After establishing its own place in the high-end market, nio inc, under the banner of overturning ModelY, launched the Joyway, aiming to make a breakthrough in the mass market.

On September 19, the countdown to the launch of Joyway's first new car L60 has begun. On the eve of the press conference, Joyway brand President Ai Tiecheng had a in-depth communication with Wall Street News. In this conversation, he detailed the background and ambitions of Joyway L60, as well as nio's ambitions.

Ai Tiecheng stated that L60 is the "ultimate product" that the team has spent more than 3 years refining, determined to overturn the current SUV king, ModelY, which sells forty to fifty thousand units per month.

"There hasn't been a product as powerful as Joyway L60 on the market before," Ai Tiecheng pointed out. Currently, ModelY does dominate the mid-size SUV market, but a good product that remains unchanged for too long is also unsustainable.

Behind such arrogance is Joyway's position at a high starting point. Nio Inc President Qin Lihong once described this sub-brand that has grown within the nio system as "mature"—mature technology, a comprehensive energy replenishment system, and a charismatic leader driving the team towards the mainstream market.

Ai Tiecheng bluntly stated that after working for many years in foreign companies, he was impressed by the maturity of China's automotive and technology industries, attracting renowned overseas designers and engineers. In recent years, nio's lavish investment in "long-termism" is thriving in this "resource-rich" environment. This further convinces Ai Tiecheng that the "next generation of the world's leading vehicle should be a Chinese brand".

In addition, what's more important for Leadar is how to break through in this market with huge imagination but serious homogenization by using a set of unexpected defensive tactics. The key figure for Leadar is Mr. Li Bin, who was poached from Disney by Li Bin five years ago.

At the beginning of car manufacturing in 2014, Li Bin had already started thinking about using a new brand to enter the mainstream family market. After coming out of the intensive care unit and surviving 2019, Nio put the second brand on the agenda in 2020, and the former 'Alps' project of Leadar was officially launched.

In Ai Tiecheng's eyes, what Li Bin valued was the user mindset he had cultivated over the years at Procter & Gamble, WeWork, Disney, and other companies. "If you ask what Tiecheng is good at, I think it's user insights, which is the foundation of my entire career."

After taking office, Ai Tiecheng and his team traveled to domestic cities from first to fifth-tier. The conclusion drawn was that 85% of the Chinese passenger vehicle market consists of family users. He outlined a basic portrait for nearly tens of millions of family car owners - everyone is at a stage of upward mobility in life.

Therefore, focusing on the family scenario, Ai Tiecheng made thorough preparations in terms of safety, space, energy consumption, etc. If combined with rental battery BaaS service, the threshold for L60 can be directly reduced to the 0.15 million yuan range. This is also the final barrier for joint venture oil vehicles.

With everything ready, Leadar became the key to Nio's push for scale.

However, the pursuers of L60 are following one after another, with Feifan R7, Zhiji LS6, Ideal L6, Xingjieyuan ET and other models taking the lead in joining the melee. Jike 7X, Avita 07, Enjoy R7 will also be launched soon.

It can be foreseen that the 0.2 million-level SUV market will see a fierce battle next, and Leadar's situation is not easy. What matters is that the total sales volume expected internally in the second half of L60's debut year is only 0.02 million units, which seems to be at odds with Leadar's ambition.

For Aitie, the first battle of the LeTao brand must not fail, how will he steer and tell the subversive story of this SUV track?

The following is a transcript of the conversation between Wall Street and Aitie Cheng, Senior Vice President of Nio and President of LeTao Motors (edited):

Q: What are the opportunities and considerations for Nio in developing mass-market brands?

Aitie Cheng: Li Bin started thinking about something very early on. In 2014 when he just started his business, he began thinking about entering the mainstream family market with a completely new brand. Because Nio is just a high-end brand, but the global market above $0.05 million accounts for 15-18%, with a total market size of roughly over 10 million vehicles; the mass market ($0.03 million-$0.05 million) accounts for roughly 50%-60%, which is more than half.

The changes in China in recent years have been too fast, when I joined in 2021, I actually wanted to make the Volkswagen and Toyota of the intelligent era. Because in the past, during the era of gasoline cars, the best cars for mainstream family users were Volkswagen and Toyota. Why did I compare Tesla's Model Y and Rongfeng at the May 15th press conference, this is completely consistent with our early thinking.

Q: Initially targeting Volkswagen and Toyota, but now aiming at Model Y, what changes have occurred in LeTao's positioning and understanding?

Aitie Cheng: We found that in the era of gasoline cars, there were cars like Toyota Rongfeng, Honda CRV, Volkswagen Touareg L, etc., which were 'powerful cars' for home use. Today, looking at the U.S. market, the European market, including Southeast Asia, these three cars are still very powerful.

