"A good person" has always been the label given to Li Bin by the outside world. Now, he wants to change that label and become a "hardworking tough guy."

NIO's organizational restructuring has attracted widespread attention recently. At a closed-door communication meeting on March 23, Li Bin and Qin Lihong faced the media, detailing a series of transformation measures NIO has taken since the end of 2023 to achieve profitability.

Li Bin dissected NIO's core objective for 2025 in three hours—the goal of turning a profit in Q4—and elaborated in detail on the three key paths to achieving this goal:Increase sales volume, improve gross margin, strictly control expenses.

He spent every penny on quality, focusing on each item, to reduce costs, and then he was offered a deal to show his products directly at Citécée exhibition, to save money.

"Profitability" and "ROI" became his frequent terms. Following the release of the Q4 2024 financial report, the loss figures once again became the focus of external attention. Li Bin indeed needs to convey confidence in NIO, and this ten-year-old new energy vehicle company also needs to find a new survival strategy in the exceptionally fierce competition.

Life-and-death line: Must be profitable in the fourth quarter.

"If there is only one thing or one goal that NIO wants to achieve this year, it is to be profitable in the fourth quarter." Li Bin stated at the outset, and "profitability" has become the keyword he mentions the most.

In the past, NIO was a representative of the "long-termism" approach in the new energy vehicle industry. From investing heavily in building battery swap stations and launching NIO Houses to create a user-service oriented company, to self-developing intelligent driving chips and vehicle operating systems, each initiative required investments of billions, even tens of billions of yuan, and a long period to see returns.

Over the past decade, every time NIO released its financial report, it became a moment for the outside world to watch for "losses", "how much more money will NIO lose?" "How long can NIO keep going?", from Li Bin and Qin Lihong on the top to every employee at NIO might face these soul-probing questions.

Recently, after the financial report for the fourth quarter of 2024 was released, a similar situation played out once again. This time, both revenue and delivery volumes set new records for蔚来, with the gross margin also showing continuous improvement, but the issue of losses remains inescapable. The keyword "over 100 billion yuan in losses over ten years" frequently appeared in various media reports.

Lee Zunlin also issued a final ultimatum to the club: this season must turn a profit.

Compared to the previous target of profitability in 2026, this goal has been significantly accelerated. Behind this profit target are two main factors: Li Bin’s clear understanding of NIO’s current development phase. The company has been established for ten years, and many of the technological investments made will bear fruit this year. The layout of the three brand matrix will also be completed this year, marking a moment for NIO to demonstrate the sustainability of its business model. Meanwhile, many new energy vehicle startups are also achieving profitability, such as Ideal and Zero Motorcycles. XPeng has also announced that it aims to achieve profitability by the end of this year.

"If, under such circumstances, we cannot achieve profitability in the fourth quarter, it will be a significant test for the long-term development and business model of the entire company. Therefore, we must achieve profitability in the fourth quarter, and we can achieve it." Li Bin admitted.

In response to the outside teasing that "Li Bin finally listened to advice," he revealed that NIO's organizational changes actually began in the second half of 2023.

In November 2023, Li Bin issued an internal letter announcing a 10% reduction in headcount, the consolidation of redundant departments and positions, the elimination of inefficient roles, and the postponement and reduction of investments in projects that would not improve the company's financial performance within three years. In 2024, NIO began piloting the CBU (Basic Business Unit) mechanism in some departments, with plans for full implementation this year after achieving positive results, aiming to lay the foundation for profitability in the fourth quarter of this year.

"If they can cross, electrification will be more actively built."

Here's how to monetize: Sales x Gross Margin - Expenses. Sales need to increase, Gross Margin should stay within a reasonable range, and expenses should be kept within a reasonable limit.

The four driving factors for his sales are product, technology, network, and service.

On the product level, this year will be a significant year for Nio, with three new models - NIO, LeDao, and Firefly - delivering a total of nine new vehicles. For the NIO brand, the NIO ET9 will start delivering soon, the 2025 version of the NIO "5566" model will be launched in the second quarter, and another new product will be launched in the second half of the year. For the LeDao brand, the LeDao L90 will be unveiled in the second quarter and delivered in the third quarter, while the third LeDao model will be launched in the fourth quarter; the Firefly brand plans to launch in April this year.

Li Bin didn't shy away from the controversies surrounding Le Dao and Firefly. He mentioned that the Le Dao L60's orders are still steadily growing in the current public opinion environment, which is very difficult. "Now, with so many people slandering, I didn't quite understand this before, but now it seems that it really can wear away the gold. But we are still stubbornly climbing out of the hole." With the completion of Le Dao's three-car layout, Li Bin believes that its brand momentum will gradually return.

Regarding the controversy over LED lanterns, Lee Zhen said that LED lanterns were custom-made for Europe, with distinctive features, and were changed in China after the Ukraine-Russia conflict and trade policies. Despite users saying they had never seen the lanterns' layout, they were unique, but were better than no one knew about. He believed the product would have a strong after-sales support, with the first shipment to be delivered in April, and would still have a full production cycle for another 8 months.

