave of complaints about Tesla’s customer service, the very thing Li —&nbsp;who regularly&nbsp;replies to queries from Nio owners on the company’s app and has taken&nbsp;weekend trips across China to meet customers —&nbsp;has used to differentiate Nio in the cut-throat EV landscape.\nBut Tesla isn’t the only foe&nbsp;Li has to worry about. A Battle Royale is brewing in China’s&nbsp;new energy car market —&nbsp;where retail sales of battery-powered passenger vehicles&nbsp;jumped 10% to 1.11 million&nbsp;last year, despite the&nbsp;hit from the pandemic —&nbsp;<a href=\"https://laohu8.com/S/AONE.U\">one</a> that will challenge both Nio and Tesla, and set the stage for global control over the future of cars.\nAfter years watching from the sidelines, the big auto-making giants are doubling down on EVs, with Volkswagen AG launching an eight-car range from its platform designed for battery electric cars&nbsp;in China, Toyota Motor Corp. unveiling a new EV&nbsp;platform, and premium carmakers like BMW AG aiming for&nbsp;one-quarter&nbsp;of all Chinese sales to be electric. At the same time, Big Tech is eyeing the sector, lured by the technological possibilities. Chinese search-engine titan Baidu Inc. to smartphone maker Xiaomi Corp. and networks giant Huawei Technologies Co. have pledged almost $19 billion into the EV and autonomous driving space since the start of the year alone.\nSmaller companies like Nio —&nbsp;which is listed with compatriots Xpeng Inc. and Li Auto Inc. in New York, putting them on the radar of U.S. investors —&nbsp;will face greater pressure as multinationals enter the fray, said Zhang Xiang, an auto-industry researcher at North China University of Technology in Beijing.\n“It’s by no means a time they can rest easy.”\nNio has already had one near-death experience.\nCarmaking is typically a capital-intensive business, but with Nio, Li has sought to create a brand beyond the vehicles, an approach he describes as “the pursuit of being a user-enterprise.’’ The most visible manifestation of that was the&nbsp;Nio House,&nbsp;an elite drop-in center for the company’s customers —&nbsp;even offering art and music classes for their kids —&nbsp;and located on prime real estate in some of China’s biggest cities. It was coupled with extravagant marketing events. The carmaker holds annual Nio Days,&nbsp;and at the first in 2017 paid for flights and luxury&nbsp;hotels for&nbsp;everyone who&nbsp;ordered a vehicle a year before production started. R&amp;B star Bruno Mars headlined the 2018 event. When its public charging facilities are&nbsp;overwhelmed, Nio has&nbsp;a fleet of cars that can&nbsp;take portable battery chargers to users wherever they’re&nbsp;parked.\nSuch largesse, along with a&nbsp;major recall&nbsp;after some cars caught fire&nbsp;just&nbsp;as China shifted subsidies from EV purchases to support the charging network, saw Nio rack up $5 billion of losses in its first four years of existence (Tesla took about 15 years to reach that particular milestone). By the second quarter of 2019, the company was losing around $5 million a day.\n“It was our darkest time,’’ Li said. A team met nightly to comb through expenses, from salaries to the cost of Nio Houses. “It was easy to calculate how much we could earn from selling cars, but we had to mind for everything to sustain a normal operation,’’ he said. “Every dollar counted.”\nBy October 2019, it looked like the gig was up. After posting a worse-than-expected quarterly loss, Nio’s shares plunged to a record low of $1.32. At its nadir, the carmaker had lost more than 70% of its market capitalization —&nbsp;about $5 billion in value&nbsp;—&nbsp;from&nbsp;its New York initial public offering a year earlier.\nEven a $200 million cash injection from a sale of convertible notes to Li and an affiliate of Chinese tech giant Tencent Holdings Ltd. —&nbsp;an early investor in both Nio and Tesla — wasn’t enough to shore up the company’s seemingly insatiable need for cash.