Nio – Why the Best Car Won’t Win
In 2009, Edward E. Whitacre Jr. took over as Chairman of the beleaguered General Motors, commissioning a public campaign announcing, “may the best car win.”
But the best car didn’t win. The winner won’t be the electric or autonomous car that offers the best performance or drive. The winner will be the car built out a network of recharging stations, from a company that set up a fuel cell company to solve the problem of battery life, that also invested billions in AI.
The best car won’t come from a traditional car company. Tesla isn’t based in Detroit; it’s based in the Valley. Tesla wasn’t set up by an insider with 30 years experience in manufacturing. Elon Musk came from the payments world. Tesla wasn’t set up to be like GM “but better” it had to tell a radically different story.
In Asia, outside Japan and Korea, there is no Detroit and no incumbent way of thinking about cars. Ford Research in 2016 found that India topped the world (at 84%) in answering “yes” to the survey question, “Do you see yourself owning an autonomous car?” Second was China, and then Brazil. Bottom of the list? The US and the UK.
Chinese manufacturer Nio, from Shanghai, is building a car from the bottom up, with services in mind. Investors include Tencent, Temasek, Baidu, Sequoia, Lenovo and TPG. Where ancillary services are an afterthought in the traditional Industrial model, Nio forecasts it will make more money from driver related services than from car sales.
Like Tesla, Nio starts with the question, “if we could start from zero, what would this look like?” because it is starting from zero. It has no other option.
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Tesla was the best performing auto stock of the last decade.
Nio won’t even manufacturer its own cars in future, completely outsourcing the process. Nio recently teamed up with competitor Xpeng to share electric charging stations and data across China.
Nio isn’t focused on product, it’s focused on the story.
Toyota’s Connected Car team didn’t start out with a vision of the future car, they started with a pain point that bugged customers.
They ran a simple ad in Craig’s List that said, “do you hate your commute?” offering to pay drivers to come and talk to them about their problems, and how Toyota would listen to their frustrations and use that to help build new products. The data they gathered inspired a first MVP and later their Mobility Service Platform.
“How do we solve this problem?”
What kind of car company thinks like that?