From a technical perspective, Li Bin believes that the soon-to-be-delivered Nio ET9 is a leader in intelligence, with significant investment. The R&D cost of the chips alone could build 1,500 battery swap stations, and the R&D cost of the operating system could build over 1,000 battery swap stations. Features like the NOMi assistant integrated with DeepSeek and end-to-end autonomous driving based on world models will also contribute to sales growth in the future.

This year is also a significant year for NIO in the construction of battery swap stations at the level of the charging and swapping network.

He admitted that Nio had paid a lot of tuition in many areas in the past, but if he could go back two or three years, he would have been more aggressive in building battery swap stations. "The promotion of sales by battery swapping has a network effect, and we underestimated the role of battery swap stations in sales," he said. He cited the example that one-third of Nio's battery swap stations, or 1,000 stations, are located in the Yangtze River Delta region (Jiangsu, Zhejiang, and Shanghai), and sales in these three provinces account for 50% of Nio's total sales, demonstrating the significant contribution of battery swap stations to sales.

However, there are still some doubts in the outside world regarding the exchange line, such as the recent emergence of megawatt flash charging, with some opinions suggesting it could pose a challenge to exchange.

Li Bin responded that charging and swapping are not in opposition; the advantages of swapping are numerous, and the issues to be addressed go far beyond the speed of charging. Even with megawatt fast-charging reaching such high speeds, how to address the issue of power capacity is also a challenge.

Compared to this, he believes that NIO's battery swap, recharge, and upgrade capabilities are the ultimate solution; furthermore, NIO recently collaborated with CATL on battery swapping, and Li Bin thinks this indicates that battery swapping is becoming a mainstream energy replenishment model.

Regarding the sales and service network, William Li revealed that Nio's sub-brand, Le Dao, will have 450 stores by the end of March this year. Firefly will be sold directly in Nio stores. A mature sales and service network this year is a crucial support for sales. In terms of internationalization, Nio will enter 25 countries and regions this year. He admitted that Nio's previous efforts in Europe were somewhat heavy, and the company paid a lot of tuition fees.

"We have invested heavily in Europe over the past few years, and it came as a surprise that these countries in Europe move so slowly. It takes 10 months to build a battery swap station, and some even take a year. The ramp-up time for their sales and service network is too slow; when the ramp-up is slow, it means higher costs. As a result, we have paid a lot of tuition fees in Europe."

Li Bin stated that going forward, the three brands of NIO entering the global market will seek local partners in each country, utilizing its existing resources including stores and service facilities, to conduct business according to NIO's direct operation model abroad. Thus, expanding overseas operations for NIO will be purely incremental.

Cost Reduction

Over 6000 cost reduction leads discovered in 2024

Lee Zhang revealed that Cai Lei in 2024 borrowed from Fruit Chain to start Cost Mining (Cost Mining) project.

Under this project, NIO has established a "cost of a hundred times" mentality internally, meaning that for any decision, 1 yuan equals 10 million yuan. "One yuan doesn't seem like much, but when multiplied by 10 million cars, it becomes 100 million. Some people think saving 1,000 yuan is not much, but when multiplied by 10 million, it becomes 100 million, so we want to instill this consciousness in our internal processes, from awareness to management standards, starting now."

Li Bin revealed that NIO received over 6,000 Cost Mining leads internally in 2024, and will continue to deepen this effort this year.

According to Li Bin, NIO's cost reduction efforts have reached an atomic level, covering the entire lifecycle from R&D to the supply chain.

He used the seat as an example, explaining that previously NIO would select suppliers for entire vehicles, such as choosing one supplier for the ES8, another for the ET7, and yet another for the ET9, all through bidding processes. This was the conventional approach.However, the problem with this approach is that the suppliers only produce a single model of car, and the volume is low, which means they cannot make a profit when the costs are distributed. Now, NIO is decoupling the components and parts of the car into layers, connecting the supply chain from the source of research and development, which benefits everyone by allowing them to make money.

Furthermore, NIO is also pushing for a "transparent supply chain," with dozens of suppliers already connected to the system. Under this system, NIO can understand all the production cost details of its suppliers related to NIO, including personnel, facilities, and energy consumption. All data must be connected in real-time. "We hope to open up the entire supply chain, make money transparently, and reduce waste."

In addition to supply chain, Li Bin believes that R&D cost reduction is also very important. Taking the intelligent driving chip developed by NIO as an example, one of these chips is equivalent to at least four chips from its peers, reducing costs by at least 10,000 yuan. From the perspective of cost thinking at millions of times, 10,000 yuan for 1 million vehicles would be 10 billion yuan, for 500,000 vehicles it would be 5 billion yuan, and for 200,000 vehicles in 2024, it would be 2 billion yuan. A lot of money can be earned back through this.

