NIO:Top Runner among China’s “Emerging Forces”

Financing, innovation, and internet thinking create new user experiences

2019/04/11

Summary

  With the advent of the double credit policy to stimulate the popularization of electric vehicles in the Chinese automotive market and the gradual reduction of subsidies for new energy vehicles (NEV), many of the emerging EV automakers in China, once dubbed as “PPT (Powerpoint) car builders,” have started to launch products to market. Of these emerging industry forces, it can be said that NIO is outperforming the other emerging NEV automakers. In a situation where mass-produced smart electric cars have not yet become popular worldwide, NIO has attracted the attention of the global automotive industry and the market for the following reasons: its listing on the NASDAQ in the U.S., its being the first automaker to manufacture over 10,000 smart electric vehicles per year,  its acquisition of investment funding from a number of major IT companies, and its launch of innovative services and sales methods. Conversely, this momentum is plaguing startup companies with issues such as poor financial performance and a lack of production capacity. In this report, MarkLines outlines the history of NIO from its inception, and analyzes its strengths and the challenges it faces.

 

Related reports:
CATARC report - November 2018: NEV trends in China(Dec. 2018)
Automotive Strategies of Alibaba and Tencent(Dec. 2018)
Beijing Motor Show 2018: Emerging Chinese EV makers(Jun. 2018)



Company introduction

Outline

  NIO is one of China's emerging EV automakers engaged in the manufacturing of Smart Premium EVs. Its headquarters is registered in the Cayman Islands, but is usually considered an automaker capitalized in Hong Kong. However, because many of its production plants, markets and customers and management members are located in mainland China, many consider NIO to be a mainland China automaker.

  NIO's Chinese name translates to “Blue Sky Coming”. As a manufacturer of NEVs, NIO’s mission is to fulfill its vision of achieving an environmentally friendly and richer lifestyle for consumers in the future.

 

Founder and initial investment team

  NIO's former name was Nextev Inc., founded in November 2014. The company name was changed to NIO Inc. in July 2017. The company’s founder, Mr. Bin (William) Li was born in 1974 and graduated from the Sociology Department of Peking University. Prior to the founding of NIO, Mr. Li was involved in the founding and investment financing of a number of companies such as Bitauto and Mobike. Among them, Bitauto was listed on the NYSE in 2010. Also, Mobike is one of the most popular bicycle sharing brands in China today.

  Tencent played the most important role in NIO's initial investment team. Tencent has invested in funding NIO more than once since its first investment in June 2015. Tencent is a leading IT company that is well-known by everyone in China. Its business scope covers a wide range of fields including its QQ instant messaging platform, video games, its WeChat Pay online transaction payment platform, music platforms, and has a high market share in all of these market areas. It is one of the 3 largest IT companies referred to as "BAT" that includes Baidu and Alibaba.

  In addition to Mr. Bin (William) Li and Tencent, the main investors for NIO’s venture capital circle included investors such as Hillhouse Capital, JD, Shunwei Capital and Sequoia Capital China.

 

Listing and company structure in the U.S.

  NIO's headquarters is registered in the Cayman Islands, and on September 12, 2018, NIO Inc. released its IPO and was listed on the NYSE. The IPO was managed by 8 global investment banks including Morgan Stanley, Goldman Sachs, and JP Morgan. Through the IPO, NIO raised approximately USD 1 billion at a stock price of USD 6.26. The company’s market capitalization as of January 2019 was approximately USD 6.997 billion.

  The common stock of the IPO was divided into three classes, A, B and C, classified according to the number of voting rights. Class A shares are for general investors with one vote per share, all Class B shares are owned by Tencent with 4 votes per share, and all Class C shares are owned by Mr. Bin (William) Li with 8 votes per share. As a result, Mr. Li and Tencent have significant influence in resolving any critical decisions faced by NIO.

