Author | Chai Xuchen Editor | Zhou Zhiyu Faced with the trend of new energy electrification and the loss of market share under price wars, joint venture car companies have been "Renovating" their famous cars in an attempt to mount a strong counterattack. On May 30, SAIC Volkswagen's Touareg L Pro was launched. The car, which is said to be "the smartest gasoline car", had been preheated for nearly two months prior to its launch. The launch invited representatives from DJI Car and Tencent Travel, as well as the person in charge of iFLYTEK, all of whom attended in person to demonstrate the strength of its smart driving and smart cabin. As a "meritorious model" of SAIC Volkswagen, Touareg has been synonymous with Volkswagen SUVs for the past 15 years and was once the best-selling joint venture SUV. With a monthly sales volume of nearly 20,000 units for a long time, it occupies a 20% share of SAIC Volkswagen. SAIC Volkswagen hopes that the new Touareg will become a disruptor in the current market, from gasoline car intelligence to a stable price system with value-added buyback policy. In the view of Yu Jingmin, Vice President of Sales and Marketing of SAIC Volkswagen, new energy vehicles still have range anxiety and gasoline cars have an advantage that needs no explanation, but the biggest difference between them and electric vehicles lies mainly in their appearance and intelligence. After fulfilling the core needs of contemporary consumers, this once "famous car" seems to be reborn. Thus, from DJI's advanced intelligent driving solution to iFLYTEK's smart cabin voice assistant, this 200,000 yuan-level SUV brings together the strengths of various parties, aiming to break through the industry's perception that gasoline cars are less intelligent than electric vehicles. The launch of the new Touareg marks the beginning of SAIC Volkswagen's counterattack. In a post-event interview, Yu Jingmin mentioned several times that due to external cooperation and the accumulation of joint venture partners, SAIC Volkswagen's technology center is actually ahead of many independent brands, but unfortunately the rhythm is too slow. The company will now accelerate its efforts to catch up and even surpass in electric, hybrid or gasoline cars. Yu Jingmin revealed to Wall Street News that the new Touareg is the first gasoline car product in the Pro series, which is focused on intelligence, and that the Passat and Touareg Pro versions will also be introduced within the year. While polishing its technology, it is also preparing for the intelligence of its A-class cars. A counteroffensive war ignited by a gasoline fueled chariot seems to be brewing rapidly. But to be fair, SAIC Volkswagen's intelligence still lags far behind new forces such as Huawei, Xiaopeng, and Ideal. At the same time, in the current context where BBA is crazy about price cuts and the BMW electric car at over 180,000 yuan is setting a new industry low price, the 236,800 yuan Touareg L Pro seems somewhat out of step and the counterattack is difficult to achieve. In response to the challenge, SAIC Volkswagen has given a three-year 20% discount buyback plan. Users no longer need to worry about the fluctuation of vehicle purchase costs and second-hand car prices. SAIC Volkswagen locks in the difference between the purchase and final selling prices of users' vehicles, in a move to crack the price war. This also buys precious time for SAIC Volkswagen to speed up product and intelligence catch-up. This is the backdrop of the efforts to win back the former "king" of the Chinese car market.

In today's weather is good. Today's weather is good.

Li Bin, who has been criticized for spending money extravagantly, having too long of a front line, and being 'not very pragmatic', finally won a victory after the NIO sales stabilized and rebounded this year. His ambition is to completely overturn the high-end market and reshape it.

On July 27th, NIO released a series of technical 'big moves': the 5nm intelligent driving chip 'Shenji' that succeeded in wafer production, the global system SkyOS, the Banyan 3 car machine with GPT blessing, the new intelligent driving 'world model', and the second-generation NIO smartphone.

Li Bin has handed the stage's 'C position' over to AI, which will be the foundation for NIO's complete transformation in the second half.

In fact, 'Only by becoming an AI master can you build a good car' has become a resonance of new players such as Musk, He Xiaopeng and Li Xiang in the automotive industry, and they are constantly competing in related technologies in the second half of the auto industry.

In the interview after the meeting, Li Bin, the chairman of NIO, first pointed out that the outside world's belief that NIO is 'burning money and inefficient' is a misconception.

Now, 60-70% of our R&D investment is in basic research and development costs, which are not targeted at a specific model or brand. All of our products can use it. This research and development efficiency is actually very high, and even if NIO sells 10 million cars a year, this part of the investment will not increase too much.