But China has developed too quickly, these cars are not smart in various aspects, we quickly stopped considering them, and then we started to target Tesla's Model Y. Li Bin said he wanted to make it 10% cheaper than it and the product had to be better than it. At that time, we came up with the concept of a swappable Model Y, which netizens called the 'premium and large swappable Model Y', and we successfully achieved the positioning at that time.

Question: ModelY has been on the market for five years now, and there is still no car that can replace it. What gives Tesla the confidence to face challenges?

Ai Tiecheng: So far, indeed, ModelY dominates the mid-size SUV market, averaging close to 40,000 in sales. Because it was the first to enter this market with an advantage, it has done well in terms of space and energy consumption. Coupled with Musk's aura, it is still very strong in user awareness.

But a good product without updates for too long may be difficult to follow. In China, the automotive industry iterates too quickly. In the past, there may not have been products with the strength of L60 in the market, providing safety, comfort, large space, and low energy consumption. I believe the next generation of the world's leading model should be a Chinese brand.

Actually, I am thinking, why have Japanese and European brands not kept up with smart technology? Chinese technology companies and the millions of software graduates every year, with a strong talent base, and the relatively developed internet companies, are the fundamental reasons why China can lead the world.

Question: Now that Tesla has released the roadmap for Full Self-Driving (FSD) in China, will this be a new killer feature?

Ai Tiecheng: I am also looking forward to its launch in China, but it will take time for them to truly drive like experienced drivers in urban areas. Domestic new energy companies have already done very well in intelligent driving. Nio is the only brand that is available nationwide for highway and urban navigation from the moment it launched, which is also the result of Nio's overall empowerment.

Question: Previously, Toyota and Volkswagen empowered Porsche and Lexus, and we are moving from the luxury market to the mainstream market. How do we balance cost and product strength?

Ai Tiecheng: The L60 is very straightforward; the entire product revolves around safety, comfort, spaciousness, intelligence, and energy consumption, focusing on the core needs of mainstream family users. I often tell the team that we should focus on the staple food and main dishes, and address the high-frequency needs of family users; we do not do the low-frequency ones. The product strength of L60 fully embodies this principle.

At the very bottom, it is actually technology-driven. When I initially established the team, I found that Chinese talent is amazing. We are not only at the configuration level, but also at the technological level, we are already leading the world. The electric motor we make is small in size, high in power, energy-saving, and space-saving. In addition, we have battery swapping, completely dispelling range anxiety.

Question: Many basic configurations of the L60 are even higher than those of Nio ES6 and ET5. Will the two brands overlap in terms of user resources? How will Lixiang and Nio differentiate their brands?

Li Xiangcheng: From the booking situation, less than 5% of Lixiang system users are from Nio, and the vast majority are new users. Many people ask why Lixiang does not bear the Nio brand because they want differentiation. The Nio brand tends to be more towards high-end business, while Lixiang is more focused on family users.

Our fundamentals are similar, but the more consumers can perceive, the more different it will be, depending on the positioning and different target audiences of the two brands. Like in the past, Mercedes-Benz and BMW have many business attributes, with more emphasis on business attributes in brand positioning and less on family attributes. You wouldn't buy a Mercedes C-Class and wonder why this car isn't as spacious as a Highlander but more expensive.

In the long run, the flagship in technology is the true luxury. It must be a technological leader, aiming for extreme innovation; Lixiang may not necessarily be the most innovative, so Nio can allocate some technology under it.

Question: It seems that there are fewer pure electric vehicles on the market, how should we think about this?

Li Xiangcheng: We do not make transitional products. Many people ask me, with such fierce competition now, why didn't Lixiang come out earlier? Because we want to make ultimate products, and we are very determined about this. The average usage period for family users is 7-10 years. No family user wants to buy a product that becomes outdated the next year; this is a pain point for many family users. Both in terms of driving trends and intelligence, we must adopt the latest technology.

But why did we choose to launch in May and deliver by the end of September? Because I am a new brand, the consideration period for buying a car for a family user is probably 3-6 months. From having a demand to understanding and finally buying a car, we need to give everyone three to four months to consider and compare.

Question: Previously it was mentioned that LeDao wants to stay ahead for 3-5 years, but now with the rapid development, how can we ensure that we can truly remain ahead in 3-5 years?

Ai Tiecheng: Truly smart electric vehicles started with Tesla, and it has been ten years now. We are predicting the time when the final product form will be formed. For example, in the case of the iPhone, the first three generations were experimental, and it wasn't until the iPhone 4 that it became the final product of a smart phone. Although now we are at the iPhone 16, essentially, apart from transitioning from 3G to 5G, there haven't been many changes, with updates being incremental improvements.

Returning to electric vehicles, the voltage has increased from 400V to eight or nine hundred volts, further increasing the current is insufficient; 900V is already close to an ultimate product; the smart architecture has also achieved convergence in four domains. Perhaps this industry should have already entered a node where final products appear relatively, and what we are doing is technology that is close to the final product form. It should continue into the future for the next 5 years or even for the following 10 years.

