$NIO Inc (NIO.US)$ I spent a few days looking through William Li's recent interview opened to the media.
Here are the takeaways:
1. The entire company is learning from Luxshare Precision Industry how to control costs and how to transform their supply chain into a 'transparent supply chain'; Luxshare Precision Industry is Apple's manufacturer, and Apple is the most advanced company in Global supply management. I believe that as long as NIO's management can learn the essence of it, the results will be immediate; because Apple's supply chain is truly the most advanced and efficient in the world.
2. This year, many battery swapping stations will be established, but unlike in the past, the ones really investing in building the swapping stations are the highway companies and city investment companies from various provinces in China, as they are government departments with very low capital costs. They invest in building the swapping stations and then rent them to NIO at a favorable price: the effect is evident, reducing capital pressure, increasing construction speed, and expanding the cooperative network.
3. He is serious about reaching break-even in Q4 2025. NIO’s years of research and development, the Shenqi NX9071 chip, active suspension, SKY Tian Shu OS, based on people...
Here are the takeaways:
1. The entire company is learning from Luxshare Precision Industry how to control costs and how to transform their supply chain into a 'transparent supply chain'; Luxshare Precision Industry is Apple's manufacturer, and Apple is the most advanced company in Global supply management. I believe that as long as NIO's management can learn the essence of it, the results will be immediate; because Apple's supply chain is truly the most advanced and efficient in the world.
2. This year, many battery swapping stations will be established, but unlike in the past, the ones really investing in building the swapping stations are the highway companies and city investment companies from various provinces in China, as they are government departments with very low capital costs. They invest in building the swapping stations and then rent them to NIO at a favorable price: the effect is evident, reducing capital pressure, increasing construction speed, and expanding the cooperative network.
3. He is serious about reaching break-even in Q4 2025. NIO’s years of research and development, the Shenqi NX9071 chip, active suspension, SKY Tian Shu OS, based on people...
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$NIO Inc (NIO.US)$ Some people with accounting knowledge may notice and realize what this means.
For such a large company like NIO, having such high R&D investment, the intangible assets are only $4M USD... unbelievable! This is very rare in accounting standards; only extremely transparent accounting standards would choose to do so.
By doing this, first, intangible assets will be greatly underestimated, which will be reflected in your balance sheet; second, the company's P/L expenses will be exaggerated, as last year's investment of 13 billion in R&D was all counted as expenses, been written off totally…that's amazing…In fact, the R&D expenses invested over the past 10 years have reached 90 billion RMB, yet the outputs of those patterns and brand goodwills… have all been without capitalization… Doing this is completely intentional to lower prices and undervalue, which is a drawback; the advantage is that the earnings reports are transparent, and investors trust Li Bin a lot… this may be why he has been able to keep raising funds!
But why not capitalize some R&D expenses under reasonable accounting rules? This way, the Earnings Reports would look better, and the stock price could rise.
The only reason is that the company deliberately underestimates its valuation to sell to major shareholders... minority shareholders, just hold it!
For such a large company like NIO, having such high R&D investment, the intangible assets are only $4M USD... unbelievable! This is very rare in accounting standards; only extremely transparent accounting standards would choose to do so.
By doing this, first, intangible assets will be greatly underestimated, which will be reflected in your balance sheet; second, the company's P/L expenses will be exaggerated, as last year's investment of 13 billion in R&D was all counted as expenses, been written off totally…that's amazing…In fact, the R&D expenses invested over the past 10 years have reached 90 billion RMB, yet the outputs of those patterns and brand goodwills… have all been without capitalization… Doing this is completely intentional to lower prices and undervalue, which is a drawback; the advantage is that the earnings reports are transparent, and investors trust Li Bin a lot… this may be why he has been able to keep raising funds!
But why not capitalize some R&D expenses under reasonable accounting rules? This way, the Earnings Reports would look better, and the stock price could rise.
The only reason is that the company deliberately underestimates its valuation to sell to major shareholders... minority shareholders, just hold it!
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Regarding BYD's 'Megawatt Flash Charging' vs NIO's partnership with Contemporary Amperex Technology.
$NIO Inc (NIO.US)$ In my opinion, BYD's Megawatt Flash Charging is a stripped-down version of NIO's battery swap stations, and it is not the optimal and most efficient final solution for users. Overall, both methods store electricity from the grid in one or more Batteries; BYD has one supercharging station and two charging piles, which store electricity in a large energy storage system of about 225 kWh. When the large Battery is fully charged and another vehicle is charging, the charging power is 1000KW, with energy replenishment efficiency peak reaching 400 kilometers in 5 minutes. When two vehicles charge simultaneously, the efficiency is reduced by more than half... taking about 10 minutes or more. If two more vehicles have bad luck and are queuing behind, sorry, that vehicle's charging efficiency will be very low. I estimate there is not much difference with different charging piles because, at that time, the large rechargeable Battery has no electricity left. Once the remaining electricity is used up, the energy storage system will need to draw from the surrounding grid to charge. So, that’s the bottleneck... This does not consider the damage to the Battery's lifespan from the supercharging power and subsequent maintenance... these are all significant flaws of BYD's 'Megawatt Flash Charging.'
Compared to supercharging, battery swapping has a significant efficiency advantage. A battery swap station can hold a maximum of 24-27 Batteries, and the swapping process takes a maximum of 3 minutes, while charging each Battery fully takes 1 hour. Therefore, a fully loaded battery swap station can serve willing users around the clock, non-stop, 7*24 hours. Under such an extreme scenario, once every vehicle becomes electric, the entire system can still run.
Compared to supercharging, battery swapping has a significant efficiency advantage. A battery swap station can hold a maximum of 24-27 Batteries, and the swapping process takes a maximum of 3 minutes, while charging each Battery fully takes 1 hour. Therefore, a fully loaded battery swap station can serve willing users around the clock, non-stop, 7*24 hours. Under such an extreme scenario, once every vehicle becomes electric, the entire system can still run.
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$NIO Inc (NIO.US)$ I think that to do something long-term, the investment decisions that can affect your returns five years from now must have the following characteristics:
1. No one is Bullish on it right now, and it is often full of controversy;
2. This company has a large enough footprint but is currently facing some issues;
3. There is huge growth potential; once certain things are done well, results can be seen.
4. There is a very long slope with a very high starting point, and what you are looking for is a snowball.
5. Let it roll, and the snowball will grow larger.
1. No one is Bullish on it right now, and it is often full of controversy;
2. This company has a large enough footprint but is currently facing some issues;
3. There is huge growth potential; once certain things are done well, results can be seen.
4. There is a very long slope with a very high starting point, and what you are looking for is a snowball.
5. Let it roll, and the snowball will grow larger.
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$NIO Inc (NIO.US)$ Why not just drop…and leave😄.
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$NIO Inc (NIO.US)$ It is not closely related to individual stocks...
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$Faraday Future Intelligent Electric Inc. (FFIE.US)$ Jia Accounting is making cars……
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