\nThe setbacks kept coming. Nio couldn’t afford the final payment on an imported&nbsp;stamping presser, a large machine used to shape a car’s panels. Worse, it had to sell the presser at a discount to Tesla, which promptly installed it in its new Shanghai plant, built with loans and support facilitated&nbsp; by the government. Soon after, a deal for as much as 10 billion yuan ($1.6 billion) in funding from a Beijing local government-backed firm fell apart. Analysts started to openly speculate that Nio may be delisted or taken over. The situation got so dire that in late 2019, He Xiaopeng, the engineer founder of Guangzhou-based Xpeng, itself in a tenuous position with just 3 billion yuan in cash, proposed a merger of the two struggling electric carmakers, according to an interview He gave to Chinese state media. Li rejected the offer.\n“Nio was already in the intensive care unit, while Xpeng was waiting outside,’’ Li recalled. “A merger would bury both of us.”\n(Xpeng went on to be the third&nbsp;Chinese EV startup to list in the U.S., raising $1.5 billion in August 2020. The surge of investment in the space has seen its shares more than double, even accounting for a recent dip, and the company is now setting up a third&nbsp;Chinese production base to meet demand.)\nThen came the lifeline that showed the lengths China will go to maintain its ambition of creating a world-leading EV industry.\nIn early 2020, the municipal government in Hefei —&nbsp;the capital of Li’s home province of Anhui, about 600 miles southeast of Beijing —&nbsp;came knocking. Despite the onset of the coronavirus pandemic, which initially paralyzed car sales, a deal was struck in which the Hefei government would lead an injection of 10 billion yuan into Nio, more than the company’s entire revenue for 2019.\nComing just months after Nio said it wouldn’t have enough money to&nbsp; continue operating&nbsp;for another year unless it got more funds, the agreement&nbsp;essentially provided the company with a state-backed security blanket. That can be&nbsp;a key advantage in China, where the government is the biggest player in almost every industry and has a hand in everything from manufacturing permits to access to capital. It&nbsp;could also provide a decisive edge over Tesla, which seems to have lost the favor it enjoyed early on with Beijing, as tensions with Washington continue to simmer under President Joe Biden’s administration.\nFor Nio, the quid-pro-quo was supporting local industry. The company abandoned plans to build a factory in Shanghai in early 2019, and instead —&nbsp;unlike Tesla and most traditional automakers —&nbsp;it pays a government-owned manufacturer in Hefei called Jianghuai Automobile Group Co., or JAC, to make its cars. The deal was extended last month&nbsp;for another three years, with JAC agreeing to double monthly capacity to 20,000 vehicles.\n“When William Li brought his proposal to us, most people thought it was fantasy that a Chinese carmaker planned to build first-rate intelligent electric vehicles,’’ former JAC Chairman An Jin said. &nbsp;“I might be the person with the best knowledge of how Nio came along, with all the challenges and difficulties. In its hardest time, William even devoted his own money to solve the problem. That’s how he fought for his dreams.’’\nAt an April 7 ceremony to mark the production of Nio’s 100,000th vehicle, Li said he would work with the Hefei government to establish an intelligent-vehicle production base, including an R&amp;D facility. Construction started later that month, and the industrial park is expected to eventually house manufacturing workshops, along with other players in the EV supply chain.\nThe Hefei pact,&nbsp;described as a government bailout by Sanford C. Bernstein’s senior analyst Robin Zhu,&nbsp;“put speculation around Nio’s funding issues to bed, at least in the foreseeable future,” he said.\nLi, though, also credits his loyal customer base. “We sold over 8,000 cars in the fourth quarter of 2019, which was pivotal to our survival,’’ he said. “That’s why I always say that our customers saved us. Even if we sold 500 or 1,000 fewer vehicles, that could have triggered a total collapse.’’\nStill, the experience was chastening. Nio cut about a quarter of its workforce, slowed its efforts&nbsp;on autonomous driving, delayed wage payments for managers and spun off some non-core businesses. While the rollout of the costly Nio Houses was suspended for more than a year, the strategy of&nbsp;putting Nio ownership at the center of an owners’ lifestyle and creating an aura of exclusivity, wasn’t forsaken&nbsp;with more modest Nio Spaces&nbsp;rolled out. Usually around 100-200 square meters (1,100-2,150 square feet), Nio Spaces are located in cheaper locales and also sometimes in smaller cities. They&nbsp;cost about 1 million yuan to set up, much less expensive&nbsp;than the more salubrious Nio Houses.