The explosive order of LeTao L60, what does it mean for NIO (09866)?

LeDao L60 explodes with orders and lands on the hot search. Recently, well-known car blogger Sun Shaojun revealed that within 72 hours, nearly 30,000 orders were placed for LeDao L60, with an average of 160 to 180 new orders per store. This year's production capacity has been completely sold out. Li Bin confirmed this information, stating that the backend servers have been expanded five times, and indeed, L60 has exploded with orders. On September 19th, LeDao's first car, the L60, was officially launched. The product was announced in May and pre-orders were accepted. At that time, the price was starting at 219,900 yuan, while the standard version launched this time is priced starting at 206,900 yuan, which is 13,000 yuan lower than the pre-sale price. The BaaS model is priced at only 149,900 yuan, exceeding market expectations. With the lower price than expected and rich features, L60 achieved great sales. With the popularity of L60, there have been a large number of criticisms and even negative comments on short video platforms about LeDao, focusing on battery rental and charging issues. Faced with such negative publicity, Li Bin jokingly said, "It was agreed that the six sects would attack Moudou Y together, but LeDao was stabbed by a friendly competitor five times." So, what is the core logic behind LeDao L60's explosive sales? What are the strengths and weaknesses compared to competitors? What does this mean for the entire NIO system? The Logic behind the Explosion of LeDao L60 The key to any product selling well lies in the clear target group. LeDao L60 is positioned as a pure electric mid-size SUV targeting young family users in the fiercely competitive price range of 200-300,000 yuan. The main sedan competitors are mainly the Xiaomi SU7 and XPeng P7, while the main SUV competitors are primarily the Model Y and XPeng G6, with similar price ranges. However, LeDao L60 has a larger size and greater flexibility in options and range extension. In the competitive new energy vehicle market, cost-effectiveness is the primary criterion for car purchase, so why can LeDao L60 make young families willing to spend money? LeDao L60's standard version priced at 206,900 yuan, plus 2,000 yuan for all-wheel drive, and an additional 29,000 yuan for the long-range 85 kWh battery version, making the high-end version priced at 255,900 yuan. Consumers can choose between buying the car outright or renting the battery. The rental option for the 60 kWh battery reduces the price by 57,000 yuan and costs 599 yuan per month, while the 85 kWh battery reduces the price by 86,000 yuan and costs 899 yuan per month. Comparing with the Model Y, which has three versions with prices higher than LeDao L60. Additionally, purchasing the full self-driving feature for the Model Y costs an additional 64,000 yuan, whereas it is mostly standard in domestic brands. LeDao L60 offers superior features compared to Model Y in terms of wheelbase length, interior space, battery capacity, and intelligent cockpit design, including massaging front passenger and driver seats. These comfort features, along with the 900V high-voltage platform, interchangeable battery system, low energy consumption of 12.1 kWh per 100 kilometers, standard intelligent driving system, and XiaoLe AI home assistant, surpass those of Model Y, making LeDao L60 stand out in terms of features. The selling point for family users is the friendly pricing, followed by comfort features. LeDao L60 offers many more features compared to Model Y, making it more appealing to family users. Although LeDao L60 has been a hit, it will face many challenges after its success. Like many popular products, L60 faces competition, especially from new energy products in a similar price range. Additionally, new and old brand concepts are battles in users' minds, especially with the re-entry of BBA brands in the market. At present, the biggest focus in public opinion is on battery swapping. Battery swapping was meant to provide users with a flexible and energy-efficient option, but it has become a focal point for negative comments on short video platforms. While some criticize the cost of battery swapping, it is actually a core advantage for LeDao L60, as it leverages NIO's extensive energy supply system with over 2500 swapping stations. LeDao benefits from this system and has seen widespread acceptance of the swapping model, with 70% of BaaS model orders, as revealed by Sun Shaojun. In the competitive new energy vehicle market, prices are decreasing, and LeDao L60's move to lower the price of the BaaS model to 150-200,000 yuan has set a benchmark for SUV pricing. It will undoubtedly face challenges and intense competition from other brands, as well as changing market dynamics. LeDao L60 is expected to adapt and continue to innovate in order to maintain its success.Facing more intense industry competition.In addition, BBA's re-entry into price wars will reshape the user composition of joint venture brands and domestic brands. Taking BMW as an example, recently BMW has cut the price of its mid-sized electric car BMW 2024 eDrive 35L by 130,000 yuan, dropping it to 223,900 yuan. This price will undoubtedly directly compete with the Luhua L60. The target value of BBA is deeply rooted in some consumers, even though it lags far behind domestic brands in terms of configuration. However, as long as the price falls within the acceptable range, some consumers are still willing to pay for the brand. The significant improvement in overall sales and cash flow of NIO After analyzing the logic behind the skyrocketing sales of the Luhua L60 and the challenges it will face in the future, let's return to the perspective of the capital market and see what impact this car will have on the NIO system? From the industry perspective, the new energy vehicle industry is still in rapid development, with a penetration rate exceeding 30% this year, and the monthly penetration rate of passenger cars even exceeding 50%. The success of Xiaopeng MONA and NIO Luhua may prompt more old brands to emulate them, creating new brands with a focus on higher cost performance to compete for more consumers in the sinking market, increase sales, and thereby alleviate the common cash flow pressure. Regarding the pricing of the Luhua L60, Li Bin stated that even if it is 43,000 cheaper than the Tesla Model Y, there is still profit to be made. If the Luhua L60 continues to have skyrocketing sales, the scale of profit margin will undoubtedly significantly improve NIO's profitability and cash flow. Although the specific order data of the Luhua L60 has not been disclosed, according to Li Bin's revelation of the capacity of 5,000 units in October, 10,000 units in December, and 20,000 units in March next year, the Luhua L60 will probably become the sales mainstay of all NIO models. After NIO's existing models delivered over 20,000 units for four consecutive months (May-August 2024), if the production capacity of the Luhua ramps up and reaches a monthly sales of 20,000 units next year, without considering new models, NIO's monthly sales will reach or exceed 50,000 units, and is expected to dominate the pure electric sales chart. Roughly calculating, if the Luhua L60 sells an average of 20,000 units per month next year, it will be 240,000 units in a year, with an average price of 220,000 yuan per car, contributing revenue of 52.8 billion yuan, and a gross profit of 5.28 billion yuan based on a 10% profit margin. This will significantly reduce NIO's shareholder losses, drive the company into a profit cycle, and boost investor confidence in holding shares. The capital market has also given a vote of confidence to NIO. Since the launch of the Luhua L60, NIO's Hong Kong-listed stock has continued to soar, with a cumulative increase of nearly 40% in September, leading the emerging electric vehicle sector. Overall, Luhua is the brand that will drive NIO's sales, and the Luhua L60, as the first model, with a higher cost performance than the Tesla Model Y, more convenient recharging, more comfortable and intelligent configuration, has successfully won over a portion of young family consumers and potential consumers of BEV from BBA. The skyrocketing sales of the Luhua L60 will drive a significant improvement in NIO's overall sales and cash flow, but will also face many challenges ahead, indicating that there is still a long way to go.