Nio, a leading electric vehicle (EV) maker, is implementing a new organizational restructuring aimed at enhancing cost control. Founder, chairman, and CEO William Li is taking a more hands-on approach in supply chain management, according to a recent report.
The company has introduced a new internal management mechanism called CBU (Cell Business Unit), which will be fully operational in the second quarter. The main objective of the CBU is to divide Nio’s operational responsibilities into distinct units, each with clear ROI indicators and a performance-based reward system.
Under the CBU system, each division at Nio will manage costs independently, tracking expenses allocated to various projects. In 2024, Li spearheaded an initiative to streamline 15 system capabilities, laying the groundwork for the implementation of the CBU mechanism.
Teams within Nio, such as the service operations and energy teams, have been successfully implementing the CBU mechanism for over a year. This new approach emphasizes the need for every penny invested to generate tangible returns, ensuring efficient cost management.
Li’s increased involvement in supply chain management has resulted in significant improvements in procurement processes. He closely examines costs during key stages of product development and directly negotiates prices for essential components like batteries.
Nio has also transitioned suppliers to the CBU system, fostering transparency in cost and profit management. By optimizing the allocation of resources and streamlining operations, Nio has realized a 10 percent reduction in seat costs on its new platform.
The company plans to introduce shared parts across upcoming models like the ET9 and the facelifted ES6, EC6, ET5, and ET5 Touring. These models will feature Nio’s proprietary smart driving chip, leading to a substantial cost reduction per vehicle.
To further enhance cost control measures, Nio sent a team to learn from Luxshare Precision, renowned for its efficient cost management practices. The company is also reassessing the necessity of certain operations and programs to streamline organizational processes.
Nio’s after-sales service business has been profitable, with cost-saving initiatives like relocating a master warehouse resulting in significant savings. The company has also optimized its service operations team, achieving improved efficiency despite a decrease in staff numbers.
In summary, Nio’s strategic focus on cost control and operational efficiency is expected to drive sustainable growth and profitability in the competitive EV market. Li’s proactive approach to supply chain management and the successful implementation of the CBU mechanism underscore Nio’s commitment to financial prudence and long-term success.
