- William Li said Nio is aiming for single-quarter profitability in the fourth quarter and needs to become more rational in cost control, resource allocation, and priority setting.
- He asked staff to change the unjustifiable practices of the past, focus on efficiency, and deliver on business goals.
Nio (NYSE: NIO) is in the midst of a new organizational restructuring focused on ramping up cost control, the core of which includes implementing a management mechanism called the CBU (Cell Business Unit).
Now, an internal speech by William Li, the company's founder, chairman, and CEO, provides more details.
Li gave the internal speech to all employees on March 14, detailing the core logic of the CBU mechanism, according to a report in local media 21jingji today.
He asked employees to change the unjustifiable practices of the past as soon as possible, emphasizing efficiency and delivering business goals.
Nio has 12 CBUs, and the units that spend the most money include the research and development team's more than RMB 100 ($1.4 billion) a year, the marketing department's billions of RMB a year, and large staff costs, Li said.
"We need to answer the question of what effect these investments are actually producing, and then we need to do it by saving money where we should save money and spending money where we should spend it," he said.
Nio's current resource boundaries narrowed because it didn't meet its operating targets for the 2022 to 2024 cycle, he said.
The company needs to make fewer inefficient investments and push resolutely for efficient ones, Li said.
Nio now needs to improve efficiencies and strengthen management around CBUs, he said.
For some projects, they were initiated based on specific market environments, but now those environments may have changed, but the projects continue, Li said, adding that those practices are what need to change.
Li said he has made some of his own decisions on things that have had a very low return on investment and he needs to review that. "In the future, even if it's something I say we should do, if it doesn't make sense financially, don't move forward."
Nio recently started asking employees to report their work hours in the R&D team, due to the fact that 60 percent of the cost of R&D investment comes from staffing costs, according to the internal speech.
He also emphasized that Nio is aiming for single-quarter profitability in the fourth quarter, and with only two quarters left before then, the company needs to become more rational in terms of cost control, resource allocation, and priority setting.
Li also mentioned that many people on the internet nowadays teach him how to be a good CEO, and he will listen to reasonable advices.
Management work is something that needs to be continuously improved, and Nio needs to regain its dignity in this regard, he said.
($1 = RMB 7.2371)
Nio making organizational changes to focus more on cost control, report says
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