Chinese electric vehicle company Nio unveiled its more cost-effective brand Onvo yesterday along with the launch of the new L60 SUV, which costs about $4,000 less than Tesla’s Model Y.
TakeAway Points:
- Nio debuted its more affordable brand Onvo with the release of the new L60 SUV, which is almost $4,000 less expensive than Tesla’s Model Y yesterday.
- The business began selling in some regions of Europe, but at first it concentrated on the high end of the market.
- In the past, Nio sold directly to consumers in Europe. “But now we have Onvo and soon we will have Firefly, an even lower entry-level brand,” he said, “We can join the international market, but doing so will require some adjustments. We can extend our search for regional allies.
Nio Releases Affordable Brand Onvo
William Li, Nio CEO, said today that the company is changing its strategy for entering international markets in light of geopolitical changes.
According to CNBC’s translation of Li’s Mandarin statement, “although our method will have some adjustment,” the company would continue to prioritise China and pursue its original goal of becoming a worldwide enterprise.
On Wednesday, Nio debuted its more affordable brand, Onvo, with the release of the new L60 SUV, which is almost $4,000 less expensive than Tesla’s Model Y.
“For example, in Europe,we previously used a direct sales method,” said Li, who founded Nio about 10 years ago.
“But now we have Onvo and then we will have Firefly, an even lower [price] entry-level brand. We can enter the global market, and in the process of doing so, we will make some changes. We can look more for local partners.”
Li stated that this can involve local manufacturing or distribution, summarising the overall approach as “global capability, local operation.”
The corporation began selling in some regions of Europe, but at first it concentrated on the high end of the market.
Nio To Invest Directly with Local Factories
According to the report, the international department of state-owned automaker GAC said last month that in addition to taking a more flexible strategy, the company will also be investing directly or working with local factories in some areas.
In order to expand internationally, BYD has built plants in certain areas while relying on regional distributors.
Li has not said when sales of cars with the Onvo name will start outside of China.
This week, the Biden administration placed 100% tariffs on Chinese electric vehicle imports, and the European Union is considering taking similar action. Tensions between the United States and China have been rising, with a current focus on sophisticated semiconductors.
Li restated his opinion that the US tariffs are “unreasonable,” particularly in light of the effects on consumers and climate change objectives.
He called the Chinese government’s import taxes on cars “fair” and mentioned that Nio had urged the country to do away with its levies on new-energy vehicle imports. Cars with battery power and hybrid drives fall into this category.
China’s Fierce Competition
The largest auto market in the world, China, has seen a sharp increase in the sales of new energy vehicles. Tesla and other businesses have had to lower their prices due to intense competition.
According to Nio’s Li, who spoke on Thursday, he believes that most of the price battle is over and that 20 to 30 manufacturers will remain in the China market after around 10 automakers lose out. He anticipates that global automakers, local Chinese companies, and startups will be among the survivors. Li insisted that Nio prioritise “stable” pricing.
The company plans to introduce one new car model year under its less expensive Onvo brand, Li added, adding an SUV for larger families that will start to be delivered in the upcoming year.
Nio’s Services
According to his estimation, Onvo’s sales of roughly 20,000 copies per month would benefit Nio as a whole. The American-listed startup has been running at a deficit.
In addition to funding research, battery swap stations, and charging stations, the company offers a number of services, such as free access to Nio House clubhouses for owners of its luxury brands.
Although Onvo users will not have access to Nio House, Li stated that they can still use the parent company’s network of switch stations and battery chargers.
However, selling an automobile’s body independent of its engine system is one of Nio’s tactics. For battery services, a customer might opt to pay on a monthly subscription basis rather than paying a larger upfront cost.
Li stated that September will see the launch of Onvo’s battery service subscription plan. The L60 is scheduled to start shipping at that time.
