Editor's note: This is a guest post from Rafi Khan, an NIO investor, and does not represent the views of CnEVPost.
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Many reasons why NIO could have had lack luster sales:
- NIO not selling Sedans which represent majority of Vehicle Sales
- NIO EVs are expensive approx. same ASP as Mercedes
- NIO has yet to fully build out its Sales Network
So how has NIO achieved:
- Highest Customer Referral Rates ever in history of Auto World at 69%
- Leading Position in SUVs only EV category currently sold by NIO
- Chinese EV Sales more than Mercedes, BMW, Audi, TSLA Model S & VW combined
Secret Sales Sauce is NIO Owners & Referral NIO Points given on Sale of NIO EVs
Option A – You buy from NIO directly you get NIO Points 5,000
Option B – You buy NIO through an existing NIO Owner then both you and the NIO referring owner get NIO Points 12,000
So the system incentivizes existing owners to sell NIO EVs
NOTE I have not used "NIO Dollar" term used in video as that may be misconstrued -- rather I just use NIO Points.
That is why you see hundreds of existing owners happily working for free at NIO Houses, NIO Spaces & Auto Shows – Best Sales Force possible.
Rather than spend spare time in their typically cramped Apartments, why not go to more spacious & luxurious NIO House or NIO Space, have a Latte & also make NIO Points 12,000 for every NIO EV you sell plus network amongst people of your ilk – Pretty easy decision for many status hungry Chinese.
With that Kick Start NIO Points Balance received on purchase, new NIO Owner has incentive to go to NIO App & NIO Life to use his NIO Points – good start to new NIO Life.
10 NIO Points equates to One RMB
These NIO Points / RMB can be used in NIO Life Mall
You get 40 NIO Points for signing up for NIO App plus more points for daily use & even more for daily continuous use.
Becoming new NIO EV owner
- You have NIO User Experience not just ordinary purchase
- You are not just an owner but valued new member of NIO Community / Family
- You remain connected with NIO Community through a) NIO House with numerous activities b) NIO Space c) NIO App Chat Groups d) NIO Life Shopping Mall e) Potential new NIO Owners who seek you out because you provide them extra purchase discount of NIO Points 7,000 f) NIO Points g) NIO Pollution Credits which daily accumulate as you drive emission free
- You are one of an exclusive group of 100,000 existing NIO owners that can & will want to sell One Million ET7 EVs which potentially, for the group of existing & new owners**, make you NIO Points 24 Billion**
Can you think of a better healthier “pyramid” sales program – Hence its unparalleled customer referral success.
Explaining NIO Pyramid Sales Terminology
Before the negative nit pickers lambast me for using “pyramid sales program”
Let me explain what I mean:-
Stage 1: NIO sells 1,000 EVs One SUV ES8 in handful of Chinese Cities
Stage 2: NIO sells 20,000 EVs Two SUV ES6 & ES8 in 50 Chinese Cities
Stage 3: NIO sells 50,000 EVs Three SUV EC6, ES6 & ES8 in 100 Chinese Cities
Stage 4: NIO sells 200,000 EVs Three SUV EC6, ES6, ES8 & One Sedan ET7 in 150 Chinese Cities Plus 6 European Countries incorporating dozens more European Cities
Stage 5: NIO sells 1,000,000 EVs Three SUVs, 2 Sedans ET7 & ET5, 1 MPV EF9 plus Robo Taxis selling throughout China, Europe & Middle East
At all stages the Chinese government is fully supportive of all your infra structure needs.
As NIO progresses through various sales stages you create Sales Pyramid as NIO Owners motivated to get Referral Fee NIO Points grows exponentially – Pyramid Selling NIO Style.
At Stage 4: 200,000 NIO Owners motivated (rapidly growing to One Million Owners as NeoPark becomes operational & ET7 sales sky rocket) to sell NIOs would be most potent Auto Sales Force ever assembled with Stage 5 yet to come.
Fulfilling the Chinese government's priority for Soft Power & Global Dominance of EV Sector.
