NIO's Li Bin Cites Rising Supply Chain Costs Squeezing Margins; LeDao L60 Launches at Lower Price to Tackle Market Challenges

NIO founder William Li stated that 2024 is the most challenging year for the automotive industry. On June 11, the refreshed Le Dao L60 was launched with a starting price of RMB 192,800, a reduction of RMB 14,100 compared to the previous model. Although this model is not operating at a loss, its profitability has been negatively impacted by significant cost increases in the upstream supply chain. Rising prices of chips and lithium raw materials have added over RMB 10,000 to the per-vehicle cost, and this cost pressure has already been passed on to end-market pricing. China’s current vehicle fleet stands at 370 million units, with market demand primarily driven by vehicle replacements rather than new purchases, leading to declining numbers of first-time car buyers. As a result, both dealerships and used-car traders are facing operational difficulties, placing the industry at a critical inflection point. To address these challenges, NIO plans to further expand its presence in lower-tier markets in the second half of the year and accelerate the development of its energy replenishment network, aiming to add 1,000 fifth-generation battery swap stations nationwide by year-end. In May, the penetration rate of new energy passenger vehicles in China surpassed 60%, while internal combustion engine (ICE) vehicle sales continued to decline. Li forecasts that the new energy passenger vehicle penetration rate could reach 70% in the third quarter. Regarding vehicle lightweighting, he noted that the core challenge lies in balancing cost, safety, and performance. The new Le Dao L60 achieves lightweighting through proprietary materials and advanced battery and electric drive technologies; however, the cost of weight reduction rises significantly with greater weight savings, placing higher demands on automakers’ R&D capabilities and cost-control expertise.