Spending control: Translate the above content directly without any additional text or explanation. Here's the direct translation: Spending control refers to the strategies and measures implemented to regulate and manage expenditures within a given budget or financial limit, aiming to ensure financial stability and prevent overspending.

Every car and every battery must have its accounts settled clearly.

In terms of reducing costs, Li Bin revealed that NIO will begin to fully implement the CBU (Basic Operating Unit) management approach this year.

CBU mechanism, in simple terms, is the shift from the previous budget-based approach to the current management-based approach, focusing on ROI (return on investment), promoting a whole-unit operational awareness - spend wisely where it's necessary and cut unnecessary expenses.

Using store sales as an example, the previous metric was how many cars sold determined how much money was earned, but the current logic is different, and the cost of selling the cars also needs to be factored in.

For instance, when a company buys leads online, and the sales team in-store closes deals with users, or when sales actively expand by reaching out to friends, the costs for the company vary greatly. After considering these factors, the sales incentive system would be entirely different. Sales themselves are like an operating report, and Xiaomi needs to calculate how much money the salesperson has earned for the company.

For example, for the upcoming launch conference of Firefly, following the previous approach, it would require renting a studio and organizing a conference, which would cost at least several hundred thousand. Now, with a new approach, renting the Bull House at Shanghai Tower for one day only costs 100,000, which saves a lot of money.

After the IT department implements the CBU mechanism, for example, if there are 10 projects, calculate clearly what the returns for each project are, what the returns are for the current year, and what the returns are in the long term. Also, account for the total cost in all respects—how much is spent on labor, how much on testing, and how much on deployment. Then rank them, with those having high ROI going first, thus having higher priority. "If it's not profitable, don't do it; we won't die without doing it." Last year, a lot of money was saved because of this.

"We've accounted for every single account, down to the regional company, every vehicle, every battery unit, every marketing campaign, every R&D project, and every motor. Each operational report must have someone taking responsibility for it, that's the concept of a whole-company operational awareness."

The Shanghai Auto Show will be held in April this year, and Li Bin has started to cut unnecessary expenses. Originally, the Firefly brand planned to exhibit independently, but he believed that exhibiting directly at the NIO booth would be more effective and also save money. Ultimately, the Firefly brand will no longer exhibit independently.

"NIO is definitely not a lavish company. We have paid a lot of tuition; some of it is due to our own lack of capability, some is due to objective laws that must be paid, and some is due to inadequate management awareness." He said that NIO still has a huge space for improvement in management efficiency, and this year they must make up for this lesson. "We do not deceive ourselves, nor do we belittle ourselves. We will continue to do well where we excel and make changes where we fall short."

Although Nio will control costs in the future, Li Bin emphasized that where it can really add value to users, Nio will definitely continue to do so. He used the example of service, noting that many Nio users have suggested closing the Bull House. "We have never considered closing the Bull House because it is a very important part of Nio."

However, Niu's house is also promoting the CBU mechanism. Li Bin gave an example that there used to be dedicated staff responsible for the Club area, who did not report to the store manager. After NIO made the store the basic unit of operation, store managers felt that if they spent more money, they would just reduce staff. "Recently, some media reported that NIO is laying off employees, but we no longer have this concept. Our internal optimization and streamlining are all done by the frontline."

Good Samaritan Li Zhi, to the wicked Li Si.

Previously, the label given to Li Bin by the outside world was "a good person"; but this year, Li Bin says he hopes his new label is "the most hardworking person, the most determined person."

Qian Ling, the CEO of Qin, said, "The fact that Li Zhi is a good person is a setup topic. What do they really want to say behind him? First, the first implication is that you can't distinguish between good and evil, second is that you have no courage, and third is that you don't take charge."

In the process of Xiaopeng emerging from its困境, the outside world has given it many "romantic" descriptions, such as investigating how many instances of corruption and firing how many high-ranking officials. Li Bin mentioned that over the 10-year history of NIO, the number of voluntary resignations of VPs (vice presidents) exceeds 20.

Li Bin revealed that NIO once reduced its U.S. team from 700 people to over 200; "We never say that we eliminate someone as a virtue, we don't really approve of that. If someone is morally corrupt and violates the law, they should be arrested, and we have arrested many people." Qin Lihong added that in 2024, NIO's compliance department handled more than 100 investigation cases, with over a dozen cases being referred to criminal law, and the longest sentence was 13 years.

Here is the translation: "We have very high standards of regulation within our company. In cases where we are involved, we will thoroughly investigate. Everyone in the team hopes to see a streamlined and straightforward approach. I am not a fan of being too casual. We think it's better to do things properly and thoughtfully, rather than just rushing through things."

From being a "good guy" to a "relentlessly driven individual," Li Bin is transforming, and NIO is slimming down and increasing efficiency through a series of mechanism changes. After these transformations, can NIO achieve its goal of doubling sales this year and achieving profitability in the fourth quarter? We shall see.