AAPL has not done this, no Auto Company has done this.
NIO is not another AAPL – NIO is just NIO!
Baas another blockbuster Sales Tool
Best Sales Tool is one which enables NIO to sell better product at much lower entry price.
BaaS enables NIO to sell 100 kWh EV at RMB 128,000 cheaper entry price relative to Premium Luxury competitors.
NIO prices BaaS 100 kWh EVs cheaper than 70 kWh BaaS EVs incentivizing new buyers towards 100 kWh Models.
NIO sells 100 kWh Models cheaper but receives RMB 58,000 more from NIO Power in revenues & makes RMB 40,000 more Profits – Sales & Marketing Genius NIO Style.
Assessing NIO's Sales Performance
a) SG&A has recently been flat whilst Sales have been rising Q to Q. Q4 2020 SG&A RMB 1207 Million for 17,353 EVs but in Q1 2021 SG&A fell to RMB1197 whilst EV deliveries rose to 20,060
b) NIO Customer Referral Rate of 69% is highest ever seen in Auto Industry
c) NIO has made zero price cuts despite handful of price cuts from TSLA
d) NIO Gross Margins have consistently risen in recent quarters
e) William Li has repeatedly stated Demand is not a problem but issue is supply of chips & batteries
f) JD Power has ranked NIO Top in Customer Appreciation
In summary NIO Sales Force & Program has produced Pre-Eminent Results
In June 2021 XPEV sold 4730 Sedans (72%) & 1835 SUVs (28%)
Vast majority of 70,000 plus monthly sales for each of Mercedes, BMW & Audi are Sports Sedans
So to get big Sales Numbers using your Pre-Eminent Sales Force & Strategy, you badly need a Sport Sedan – No Problem NIO has the ultimate answer.
ET7 Sedan Ultimate EV Luxury Driving Machine – More NIO Master Moves
ET7 has potential to Disrupt Premium Luxury Segment & be most profitable EV.
Better Range, Performance, ADaaS Autonomy, Safety, Power Train, Luxury, Entertainment, Service, AI, BaaS Entry Price, Govt. Subsidy, Body (Aluminum), 4WD, Pollution Credits plus NIO House, NIO Points & NIO Life.
From ET7 SP of RMB 526,000 deduct 128,000 BaaS 18,000 Govt Subsidy.
Customer Pays RMB 380,000.
NIO gets RMB 380,000 plus 128,000 (BaaS from NIO Power) Est. 12,000 (Pollution Credits sold to ICE OEMs) Est 50,000 (Capitalizing ADaaS monthly payments) or RMB 190,000 ($30,000) MORE than Customer Pays upfront.
Estimate NIO makes Profit of RMB 190,000 ($30,000) per ET7 which make ET7 not only highly disruptive but highly profitable.
Good Luck trying to swim the NIO Moat!
There is a reason why no one has yet seriously challenged NIO in Premium Luxury EV Segment.
BYD, XPEV, Geely (Volvo), Li, TSLA, SAIC, VW all fighting for RMB 250,000 Crowd.
MB, BMW, Audi, Jaguar, TSLA Model S cannot get Chinese sales off the ground at NIO Price Levels
It is because NIO has already built a huge big Moat:
- BaaS Price Entry that no one else has
- BaaS Upgrade Battery Potential that no one else has
- NIO Price / Performance / Range combo that no one else has
- NIO House / NIO Life / NIO Points / NIO Community / NIO Service / NIO Govt. Subsidies
- NIO ADaaS Level 4 Autonomy
- NIO Pre-Eminent User Experience
- NIO Lidar Safety / #1 Customer Rating
- Government Support for NeoPark & Infrastructure
- NIO Team Intel Mobil Eye / Nvidia / QCOM / SinoPec / CATL
Combine Superior Service to Superior Product to Superior Sales Force.
You have all ingredients for a Superior, Once in a Lifetime Stock.
Not a Financial Advisor Nor an Auto Analyst JMHO DYODD