\nIt seems to have worked —&nbsp;for now. Nio is still yet to turn a profit but&nbsp;its sales have risen steadily since —&nbsp;topping $1 billion for the first time in the three months to Dec. 31, 2020. The company narrowed its net loss in the first quarter of 2021 to 451 million yuan, down from 1.69 billion yuan a year earlier and 1.39 billion yuan in the fourth quarter of 2020. Even the&nbsp;businesses that underpin Nio’s lifestyle brand are making money, contributing to 1.1 billion yuan in revenue from non-vehicle sales last year,&nbsp;according to the company’s annual report.\n“To enter the car industry and survive isn’t easy,’’ said Jochen Goller, BMW’s China CEO. “Some others have disappeared. I have met with William Li a couple of times and I have to say I am impressed by what he has achieved. Nio is also creating awareness for battery cars, and having the right brands in the segment is helping the market.’’\nThe Hefei deal also came around the same time as investors cottoned on to the EV revolution, putting a rocket under Nio’s shares. They surged more than 1,110% last year, besting even the rally that propelled Tesla into the S&amp;P 500 Index. The stock has given up some of those gains since as enthusiasm has eased, but with a market value of $70 billion, Nio is still bigger than Ford Motor Co.\nIt’s a long way from Li’s relatively humble beginnings. Raised by his grandparents in a small village in the hills of Anhui, known for farming and —&nbsp;more recently —&nbsp;the automobile industry, Li calls himself one of China’s “first generation of `left-behind’ children’’ because both his parents moved to the neighboring province of Jiangsu&nbsp;to pursue better work. There was no electricity in the village until Li was in his teens.\nWhile majoring in sociology at Peking University, one of China’s top colleges, Li started his first business —&nbsp;leasing internet servers and helping clients register domain names. The auto industry is where Li has enjoyed his greatest success, however, with the three listed companies he founded in the past 20 years all related to cars. His first, a vehicle-pricing portal called BitAuto Holdings Ltd. was acquired last year by Yiche Holding Ltd. for $2.8 billion, propelling Li’s personal fortune to $7 billion.&nbsp;That was followed by online auto-finance platform Yixin Group Ltd., which listed in Hong Kong in late 2017.\nThen came Nio. In an internal presentation in 2016, Li recalled looking out the window of his apartment at Beijing’s smoggy skies before the birth of his first son, and decided something needed to be done to tackle the country’s chronic pollution. He started Nio in late 2014&nbsp;with funding from a group of well-known investors, including Li Auto founder Li Xiang and Richard Liu, the founder of e-commerce portal JD.com. Xiaomi’s Lei Jun was also an early backer.\nWhen he’s not dining with super-fans, Li’s workday calendar is packed. On a recent Tuesday at the company’s corporate headquarters —&nbsp;which remain in the slick financial capital of Shanghai —&nbsp;he spent the morning locked in executive committee meetings. In the afternoon, it was more back-to-back meetings with the company’s battery partner, designers, and clients from Europe. In a first, Nio recently announced plans to start selling cars in EV hotbed Norway.\nBut while the company is on much firmer ground than&nbsp;18 months ago, questions remain.\n“Auto manufacturing has big economies of scale, and at less than 100,000 units a year, Nio hasn’t yet reached the production volume to realize all of those efficiencies,” said Robert Cowell, an equity analyst at Shanghai-based 86Research.\nCost issues linger, with the price of raw materials used in batteries, the most expensive part of an EV, including lithium-ion compound, soaring in recent months. Like most global automakers, Nio has also been hit by a worldwide shortage of the chips used increasingly in modern cars, leading to the suspension of production in Hefei for five days at the end of March. And despite the intensifying competition in an industry defined by technological advances and consumers drawn to the next shiny thing, Nio isn’t planning on unveiling any new models until late this year or early 2022.