Sporting a fresh cropped haircut, Nio co-founder and chief executive William Li was greeted like a rock star by tens of thousands of devoted fans on Saturday night as he took to the stage at the Olympic stadium in Xi’an, China’s ancient central capital.
Li, who is often referred to as China’s Elon Musk, has sparked division among investors and analysts. Some see his bet on battery-swapping technology — which is at the heart of the electric vehicle group’s business plan and competes with the likes of Tesla that only charges vehicles individually — as unworkable outside China’s big cities.
Others question the financial sustainability of his premium electric vehicles business, which, nearly a decade after being founded in 2014, remains in a fight for survival as it struggles with heavy losses and the high costs of rolling out its battery-swapping infrastructure.
However, the fervour among customers braving the sub-zero temperatures at the annual “Nio Day” over the weekend was a reminder that Li’s fledgling car group strikes a chord with many younger drivers in the world’s biggest electric vehicle market.
“William Li is a pioneer. He is effectively China’s Elon . . . if we are looking at branding, looking at bold moves,” said Tu Le, founder of Beijing-based advisory company Sino Auto Insights.
Nio’s sales to the end of November this year are up 33 per cent at about 142,000 vehicles, putting it ahead of almost all foreign brands in China’s EV market, though well behind Tesla and Warren Buffett-backed BYD, according to HSBC data.
But making cars is notoriously expensive. Five years after listing on New York’s Nasdaq stock exchange, Nio still loses $12,000 for every car that rolls off its production lines, president and co-founder Lihong Qin told the Financial Times recently.
Li, aged 49, founded his first business while studying sociology and law at Peking University more than two decades ago, funding the company by taking on side-jobs as a computer programmer. A serial entrepreneur, he ultimately started dozens of companies and took three public.
The biggest venture before Nio was Bitauto, China’s first online car sales channel, which Li founded in 2000 and floated on the Nasdaq in 2010.
Choking air pollution in China’s cities in the 2000s made him consider an electric vehicle business next. Nio’s Chinese name, “wei lai”, translates to “blue sky coming”.
Li’s motivation was not just environmental. He believed traditional carmakers had lost their way on customer service. In an interview with the FT in 2018, he recalled how this was finally brought home to him at an Audi showroom at Munich airport.
Audi was then one of the top-selling car brands in China and Li himself owned several of its cars. But, instead of acknowledging him as a loyal customer, the sales staff launched into a hard sell.
The episode spawned an idea — that customers should be treated as members of a club rather than sales targets.
“The future of a brand or a company is not about the boundaries of the product . . . It’s actually going to be defined by the user groups that they provide services to,” he said at the time.
His vision appears, in part, to have been vindicated. Backed by an enthusiastic group of drivers, Nio has overtaken Audi in sales in Shanghai as the market share of foreign carmakers in China has collapsed.
Today, Nio users can directly message Li through an app to share their thoughts and ideas about the company’s cars and services.
Senior executives have become grudgingly accustomed to receiving messages from their boss, “maybe in the middle of the night”, enquiring whether a user’s idea can be implemented, according to a senior consultant who works with the business.
“He really drives and lives and embraces and pushes this concept of user centricity. You feel this throughout the whole company,” the consultant said.
However, Li has pinned a lot of faith in making cars with swappable batteries, a different approach from Tesla, gambling that in big cities consumers will prefer this technology, which takes a matter of minutes compared with the slower process of charging a car individually.
In recent months, Li has secured partnerships with Geely and Changan, two of China’s biggest car groups, to develop battery-swapping technology and infrastructure with the aim of lowering costs through scale.
And yet, like Musk, Li is both nimble and has a knack for eye-catching stunts. In December, millions watched as he live-streamed a 14-hour drive from Shanghai to Xiamen.
The 1,000km journey showcased a new long-range battery technology for individual cars developed by Nio. It was also recognition that the company needs alternative technology to its shorter-range swapping network.
Still, Li has not managed what Musk succeeded in doing in converting online enthusiasm into profits.
In its New York stock market listing in 2018, Nio revealed it had lost $1.6bn in three years while making almost zero revenue. The company was bailed out to the tune of nearly $1bn in 2020 by state-owned enterprises from the eastern Chinese province of Anhui.
And facing intense competition from Tesla and BYD along with fellow start-ups Li Auto and Xpeng and established carmakers such as VW and Ford, Nio has missed production targets and recorded big losses. Its shares are below their IPO value and have lost more than 85 per cent since their 2021 peak.
This month, Nio secured $2.2bn from CYVN, an investment group from Abu Dhabi, the second time the Middle Eastern investor has pumped money into the company after a $1bn injection in July.
Investors and analysts are worried that Li, under financial pressure, could undermine Nio’s established reputation as a premium car brand by chasing higher sales volumes with lower-cost models.
Some also argue the company, which is building a business in Europe, could benefit from a more focused effort on domestic sales before trying to expand overseas, particularly with rising protectionism and anti-Chinese sentiment in the US.
However, Li looks like a survivor. If he is troubled by his company’s financial outlook, he did not show it in Xi’an on Saturday.
Such was the demand to attend the Nio Day, tickets were available only through a lottery system. Beaming, he unveiled a new car, a new computer chip and the latest improvements to Nio’s “beautiful” solar-powered battery-swapping stations. Each announcement, of course, was met with applause from the Nio tribe.
“William is crazy,” joked one employee. “His fans are too.”
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