must tap potential from within, inefficient projects will be fully optimized, and employees need to be more agile, Li said.

In a January 1 internal all-employee letter, William Li, Nio's founder, chairman and CEO, outlined the major issues facing the company today, asked for greater employee efficiency and vowed to optimize inefficient projects and teams.

The company's workload will increase a lot in 2023, but the company will only see a small increase in the resources it devotes to it, he said.

Nio must tap the potential from within, and inefficient teams, inefficient processes, and inefficient projects will be fully optimized, Li said.

The ever-changing market requires Nio employees to become more agile, he said.

Nio's new strategic businesses will usher in key milestones and the user deliveries and services in Europe will further accelerate, Li said.

Here is the full text of Li's internal letter in English, obtained by CnEVPost.

Dear colleagues,

As we welcome the year of 2023, I would like to wish everyone a wonderful new year!

In the past month, as the omicron variant spreads rapidly across China, many colleagues have been infected and the virus has taken a toll on people's health and way of life.

Despite these challenges, everyone still tried to work in various ways to ensure smooth progress in terms of R&D, supply chain, production, delivery, user service, Nio Day 2022 and many other activities.

I would like to thank everyone for working diligently during this difficult time and hope affected colleagues get well soon.

2022 is an unusual year. The COVID pandemic and emergency events exerted impacts that exceeded everyone's expectations, and disrupted our original pace and plan.

Even in the face of a myriad of challenges, we still made positive strides. In 2022, we delivered 122,486 vehicles, increasing by 34% year-over-year.

We kicked off the delivery of three new vehicles based on NT2, namely ET7, ES7 and ET5. We started production in F2 and fulfilled the infrastructure-building targets, such as Nio Houses, Power Swap stations, and Nio Service Centers. We successfully held Nio Berlin and built up local teams in five European countries.

We pushed forward new strategic businesses according to plan. We successfully listed on HKEX and SGX. During this turbulent year, there have been so many touching and unforgettable moments and stories. Thank you all for your full dedication and joint efforts!

In 2022, there are pains and gains. However, it should be clearly recognized that many peers outperformed us in the same period.

Our delivery volume growth fell behind that of the overall smart EV market in China. When tackling supply chain volatilities, many companies responded more swiftly and efficiently. In the face of demand fluctuations, the inertia was too strong to make timely adjustments and avoid unnecessary losses.

The software and hardware quality issues before and after the new vehicle launch affected the reputation and word of mouth of our products. The test vehicle accident and data leakage incident sounded the alarm for us to enhance internal control and management.

We set up a user satisfaction feedback mechanism, but the problem-solving speed still fell greatly short of user expectations. The organization and team expanded too quickly in the past year while the internal communication efficiency was in dire need of improvement.

The digital management system could not effectively support new business needs and became the bottleneck of business development. External environment and pressure should not be the reason for us to evade our own problems. We could have and should have done better.

Great companies can turn challenges into opportunities and build their own competitive strengths under pressure. The competition of smart EV is now in the later stage of the qualifying round. We have to perform exceptionally well to be able to enter the final round.

We have to get out of the woods of 2022 as quickly as possible, take a deep breath, stand our ground, keep a sense of urgency and get to work in an agile and efficient mode to embrace even more fierce competition in the next round.

We need to be fully prepared for the difficulties ahead in 2023 or for an even longer period. People need time to recover from the COVID pandemic while the economy and consumer confidence also require a relatively long process to restore.

Consequently, the premium vehicle market will take a hit in particular. The anti-globalization trend is unlikely to turn the tide, which will bring serious impediments to our global market entry efforts.

As the market competition gets even more fierce and products and technologies become increasingly homogeneous, it is getting harder to gain differentiated competitive edge.

We should not have a fluke mind or take any chances. Instead, we have to keep a sense of crisis, observe and analyze the dynamics of the operating environment and competition landscape level-headedly, so as to adapt to and cope with the daunting challenges down the road.

When the going gets tough, we should be even more steadfast and confident about the future. Our confidence comes from our judgement on the trend: smart EV has become one of the few highlights of global economy and the pursuit of sustainable development has also become one of the few global consensuses.

Our confidence comes from our systematic innovations of products, services, and communities, our determined investments in core full-stack technologies centered around smart EV, and our decisive infrastructure deployment of Nio House, Nio Power and Nio Service Center.

Our confidence comes from the vision of becoming a user enterprise and our value-driven organization and outstanding teams. We are on the right side of history and in the right direction. As long as we stay focused on execution, we can achieve our goals.

Staying focused on execution means working more agilely. The ever-changing market requires us to equip ourselves with agile mindset, process and capabilities.

Product Experience team needs to dive deep into user needs more keenly and insightfully, quickly respond to user feedback in a closed-loop manner. R&D team needs to evaluate and review project progresses at all times to identify issues and make corrections in a timely manner.

User Development and Operation teams need to make dynamic predictions on market demand to provide a timely and accurate planning basis to the Industrialization team. Supply Chain, Manufacturing and Logistics teams need to respond more quickly to market volatilities and secure supplies with sunk costs as low as possible.

Quality team needs to speed up the quality issue closed-loop resolution to minimize losses as well as protect user benefits and product reputations. After-sales and Service teams need to respond to user demand more swiftly to improve user experiences. Administration and Support teams need to provide suitable and handy support to business teams to enhance efficiency of business operations.

Staying focused on execution means working more efficiently. In 2022, our team and organization continued to scale up, leading to many issues such as unclear roles and responsibilities, unaligned objectives, inadequate processes and overlapping initiatives.

There is significant room for improvement when it comes to efficiency. In 2023, we will face more work load, but the overall investments by the Company will only increase slightly. Therefore, we have to tap into the potential internally. In particular, low-efficiency organization, teams, processes and projects need to be streamlined and optimized comprehensively.

In 2023, I will spend more time on efficiency improvement personally, and would like to urge every colleague to support and join the efforts from the perspective of the Company's overall interests and would welcome all the constructive suggestions for me and the management team on efficiency improvement.

2023 is a year of significance to us. We will deliver five new vehicles based on NT2 in the first half of 2023 while the R&D of NT3 will be in full swing. All the new strategic businesses will usher in key milestones and the user deliveries and services in Europe will further accelerate.

Our performance in 2023 will directly determine our long-term competitiveness, so every one of us needs to pour our heart into it and go all out.

Our journey is a muddy marathon, so do not expect an easy road ahead. In 2023, let us all stay focused on execution efficiency improvement and keep powering on!


William Li asks for better performance in all-hands letter as NIO suffers persistent operational issues