\nRead more: Why Nio Should Resist the Siren Song of Norway\nWhile Tesla is the main competitor in view, it’s the rivals to come that Li sees as the biggest threat.\n“The final game won’t start until tech giants are in,” he said. In March,&nbsp;Xiaomi unveiled plans to invest about $10 billion in manufacturing EVs, while Huawei has collaborated on at least two cars and is developing autonomous driving technologies.&nbsp;Lurking in the background is the biggest tech giant of all —&nbsp;Apple, which has long harbored ambitions to make its own, self-driving car.\n“I trust companies like Apple for their determination, software development, intelligence capability, and user connection,’’ Li said. “It’s going to be different competition from traditional car companies.”\nBut like Musk and other EV evangelists, Li is looking to the long game.&nbsp;“I’m very optimistic,” he said. “By 2030, 90% of the newly launched cars will be electric, or even 95%.”\nFor the Nio fans gathered in Shanghai that Sunday evening, that future is already here.\nWith&nbsp;the event drawing&nbsp;to a close, owners pose for a large group photo with Li at its center, everyone flashing thumbs up. As the lights dim, Li slips out of the hall and into the night, where his driver —&nbsp;in a white Nio ES8 —&nbsp;waits to take him home.","source":"yahoofinance","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Elon Musk's China Nemesis Survived Once, But He Has a Fight Ahead</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nElon Musk's China Nemesis Survived Once, But He Has a Fight Ahead\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-06-11 15:10 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://finance.yahoo.com/news/elon-musks-china-nemesis-survived-063010688.html>Bloomberg</a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n(Bloomberg) -- William Li is being mobbed. At a gala dinner in Shanghai, the founder of Chinese electric carmaker Nio Inc. can barely move forward in the buffet queue before being stopped for another ...\n\n<a href=\"https://finance.yahoo.com/news/elon-musks-china-nemesis-survived-063010688.html\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"AAPL":"苹果","CAAS":"中汽系统","JD":"京东","F":"福特汽车","TSLA":"特斯拉","K3SD.SI":"u BIDU ADR US$+","TM":"丰田汽车","XIACF":"Xiaomi Corp.","LI":"理想汽车","BIDU":"百度","JDCMF":"JD.com, Inc."},"source_url":"https://finance.yahoo.com/news/elon-musks-china-nemesis-survived-063010688.html","is_english":true,"share_image_url":"https://static.laohu8.com/5f26f4a48f9cb3e29be4d71d3ba8c038","article_id":"2142271199","content_text":"(Bloomberg) -- William Li is being mobbed. At a gala dinner in Shanghai, the founder of Chinese electric carmaker Nio Inc. can barely move forward in the buffet queue before being stopped for another selfie, handshake or hug. Swapping his usual attire of jeans and a T-shirt for a tailored grey suit and blue dress shirt, the tall 46-year-old happily obliges with a smile.\nLi manages to spoon a small amount of fried rice and vegetables onto his plate, but he’s not here for the food. Over the next three hours, Li poses for hundreds more photos, chatting with customers of the automaker he started just over six years ago and has built into a way of life — at least for the people who buy his cars — with clubhouses, a round-the-clock battery recharging service and even clothing, food and exercise equipment, all decked out in Nio’s geometric logo. As Li works the room, a video backdrop shows six performers, each wearing a different-colored Nio hoodie, singing a self-composed song dedicated to the company. “Meeting with Nio, we want to be better selves,’’ the not-so-catchy ditty goes.\nWhile other billionaire executives may cringe at spending their down time glad-handing customers, for Li this is core. Nio’s business model relies on creating a sense of allegiance among buyers, who then persuade friends and family to spread the word about its cars. Dubbed “Rippling Mode,’’ the strategy invokes the ever-widening circles caused by throwing a single stone into a pond, Li says. The scene in Shanghai was just what he was aiming for: a passionate customer base with the loyalty of Apple Inc. fans — and a dash of Elon Musk cult-of-personality thrown in.