Li Bin, Chairman and CEO of NIO Automobile, sent an internal letter to all employees on November 3rd, partially confirming the previously circulated news in the industry that NIO will lay off 10-20% of employees. In this letter from all employees, Li Bin proposed that "the company will reduce the number of positions by about 10%, and the specific adjustments will be completed in November
The terminal channels will not move, and this optimization and adjustment is mainly aimed at the headquarters. An insider from NIO Automobile told Cailian News Agency that the main purpose of personnel optimization and adjustment is to reduce costs and increase efficiency to cope with more intense market competition.
Two "improvements"
The cumbersome personnel and institutional arrangements are undoubtedly a heavy burden for a new car making force like NIO.
According to the 2022 annual report, NIO had 26800 employees in the current period, and NIO paid over 11.2 billion yuan in compensation for this. From the perspective of sales, general and administrative expenses, NIO Automobile has grown quarterly, reaching 5.3 billion yuan in the first half of this year, which is 34.09% higher than Ideal Automobile, also a new force in car manufacturing.
In January of this year, Li Bin mentioned in a letter from all staff that the team would be streamlined. "In 2022, the team continued to expand, but there were many situations where responsibilities were unclear, goals were inconsistent, processes were incomplete, and redundant construction was common. There was still a lot of room for improvement in efficiency." However, Li Bin also said, "As long as we can provide salaries, it is easy to avoid layoffs, Maintaining 100% of people and completing 150% of work should be what we need to do
The final decision for Li Bin to streamline his team was not only due to the huge personnel expenses, but also to the current weakness of his main business. The latest data shows that NIO delivered 16074 vehicles in October, which is lower than the previously set monthly sales target of "stabilizing at over 20000 vehicles".
At present, NIO Automobile has reached 8 models for sale, making it the largest new force in car manufacturing. However, none of the models have become truly popular. On June 12th of this year, NIO announced a price reduction of 30000 yuan for all series of new cars, with deliveries exceeding 20000 in July. However, it failed to maintain its growth momentum and the delivery volume remained hovering between 15000 and 20000 units.
This year, we delivered 5 new products and gained over 40% market share in the pure electricity market with a transaction price of over 300000 yuan. However, our overall performance still falls short of the expected target, "Li Bin admitted in a letter to all employees.
At the same time, 'neglecting one's job' has always been a criticism of NIO Motors in the industry. The NIO chip "Yang Jian" was mass-produced in October, with an 800 member chip research and development team and self-developed the entire vehicle operating system Tianshu SkyOS. Li Bin once said, 'Yang Jian' can reduce the cost of NIO's single car LiDAR by hundreds of yuan, and the R&D cost can be recovered in about a year. '
NIO Phone is currently the only car building new force with a self built mobile phone team, and NIO Phone has been launched. Previously, NIO was also exposed to have self-developed lithium manganese iron phosphate and 4680 batteries, and plans to mass produce and supply NIO and its subsidiary brand Alps.
Based on this, the entire staff letter mentioned two aspects of "efficiency improvement": firstly, organizational efficiency improvement, merging duplicate departments and positions, transforming inefficient internal workflow and division of labor, and canceling inefficient positions; The second is resource efficiency, delaying and reducing project investments that cannot improve the company's financial performance within 3 years.
Three 'guarantees'
At the 2023 first quarter financial report conference call of NIO Motors, Li Bin stated that "NIO's originally scheduled time for achieving breakeven in the fourth quarter of this year has been postponed to within one year. Obviously, if these issues are not addressed, NIO's breakeven point may be postponed again.
In a letter from all staff on November 3rd, Li Bin not only mentioned the streamlining of the team, but also proposed three "guarantees", namely, ensuring long-term investment in core key technologies and maintaining leading advantages in technology and products; Ensure sales and service capabilities are able to cope with fierce market competition; Ensure the timely launch of 9 core products from 3 brands. This is the first time NIO has disclosed its brand product planning to the public.
According to the information disclosed by NIO, over the past two months, the company has conducted more than thirty two-year business plan analysis and discussion meetings to determine the goals, key success factors and priorities, action plans, and required resources for each business in the next two years, identify opportunities for organizational optimization, cost reduction, and efficiency improvement. In the past two weeks, the company has identified the business priorities for the "three guarantees" mentioned above.
For the increase in sales, NIO has proposed expanding its sales service network to ensure that orders do not fall into the hands of others. At the 2023 Q2 financial report, Li Bin revealed that he hopes to accelerate order conversion through more channel coverage and improved sales capabilities in the future. In June, we found that our sales capacity was unable to meet the demand for selling 7 or 8 vehicles simultaneously. Starting from July, we have comprehensively improved our sales capacity, with a goal of selling 30000 locked orders per month. We will complete the construction of this sales capacity by the end of September, and (hopefully) the results of sales capacity construction will gradually become apparent starting from October
NIO Motors is not the first new car making force to choose to improve organizational efficiency in order to gain "survival opportunities". Since last year, Xiaopeng Automobile has also undergone significant organizational reforms. Xiaopeng Automobile Chairman He Xiaopeng recently stated that, In 2019, the company had only about a thousand people, and by 2022, it had already 20000 people. At this growth rate, the company's management and operational capabilities have not yet been established, and too many people are still using past experience to do what they are doing now. This is not enough. Competition is changing, technology is changing, and the personnel size has increased more than ten times, and the difficulty of management has actually increased dozens of times. If you remain unchanged, the company will be gone
Ideal cars treat organizational processes as equally important "products" as smart electric vehicles. Li Xiang, Chairman of Ideal Automobile, has stated on multiple occasions that "these two products serve two users: one is aimed at end consumers of household users, and the product is intelligent electric vehicles; the other is aimed at organizations and employees, and the product is a process system. These two circles are interdependent. We also treat organizational processes as products that exceed user needs