Question: Ideal, Xiaopeng have penetrated the market, and it seems everyone is targeting the household market. As a latecomer, where does LeDao's advantage lie?

Ai Tiecheng: Let's go back to the users; understanding users is my strength. We have conducted a lot of surveys on mainstream global family cars, and there is one very consistent point - for users in this price range, they are in a life stage with upward goals, seeking a better future.

Family users buy cars when they are in a particularly happy time, such as getting a promotion, finding a partner, or having a child, which are all very joyful moments in life. Since we are targeting family users, can we make their joy even greater? The brand image we have set for ourselves is warm, reliable, and sincere.

Assuming a 22 million user market in China, with a market scale of 0.15-0.35 million last year, by 2025 it could reach 10 million, with 85% of them being family users. At this point, it will be a matter of who can do better, who can provide the best experience and lower costs.

Question: After LeDao adopts rental electric services, will it further disrupt the market at the 0.15 million level?

Ai Tiecheng: Yes, 80% of Nio's users use the Baas solution, and we predict that Leador's Baas will be relatively high. Among Leador L60 small order users, 39% have compared it to Model Y, but very few compare it to traditional fuel vehicles.

After leasing the battery from Leador, the cost can drop below 200,000 yuan. In fact, Leador aims to break through the final stronghold of joint venture cars - mid-sized SUVs. In this aspect, Leador has advantages over Nio. For example, the ES6 priced at 350,000 yuan, with battery leasing at 280,000 yuan, surpasses any traditional fuel vehicle. Once Leador enters the 160,000-170,000 yuan range, there are plenty of traditional fuel vehicles there. Even considering monthly electric costs, the overall expenses are much lower than fuel costs.

Today, if you are considering buying a car priced around 160-170,000 yuan, he may not have calculated the expenses thoroughly. I want to help him understand it clearly. If you drive a Tiguan or Rongfang, with 20,000 kilometers per year, fuel costs 9,000 yuan. Our product experience is several generations ahead of them, with lower usage costs, cheaper electricity, maintenance, why not give it a try?

For families looking at cars priced over 200,000 yuan, it's a significant investment, possibly the only car in the family. It needs to cater to their needs like taking kids to school, commuting to work, weekend family trips, which is essential. In the era of traditional fuel vehicles, products in the 200,000 yuan range represent the highest value and strength.

It all comes back to the basics, ultimately returning to the fundamentals. We are also looking at how to explain to users that they are buying a better, money-saving car. This is our main strategy.

Q: How many vehicle models does Leador currently plan?

Ai Tiecheng: Currently, it's 3-4 models, like Toyota's best-selling three or four models back then, around 200,000 yuan are Rongfang, Jiamei, and another is Hanlanda. Because large SUVs are needed for bigger families, we call the L60 a smart family mid-sized SUV, the second SUV is a large three-row SUV, centered around multi-generational, multi-child big families.

We only focus on making popular models, those that most users are likely to purchase.

Question: Currently, the orders exceed the management's expectations, but this year's estimated production capacity is only 20,000 vehicles. Nio has suffered losses before, has Lediola considered this risk?

Ai Tiecheng: The Law of climbing production is inevitable, every company must go through it. The first month a few thousand, the second month tens of thousands, the third month to ten thousand, it may be possible to reach the originally planned monthly production of 20,000 units by the 4th-6th month. We are trying our best to improve. In fact, since the first half of 2022, our team has been stationed in the suppliers by the purchasing and quality departments, and started preparing for the capacity of delivering 20,000 units per month.

Question: Lediao's batteries support 60 degrees, 85 degrees, but Nio's batteries support 70 degrees, 100 degrees. How do we solve the battery compatibility issue?

Ai Tiecheng: Technically, it has been compatible. With Nio and Lediao batteries, the third generation (21 cell capacity) and fourth generation (23 cell capacity) battery bins have a large capacity, currently not fully utilized, only a dozen cells are in place.

We will first invest batteries based on the usage around the battery swapping stations. If there are a large number of users around the battery swapping station, we may add more batteries there, approximately like this.

Question: What are the differences between Lediao's store expansion strategy and Nio's, and why have half of them chosen to be located in auto cities?

Ai Tiecheng: Tesla, Ideal, basically wherever they are, we are there too because they have already gone through the process. In the 0.15-0.35 million range. It's best if there is a clustering effect because users won't just look at one brand, when buying a 0.2 million car, they usually compare three or four different cars.

Question: What do you think has been the biggest challenge for you in the automotive industry over the past three years?

Ai Tiecheng: I have always been engaged in brand building, but today there has been a significant shift in brand communication methods. We hope that Ledao is a warm, sincere, and reliable brand. How can we stick to our brand's underlying image, while also letting others know that we stand out? This is what I need to think about.

Question: Is it even more difficult to create a new brand now?

Ai Tiecheng: I think we are doing fine. Our company comes with its own traffic. Of course, my goals are ambitious. I believe that as a new energy brand, it takes time, and others need to understand you better.