\nIt’s an approach that’s turned Nio into Musk’s most visible nemesis in a country that seems to be minting Tesla adversaries every other day. While other electric vehicle companies may pump out more cars aimed at the mass market, Nio is targeting the premium buyers that Musk — who established his first Gigafactory outside the U.S. on the outskirts of Shanghai in 2019 — needs to realize his ambitions for global growth and long-term profitability. China is ground-zero in the transition away from gas-guzzlers to alternative-energy cars, with the government intent on dominating a new automotive era that has triggered an onslaught of investment over the past six months and that even the U.S. is now embracing.\nThe biggest car market on the planet, China is already the world’s largest for EVs. Sales will reach 2 million this year and surge to 6.2 million vehicles by 2025, when they will account for a quarter of all passenger car sales in the country, according to BloombergNEF.\nUrbane, early adopters in China’s biggest cities have been at the heart of that transition, and are prime targets for both Nio and Tesla. Nio’s premium ES6 SUV competes head-to-head with the sporty Model Y that Tesla started making in China last year. It’s a tussle that’s front and center for Li, who in an interview with Bloomberg talked about how the eldest of his two sons, a first grader, wants to follow in his footsteps.\n“One day he told me that he would study hard and work hard, helping dad beat Tesla when he grows up,” said Li. “It’s going to be too late, I said.”\nThese days, that prospect is looking less like wishful thinking.\nNio delivered more than 20,000 vehicles, all of them SUVs, in the first quarter at an average price of $68,000, while Tesla shipped around 17,000 of its Model Y sports utility vehicle in China, which starts at around $53,000. Nio's share of the overall China market for higher end cars is second only to Tesla, according to Kang Jun, an analyst at consultancy LMC Automotive, and it's set a “benchmark” for the wider EV space, “particularly in product and service innovation.”\nTesla has also faced a raft of setbacks of late in China, which accounted for more than 20% of all revenue last year. Increased scrutiny from local regulators has been accompanied by a rising backlash against Tesla and its cars, culminating in one owner climbing on top of a Model 3 at the recent Shanghai Auto Show, claiming the company failed to address issues with her vehicle’s brakes. The protest, which went viral in China, unleashed a wave of complaints about Tesla’s customer service, the very thing Li — who regularly replies to queries from Nio owners on the company’s app and has taken weekend trips across China to meet customers — has used to differentiate Nio in the cut-throat EV landscape.\nBut Tesla isn’t the only foe Li has to worry about. A Battle Royale is brewing in China’s new energy car market — where retail sales of battery-powered passenger vehicles jumped 10% to 1.11 million last year, despite the hit from the pandemic — one that will challenge both Nio and Tesla, and set the stage for global control over the future of cars.\nAfter years watching from the sidelines, the big auto-making giants are doubling down on EVs, with Volkswagen AG launching an eight-car range from its platform designed for battery electric cars in China, Toyota Motor Corp. unveiling a new EV platform, and premium carmakers like BMW AG aiming for one-quarter of all Chinese sales to be electric. At the same time, Big Tech is eyeing the sector, lured by the technological possibilities. Chinese search-engine titan Baidu Inc. to smartphone maker Xiaomi Corp. and networks giant Huawei Technologies Co. have pledged almost $19 billion into the EV and autonomous driving space since the start of the year alone.\nSmaller companies like Nio — which is listed with compatriots Xpeng Inc. and Li Auto Inc. in New York, putting them on the radar of U.S. investors — will face greater pressure as multinationals enter the fray, said Zhang Xiang, an auto-industry researcher at North China University of Technology in Beijing.\n“It’s by no means a time they can rest easy.”\nNio has already had one near-death experience.