In Li Bin's view, many intelligent cars on the road today have relatively fragmented operating systems. They lead to delays in information transfer, sharing, and decision-making, which are not efficient.

Therefore, NIO decided four years ago to build a global automotive system from scratch, which can be reused in different vehicle series. 'In 2019, it was difficult for our company, and in 2020, after we recovered some strength, we determined to develop this structure,' Li Bin revealed to Wall Street News.

Global development speeds up for future development and lays the foundation. QIN Lihong, President of NIO, explained that this is to make NIO more competitive in the high-end market in the future.

'More than 30% of existing BBA petrol car users have decided to try new energy for their next car', Li Bin said, 'This is a huge opportunity. But the question is, which brand will become their first choice?'

In QIN Lihong's view, to stand firm in the high-end market, there is no possibility of 'one trick can eat all over the world.' Luxury car users are a group with relatively high comprehensive requirements.

However, Li Bin also admitted that this kind of long-termism is a big test of perseverance. 'These things may be found too expensive at first, and not every company is willing to do them, nor every company can survive to see the day of effectiveness.' But he firmly believes that once started, things will become easier and easier.

Li Bin revealed that NIO's market share in the high-end market above 300,000 yuan has reached 50-60%. Starting from the sub-brand Lixiang L60 and NIO's flagship ET9, this intelligent platform that has been built for several years has begun to show its effects.

However, some insiders in the industry and some consumers do not like NIO's focus on the 'invisible' core parts for a long time. Li Bin also admitted that NIO has suffered losses in this regard.

'There are places where we didn't think comprehensively enough, and we have learned a lot of lessons.' Li Bin said frankly, 'So we changed. Look, Lixiang L60 has refrigerators, televisions, and big sofas for a comfortable and spacious experience. We are trying to target feedback.'

Obviously, while Li Bin is changing the market, he is also being changed by the market. Mutual adaptation is to jump out of the existing circle and become one of the giants in the automotive industry in the future.

NIO's big chess game has finally reached a turning point for breakout, and long-term preparations have waited for the moment of 'realization.'

However, in the market environment full of twists and turns, peer companies and technology players such as Huawei and Xiaomi who came out of nowhere are constantly changing the pattern of the auto market. NIO, whose ceiling is set high enough, can it smoothly complete its grand blueprint in the great changes? This is the market's biggest concern.

Li Bin, who does not believe in miracles, still has to step by step and be down-to-earth to succeed in reaching the top.

The following is an edited transcript of the dialogue between Li Bin, chairman of NIO, Qin Lihong, president of NIO, and Wall Street News:

Q: Will NIO's high R&D expenses affect its profit plan? A: R&D costs are highly reusable. The traditional platform and current platform are not of the same magnitude. For the whole vehicle operating system, we can actually reduce a lot of R&D costs by using it on different brands. Most companies still adopt a part-oriented mindset, but smart automobile companies should adopt a layered and decoupled approach. NIO has always pursued the ultimate and has already decoupled the battery pack and the car. If the high-voltage platform of the battery stabilizes, the fourth and fifth generation models can use the same battery pack. Therefore, even if NIO sells 10 million vehicles a year, the investment in basic R&D will not increase too much. This is the benefit of good platformization in intelligent and electric directions. Today, we encountered ET9 and you will see that it has already begun to play a role gradually.

Q: How do you predict the timing of the outbreak of the next surge after the release of the full-domain system plan? A: Some technologies will indeed undergo a leap in terms of experience, and these experiences are mostly based on large-scale AI capabilities. Models like the intelligent driving world and the spatiotemporal model are at the forefront of competition. We attach great importance to collective intelligence, which will bring us many surprises in one or two years, regardless of language models or multimodal models, or world models. Overall, its effects of convergence and focus are very fast.

Q: Why doesn't NIO focus more on creating more explicit value? Don't you think you are losing out? A: Yes. But the product definition is different. For some high-perception functions and configurations, the product definition is indeed not comprehensive enough, and we have a lot of experience and lessons. For example, the L60 Da Color TV and the big sofa have already been achieved, and even single motors are used, emphasizing listening and persuasion. However, we must still compete on the underlying capabilities in safety, space efficiency, cost structure, and battery swapping.

