NIO CEO William Li Sets Sights on System Capabilities Amid 2023 Shortfalls, Preps for Fierce Competition in 2024

Following a year in which NIO only achieved around 60% of its sales target, Chairman and CEO William Li recently reflected on the company’s performance and discussed future prospects in an internal gathering.

As reported by Chinese news outlet LatePost, William Li’s first internal letter of 2024 acknowledged that NIO‘s performance last year fell short of expectations, necessitating a swift enhancement of its organizational capabilities.

In 2023, NIO transitioned its vehicle lineup to a second-generation platform, launched mobile phone products, secured independent production qualifications, and attracted substantial investments from the Middle East. Despite these achievements, Li described 2023 as “a challenging and memorable year for NIO“.

The primary issue was that the company’s core business of automobile sales didn’t meet expectations, falling short of the ambitious goal set at the beginning of the year to double sales to 250,000 units. This shortfall was reflected in the company’s financial performance, with a net loss of 4.557 billion yuan recorded, even after a significant narrowing in the third quarter.

William Li outlined that NIO‘s primary focus moving forward will be on building system capabilities. He stressed the need for each department to understand the intrinsic logic and key success factors of their operations, set clear and definitive goals, allocate resources effectively, and continually review and improve upon delivery results.

Li emphasized in the letter, “The intelligent electric vehicle industry is vast, with an extensive supply chain. A one percent discrepancy in system capabilities could lead to a ten percent gap in sales and profitability.” He noted that NIO‘s business boundaries had expanded rapidly over the past few years, leading to resource wastage due to insufficient understanding of the business and less-than-ideal management.

Li also highlighted the necessity of balancing the company’s investments in product technology R&D and service infrastructure development with cost control. “We are still grappling with losses resulting from R&D and infrastructure investments. We need to continuously improve our financial performance to ensure the company’s sustainable development. It’s our responsibility and duty to utilize every penny from our investors and shareholders effectively.”

William Li declared in the internal letter, “In 2024, we must decisively avoid ineffective and inefficient investments, and save every penny that does not create value for our users and the company.”

The competition in China’s new energy vehicle market is intensifying. Li predicted that the next two years would be a pivotal phase in the industry’s transformation, with the level of competition exceeding expectations. He cautioned, “We will face tougher competitors and more superior products, more intense price wars, and a more complex public sentiment. Everyone in the team needs to be mentally prepared, abandon illusions, and confront challenges head-on.”

In light of this, Li outlined key priorities for 2024. These include ensuring long-term investment in core technologies, maintaining a competitive edge, and ensuring timely and quality delivery of products; enhancing sales and service capabilities to withstand market competition, and converting sales potential into actual sales volume; and ensuring that development of the company’s three brands and nine core products proceeds on schedule.

Previously, NIO experienced delays in delivering the NIO ET5 and ET7 due to chip shortages and process improvements, with the latter being delivered a year after its launch. William Li acknowledged that 2024 would present more significant challenges, as NIO will not be launching new models, and only its sub-brand Alpine is set to release new vehicles in the second half of the year. However, he optimistically views 2024 — with fewer new vehicle launches — as an opportunity for NIO to focus on enhancing its system capabilities.

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