\nCarmaking is typically a capital-intensive business, but with Nio, Li has sought to create a brand beyond the vehicles, an approach he describes as “the pursuit of being a user-enterprise.’’ The most visible manifestation of that was the Nio House, an elite drop-in center for the company’s customers — even offering art and music classes for their kids — and located on prime real estate in some of China’s biggest cities. It was coupled with extravagant marketing events. The carmaker holds annual Nio Days, and at the first in 2017 paid for flights and luxury hotels for everyone who ordered a vehicle a year before production started. R&B star Bruno Mars headlined the 2018 event. When its public charging facilities are overwhelmed, Nio has a fleet of cars that can take portable battery chargers to users wherever they’re parked.\nSuch largesse, along with a major recall after some cars caught fire just as China shifted subsidies from EV purchases to support the charging network, saw Nio rack up $5 billion of losses in its first four years of existence (Tesla took about 15 years to reach that particular milestone). By the second quarter of 2019, the company was losing around $5 million a day.\n“It was our darkest time,’’ Li said. A team met nightly to comb through expenses, from salaries to the cost of Nio Houses. “It was easy to calculate how much we could earn from selling cars, but we had to mind for everything to sustain a normal operation,’’ he said. “Every dollar counted.”\nBy October 2019, it looked like the gig was up. After posting a worse-than-expected quarterly loss, Nio’s shares plunged to a record low of $1.32. At its nadir, the carmaker had lost more than 70% of its market capitalization — about $5 billion in value — from its New York initial public offering a year earlier.\nEven a $200 million cash injection from a sale of convertible notes to Li and an affiliate of Chinese tech giant Tencent Holdings Ltd. — an early investor in both Nio and Tesla — wasn’t enough to shore up the company’s seemingly insatiable need for cash.\nThe setbacks kept coming. Nio couldn’t afford the final payment on an imported stamping presser, a large machine used to shape a car’s panels. Worse, it had to sell the presser at a discount to Tesla, which promptly installed it in its new Shanghai plant, built with loans and support facilitated  by the government. Soon after, a deal for as much as 10 billion yuan ($1.6 billion) in funding from a Beijing local government-backed firm fell apart. Analysts started to openly speculate that Nio may be delisted or taken over. The situation got so dire that in late 2019, He Xiaopeng, the engineer founder of Guangzhou-based Xpeng, itself in a tenuous position with just 3 billion yuan in cash, proposed a merger of the two struggling electric carmakers, according to an interview He gave to Chinese state media. Li rejected the offer.\n“Nio was already in the intensive care unit, while Xpeng was waiting outside,’’ Li recalled. “A merger would bury both of us.”\n(Xpeng went on to be the third Chinese EV startup to list in the U.S., raising $1.5 billion in August 2020. The surge of investment in the space has seen its shares more than double, even accounting for a recent dip, and the company is now setting up a third Chinese production base to meet demand.)\nThen came the lifeline that showed the lengths China will go to maintain its ambition of creating a world-leading EV industry.\nIn early 2020, the municipal government in Hefei — the capital of Li’s home province of Anhui, about 600 miles southeast of Beijing — came knocking. Despite the onset of the coronavirus pandemic, which initially paralyzed car sales, a deal was struck in which the Hefei government would lead an injection of 10 billion yuan into Nio, more than the company’s entire revenue for 2019.\nComing just months after Nio said it wouldn’t have enough money to  continue operating for another year unless it got more funds, the agreement essentially provided the company with a state-backed security blanket. That can be a key advantage in China, where the government is the biggest player in almost every industry and has a hand in everything from manufacturing permits to access to capital. It could also provide a decisive edge over Tesla, which seems to have lost the favor it enjoyed early on with Beijing, as tensions with Washington continue to simmer under President Joe Biden’s administration.