Q: How does NIO view the current state of the industry? A: NIO has maintained a monthly sales volume of around 0.02 million since May, and it seems that this level is relatively stable. The leader of the Automobile Association asked whether we have many high-quality developments, but there are also many low-quality competitions. How to avoid low-quality competitions? I raised my hand and asked if we could not publish weekly rankings. Although it is normal for internal work to be precise to the day, publishing weekly rankings will increase people's internal anxiety and is not conducive to the healthy development of the industry. In addition, we do not make sales forecasts, nor do we make some unaudited sales statistics. NIO has never authorized anyone to release weekly sales, so can third parties single us out when publishing some rankings?

Q: How does NIO view the current state of the industry? A: NIO has maintained a monthly sales volume of around 0.02 million since May, and it seems that this level is relatively stable. The leader of the Automobile Association asked whether we have many high-quality developments, but there are also many low-quality competitions. How to avoid low-quality competitions? I raised my hand and asked if we could not publish weekly rankings. Although it is normal for internal work to be precise to the day, publishing weekly rankings will increase people's internal anxiety and is not conducive to the healthy development of the industry. In addition, we do not make sales forecasts, nor do we make some unaudited sales statistics. NIO has never authorized anyone to release weekly sales, so can third parties single us out when publishing some rankings?

Q: How does NIO view the current state of the industry? A: NIO has maintained a monthly sales volume of around 0.02 million since May, and it seems that this level is relatively stable. The leader of the Automobile Association asked whether we have many high-quality developments, but there are also many low-quality competitions. How to avoid low-quality competitions? I raised my hand and asked if we could not publish weekly rankings. Although it is normal for internal work to be precise to the day, publishing weekly rankings will increase people's internal anxiety and is not conducive to the healthy development of the industry. In addition, we do not make sales forecasts, nor do we make some unaudited sales statistics. NIO has never authorized anyone to release weekly sales, so can third parties single us out when publishing some rankings?

Q: How does NIO view the current state of the industry? A: NIO has maintained a monthly sales volume of around 0.02 million since May, and it seems that this level is relatively stable. The leader of the Automobile Association asked whether we have many high-quality developments, but there are also many low-quality competitions. How to avoid low-quality competitions? I raised my hand and asked if we could not publish weekly rankings. Although it is normal for internal work to be precise to the day, publishing weekly rankings will increase people's internal anxiety and is not conducive to the healthy development of the industry. In addition, we do not make sales forecasts, nor do we make some unaudited sales statistics. NIO has never authorized anyone to release weekly sales, so can third parties single us out when publishing some rankings?

Q: Can NIO's many R&D investments affect its profit plan? A: R&D costs are highly re-usable. The traditional platforms and the current platforms are not of the same caliber. The company's operating systems can reduce a lot of R&D costs for different brands. Most companies still have a parts-oriented mindset while smart car companies should adopt a layered and decoupled approach. Pursuing the ultimate has always been one of NIO's goals, and we have already decoupled the battery pack from the vehicle. Once the high-voltage platform is stabilized, the fourth and fifth generation models can use one battery pack. Even if NIO is selling 10 million units a year, this kind of long-term investment in R&D will not increase too much, which is the benefit of good platformization of intelligent and electric directions. You will begin to see its role gradually, as we encountered with ET9 today.

Q: Why doesn't NIO try to create more explicit value? Don't you feel you're at a disadvantage? A: Yes, we do. However, products have different definitions. For some high-perception features and configurations, the product definition is not comprehensive enough, which has left us with a lot of experience and lessons learned. For example, the L60 Color TV and the big sofa with single-motor mainly emphasize listening and persuasion. However, we must still compete on the underlying capabilities in safety, space efficiency, cost structure, and battery swapping.

Q: What is NIO's view of the current state of the industry? A: NIO has maintained a monthly sales volume of around 0.02 million since May, and it seems that this level is relatively stable. The leader of the Automobile Association asked whether we have many high-quality developments, but there are also many low-quality competitions. To avoid low-quality competitions, I suggested that we should not publish weekly rankings. Although it is normal for internal work to be precise to the day, publishing weekly rankings will increase people's internal anxiety, which is not conducive to the healthy development of the industry. Also, we do not make sales forecasts, nor do we provide unaudited sales statistics. NIO has never authorized third parties to release weekly sales, so can third parties single us out when publishing some rankings?

Q: What is NIO's perception of the "intelligent driving moat"? A: Everyone is running a marathon, and the road is still very long. I dare not say that we have a moat for battery swapping. In the highly competitive Chinese automobile market, we can only do our best and work hard according to our own logic. Certain technologies will undergo a leap in experience, especially those based on large-scale AI capabilities. Models like the intelligent driving world and the spatiotemporal model are at the forefront of competition. We attach great importance to collective intelligence, which will bring us many surprises, whether in language models, multimodal models, or world models. Its effects of convergence and focus are very fast.