\nFor Nio, the quid-pro-quo was supporting local industry. The company abandoned plans to build a factory in Shanghai in early 2019, and instead — unlike Tesla and most traditional automakers — it pays a government-owned manufacturer in Hefei called Jianghuai Automobile Group Co., or JAC, to make its cars. The deal was extended last month for another three years, with JAC agreeing to double monthly capacity to 20,000 vehicles.\n“When William Li brought his proposal to us, most people thought it was fantasy that a Chinese carmaker planned to build first-rate intelligent electric vehicles,’’ former JAC Chairman An Jin said.  “I might be the person with the best knowledge of how Nio came along, with all the challenges and difficulties. In its hardest time, William even devoted his own money to solve the problem. That’s how he fought for his dreams.’’\nAt an April 7 ceremony to mark the production of Nio’s 100,000th vehicle, Li said he would work with the Hefei government to establish an intelligent-vehicle production base, including an R&D facility. Construction started later that month, and the industrial park is expected to eventually house manufacturing workshops, along with other players in the EV supply chain.\nThe Hefei pact, described as a government bailout by Sanford C. Bernstein’s senior analyst Robin Zhu, “put speculation around Nio’s funding issues to bed, at least in the foreseeable future,” he said.\nLi, though, also credits his loyal customer base. “We sold over 8,000 cars in the fourth quarter of 2019, which was pivotal to our survival,’’ he said. “That’s why I always say that our customers saved us. Even if we sold 500 or 1,000 fewer vehicles, that could have triggered a total collapse.’’\nStill, the experience was chastening. Nio cut about a quarter of its workforce, slowed its efforts on autonomous driving, delayed wage payments for managers and spun off some non-core businesses. While the rollout of the costly Nio Houses was suspended for more than a year, the strategy of putting Nio ownership at the center of an owners’ lifestyle and creating an aura of exclusivity, wasn’t forsaken with more modest Nio Spaces rolled out. Usually around 100-200 square meters (1,100-2,150 square feet), Nio Spaces are located in cheaper locales and also sometimes in smaller cities. They cost about 1 million yuan to set up, much less expensive than the more salubrious Nio Houses.\nIt seems to have worked — for now. Nio is still yet to turn a profit but its sales have risen steadily since — topping $1 billion for the first time in the three months to Dec. 31, 2020. The company narrowed its net loss in the first quarter of 2021 to 451 million yuan, down from 1.69 billion yuan a year earlier and 1.39 billion yuan in the fourth quarter of 2020. Even the businesses that underpin Nio’s lifestyle brand are making money, contributing to 1.1 billion yuan in revenue from non-vehicle sales last year, according to the company’s annual report.\n“To enter the car industry and survive isn’t easy,’’ said Jochen Goller, BMW’s China CEO. “Some others have disappeared. I have met with William Li a couple of times and I have to say I am impressed by what he has achieved. Nio is also creating awareness for battery cars, and having the right brands in the segment is helping the market.’’\nThe Hefei deal also came around the same time as investors cottoned on to the EV revolution, putting a rocket under Nio’s shares. They surged more than 1,110% last year, besting even the rally that propelled Tesla into the S&P 500 Index. The stock has given up some of those gains since as enthusiasm has eased, but with a market value of $70 billion, Nio is still bigger than Ford Motor Co.\nIt’s a long way from Li’s relatively humble beginnings. Raised by his grandparents in a small village in the hills of Anhui, known for farming and — more recently — the automobile industry, Li calls himself one of China’s “first generation of `left-behind’ children’’ because both his parents moved to the neighboring province of Jiangsu to pursue better work. There was no electricity in the village until Li was in his teens.\nWhile majoring in sociology at Peking University, one of China’s top colleges, Li started his first business — leasing internet servers and helping clients register domain names. The auto industry is where Li has enjoyed his greatest success, however, with the three listed companies he founded in the past 20 years all related to cars. His first, a vehicle-pricing portal called BitAuto Holdings Ltd. was acquired last year by Yiche Holding Ltd. for $2.8 billion, propelling Li’s personal fortune to $7 billion. That was followed by online auto-finance platform Yixin Group Ltd., which listed in Hong Kong in late 2017.\nThen came Nio. In an internal presentation in 2016, Li recalled looking out the window of his apartment at Beijing’s smoggy skies before the birth of his first son, and decided something needed to be done to tackle the country’s chronic pollution. He started Nio in late 2014 with funding from a group of well-known investors, including Li Auto founder Li Xiang and Richard Liu, the founder of e-commerce portal JD.com. Xiaomi’s Lei Jun was also an early backer.\nWhen he’s not dining with super-fans, Li’s workday calendar is packed. On a recent Tuesday at the company’s corporate headquarters — which remain in the slick financial capital of Shanghai — he spent the morning locked in executive committee meetings. In the afternoon, it was more back-to-back meetings with the company’s battery partner, designers, and clients from Europe. In a first, Nio recently announced plans to start selling cars in EV hotbed Norway.\nBut while the company is on much firmer ground than 18 months ago, questions remain.\n“Auto manufacturing has big economies of scale, and at less than 100,000 units a year, Nio hasn’t yet reached the production volume to realize all of those efficiencies,” said Robert Cowell, an equity analyst at Shanghai-based 86Research.\nCost issues linger, with the price of raw materials used in batteries, the most expensive part of an EV, including lithium-ion compound, soaring in recent months. Like most global automakers, Nio has also been hit by a worldwide shortage of the chips used increasingly in modern cars, leading to the suspension of production in Hefei for five days at the end of March. And despite the intensifying competition in an industry defined by technological advances and consumers drawn to the next shiny thing, Nio isn’t planning on unveiling any new models until late this year or early 2022.\nRead more: Why Nio Should Resist the Siren Song of Norway\nWhile Tesla is the main competitor in view, it’s the rivals to come that Li sees as the biggest threat.\n“The final game won’t start until tech giants are in,” he said. In March, Xiaomi unveiled plans to invest about $10 billion in manufacturing EVs, while Huawei has collaborated on at least two cars and is developing autonomous driving technologies. Lurking in the background is the biggest tech giant of all — Apple, which has long harbored ambitions to make its own, self-driving car.\n“I trust companies like Apple for their determination, software development, intelligence capability, and user connection,’’ Li said. “It’s going to be different competition from traditional car companies.”\nBut like Musk and other EV evangelists, Li is looking to the long game. “I’m very optimistic,” he said. “By 2030, 90% of the newly launched cars will be electric, or even 95%.”\nFor the Nio fans gathered in Shanghai that Sunday evening, that future is already here.\nWith the event drawing to a close, owners pose for a large group photo with Li at its center, everyone flashing thumbs up. As the lights dim, Li slips out of the hall and into the night, where his driver — in a white Nio ES8 — waits to take him home.","news_type":1,"symbols_score_info":{"AAPL":0.9,"AONE":0.9,"BIDU":0.9,"CAAS":0.9,"F":0.6,"JD":0.9,"JDCMF":0.6,"K3SD.SI":0.6,"LI":0.9,"TM":0.6,"TSLA":0.9,"XIACF":0.6}},"isVote":1,"tweetType":1,"viewCount":823,"commentLimit":10,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"symbols":[],"verified":2,"subType":0,"readableState":1,"langContent":"EN","currentLanguage":"EN","warmUpFlag":false,"orderFlag":false,"shareable":true,"causeOfNotShareable":"","featuresForAnalytics":[],"commentAndTweetFlag":false,"andRepostAutoSelectedFlag":false,"upFlag":false,"length":4,"xxTargetLangEnum":"ORIG"},"commentList":[],"hasMoreComment":false,"orderType":2}