Q: What is NIO's perception of the "intelligent driving moat"? A: Everyone is running a marathon, and the road is still very long. I dare not say that we have a moat for battery swapping. In the highly competitive Chinese automobile market, we can only do our best and work hard according to our own logic. Certain technologies will undergo a leap in experience, especially those based on large-scale AI capabilities. Models like the intelligent driving world and the spatiotemporal model are at the forefront of competition. We attach great importance to collective intelligence, which will bring us many surprises, whether in language models, multimodal models, or world models. Its effects of convergence and focus are very fast.

Q: How does NIO attract so many BBA car owners in its increased trade-ins? How much benefit and changes can technological innovation bring? A: Indeed, most NIO car owners come from high-end traditional gasoline cars. They choose NIO for several reasons. First, NIO is the only pure electric vehicle without range anxiety, and its charging and battery swapping systems are very mature. Second, NIO's brand and culture, style and attitude are quite attractive. Soft qualities let gasoline car users feel they are not downgrading in terms of spiritual level. We conducted a survey that found that more than 30% of BBA owners are ready to try new energy vehicles for their next car. However, high-end brands require a high level of quality, and therefore, they demand style and attitude. NIO has confidence in catering to this part of users.

Q: How does NIO attract so many BBA car owners in its increased trade-ins? How much benefit and changes can technological innovation bring? A: Indeed, most NIO car owners come from high-end traditional gasoline cars. They choose NIO for several reasons. First, NIO is the only pure electric vehicle without range anxiety, and its charging and battery swapping systems are very mature. Second, NIO's brand and culture, style and attitude are quite attractive. Soft qualities let gasoline car users feel they are not downgrading in terms of spiritual level. We conducted a survey that found that more than 30% of BBA owners are ready to try new energy vehicles for their next car. However, high-end brands require a high level of quality, and therefore, they demand style and attitude. NIO has confidence in catering to this part of users.

Q: How does NIO attract so many BBA car owners in its increased trade-ins? How much benefit and changes can technological innovation bring? A: Indeed, most NIO car owners come from high-end traditional gasoline cars. They choose NIO for several reasons. First, NIO is the only pure electric vehicle without range anxiety, and its charging and battery swapping systems are very mature. Second, NIO's brand and culture, style and attitude are quite attractive. Soft qualities let gasoline car users feel they are not downgrading in terms of spiritual level. We conducted a survey that found that more than 30% of BBA owners are ready to try new energy vehicles for their next car. However, high-end brands require a high level of quality, and therefore, they demand style and attitude. NIO has confidence in catering to this part of users.

Q: How does NIO attract so many BBA car owners in its increased trade-ins? How much benefit and changes can technological innovation bring? A: Indeed, most NIO car owners come from high-end traditional gasoline cars. They choose NIO for several reasons. First, NIO is the only pure electric vehicle without range anxiety, and its charging and battery swapping systems are very mature. Second, NIO's brand and culture, style and attitude are quite attractive. Soft qualities let gasoline car users feel they are not downgrading in terms of spiritual level. We conducted a survey that found that more than 30% of BBA owners are ready to try new energy vehicles for their next car. However, high-end brands require a high level of quality, and therefore, they demand style and attitude. NIO has confidence in catering to this part of users.

Q: Will NIO's high R&D expenses affect its profit plan? A: R&D costs are highly re-usable. The traditional platforms and the current platforms are not of the same caliber. The company's operating systems can reduce a lot of R&D costs for different brands. Most companies still have a parts-oriented mindset while smart car companies should adopt a layered and decoupled approach. Pursuing the ultimate has always been one of NIO's goals, and we have already decoupled the battery pack from the vehicle. Once the high-voltage platform is stabilized, the fourth and fifth generation models can use one battery pack. Therefore, even if NIO sells 10 million units a year, this kind of long-term investment in R&D will not increase too much, which is the benefit of good platformization of intelligent and electric directions. You will begin to see its role gradually, as we encountered with ET9 today.

Q: What is NIO's perception of the "intelligent driving moat"? A: Everyone is running a marathon, and the road is still very long. I dare not say that we have a moat for battery swapping. In the highly competitive Chinese automobile market, we can only do our best and work hard according to our own logic. Certain technologies will undergo a leap in experience, especially those based on large-scale AI capabilities. Models like the intelligent driving world and the spatiotemporal model are at the forefront of competition. We attach great importance to collective intelligence, which will bring us many surprises, whether in language models, multimodal models, or world models. Its effects of convergence and focus are very fast.

Q: How does NIO view the current state of the industry? A: NIO has maintained a monthly sales volume of around 0.02 million since May, and it seems that this level is relatively stable. The leader of the Automobile Association asked whether we have many high-quality developments, but there are also many low-quality competitions. To avoid low-quality competitions, I suggested that we should not publish weekly rankings. Although it is normal for internal work to be precise to the day, publishing weekly rankings will increase people's internal anxiety, which is not conducive to the healthy development of the industry. Also, we do not make sales forecasts, nor do we provide unaudited sales statistics. NIO has never authorized third parties to release weekly sales, so can third parties single us out when publishing some rankings?

Q: How does NIO attract so many BBA car owners in its increased trade-ins? How much benefit and changes can technological innovation bring? A: Indeed, most NIO car owners come from high-end traditional gasoline cars. They choose NIO for several reasons. First, NIO is the only pure electric vehicle without range anxiety, and its charging and battery swapping systems are very mature. Second, NIO's brand and culture, style and attitude are quite attractive. Soft qualities let gasoline car users feel they are not downgrading in terms of spiritual level. We conducted a survey that found that more than 30% of BBA owners are ready to try new energy vehicles for their next car. However, high-end brands require a high level of quality, and therefore, they demand style and attitude. NIO has confidence in catering to this part of users.

Even if we become the number one, we won't publish weekly charts, said Li Bin.

Will Nio catch up with this wave of Robotaxi?

We will never do Robotaxi. The value of intelligent driving is not to eliminate the hard work of chauffeurs, but to free up energy and make driving less tiring and safer. Actually, Robotaxi is not inspiring, and I don't think it's a big business.

I have a say in shared transportation. Traffic is a social problem, not just a technical one. If Robotaxi technology matures, it's not a sustainable business. Because if you want to meet the demand for transportation, you need a high number of cars. When Mobike and OFO were competing, a huge number of shared bicycles became cannon fodder.

So if we don't limit it, the streets will be filled with cars. I don't need to produce a car and sell it. I won't make any money if I can't sell it.

So, unmanned taxis cannot solve the problem of traffic volume. The number of cars a city can accommodate is limited. Robotaxi will not expand without boundaries like cloud computing services. Wake up!

What level has Nio Inc.'s intelligent driving or AI reached in the industry?

Many people don't understand the real Nio Inc., and in the current marketing environment, it is often labeled by its competitors. If we don't speak actively, we will be understood and interpreted by consumers, and even affect our brand, sales and user experience.

Nio Inc. is often driven by others. Some people will say that your service is good, but what's the use? In fact, our good service does not mean that our technology is not good; our good charging-swapping service does not mean that our charging service is bad.

So last year we decided to do Nio Inc., to tell everyone the truth about Nio Inc. is technology, research and development. We invested a lot of money to make our underlying ideas, thoughts and progress public, so that fewer people will misunderstand us.

What is Nio Inc.'s long-term plan for mobile phones?

Previously, investors felt that this was not a core business and would dilute their focus. But today's mobile phone industry chain is very mature, different from ten years ago. 80% of our team are software engineers, focusing on doing a good job in software experience, and the hardware part is shared within the company.

The development of mobile phones is a fixed cost. We only make one phone a year. So the connection experience with the car is very good. Nio Inc. insists on providing a truly pure phone, and sometimes limited supply is also a competitive advantage.

In order to be competitive, how much investment is needed in research and development according to Nio Inc.'s view?

Actually, our efficiency is very high. Last year, we delivered five new models in four months and captured 50% to 60% of the share in the high-end market above 0.3 million. The coming Nio Inc. is going to be released soon, and it will definitely have a good performance in its subdivision market.

We spend 3 billion yuan on R&D every quarter and almost 10 billion yuan on R&D every year, 60% to 70% of which is spent on basic research and development. Such investment allows us to have the qualifications to participate in the finals. Nio Inc. has set a very high ceiling for users in all aspects, and will release huge benefits in the future.

Cars are a 15-year product, and many things that Tesla talked about in 2018 are still being delivered today. Banyan3.0 will be released in the third quarter of this year, and the function of intelligent driving chips will be available in the first quarter of next year.

In summary, delivering as soon as possible, letting everyone feel the charm of technology, and having a good experience is a very important task. But miracles won't happen in a day.