NIO's primary subsidiaries

Country·Area Month of establishment Company name Business
Germany May.2015 NIO GmbH Vehicle Design Division
U.S. Nov.2015 NIO USA Its U.S. headquarters, mainly responsible for the design and development of autonomous driving related software and hardware as well as high-tech modules.
U.K. Feb.2016 NIO Nextev (UK) Limited Responsible for Formula E and sports car EP9 related business, the subsidiary also provides vehicle engineering support services to NIO in Shanghai.
Hong Kong, China Feb.2015 NIO Nextev Limited NIO’s first wholly-owned subsidiary. It is NIO's holding company for a number of NIO’s subsidiaries located in countries such as the UK, U.S., Germany, and China.
Dec.2015 XPT Limited Develops EV systems and components
Nov.2017 NIO Express Limited Responsible for power management and related operations
Feb.2017 NIO User Enterprise Limited Responsible for EV sales and customer service
Mainland, China May.2015 NIO Co., Ltd Global Headquarters. Responsible for research and development activities.
May.2016 XPT (Jiangsu) Investment Co., Ltd Mainland China investment platform
Jan.2017 NIO Energy Investment (Hubei) Co., Ltd Responsible for power management and related operations
Mar.2017 Shanghai NIO Sales and Services Co., Ltd Responsible for EV sales and customer service


  For NIO’s other subsidiaries, capital participation companies, the status of its holdings, see the diagram below.

The above diagram was created by MarkLines based on the prospectus of NIO.



NIO’s strengths and the risks it is facing

Strengths: Pioneer in China's luxury EV segment market, innovative charging solutions, and corporate philosophy

  NIO is a pioneer in the Chinese luxury EV segment market. Many emerging forces have appeared in China since around 2015. These companies basically focus on the production of BEVs (Battery Electric Vehicles). According to the statistics compiled by Sina News, there are more than 50 emerging automakers as of early 2019, and NIO is one of them. Among many of these emerging automakers, NIO has clearly positioned its products as high-end EVs since the company’s inception. There is not much competition in this market segment. Most emerging automakers face competition with a number of long-established automakers who have already made inroads into the Chinese market by positioning their vehicles for the entry level and middle-class market segments.

  NIO has created a suite of comprehensive and innovative charging solutions. The biggest concerns for many consumers regarding EVs is range and charging difficulties. The solution for most automakers is to increase battery capacity and the installation of charging networks. In addition to these two methods, NIO has devised solutions and services such as  battery swap stations, charge supply trucks, a “one-click charging” mobile app that provides optimized charging services, and by 2018 NIO had installed battery swap stations along the Beijing-Hong Kong-Macao Expressway (described in detail later). These measures have reduced user concerns regarding range and charging. China's charging infrastructure is still incomplete, so NIO’s solutions are excellent.

  NIO’s corporate philosophy advocates providing a unique and comprehensive mobility lifestyle centered on the user experience. NIO’s founder, Mr. Bin (William) Li has experienced a number of successes in founding startups in the internet industry, and NIO incorporates internet industry thinking in various ways. For example, its charging infrastructure offers a service making it possible for users to make reservations remotely to have their vehicles charged, and the company has endeavored to promote its brand image and connect with customers through its facilities such as NIO Houses. NIO has its own uniqueness in terms of its business philosophy and marketing methods compared to many other automakers that were born prior to the age of the internet.

 

Risks: Poor financial conditions, NEV subsidy elimination, and production capacity shortages

  As a start-up company, NIO can never be too optimistic about its financial situation. In 2016, the company recorded a loss of CNY 2.569 billion. In 2017, this number doubled and its losses increased to CNY 5.21 billion. In the first half of 2018, its losses exceeded USD 500 million (approximately CNY 3.326 billion). In the fourth quarter of 2018, its net loss was close to USD 1.4 billion (about CNY 9.6 billion). An enormous amount of funding will be required in the future for the development of new products, the expansion of production capacity, infrastructure construction, marketing, etc. In addition, if one references the financial condition of its main competitor Tesla (Tesla was established in 2003, listed on NASDAQ in 2010, and was operating in the red until the third quarter of 2018 when it finally turned a profit), NIO is likely to continue losing money for the time being. When NIO’s financial results for the fourth quarter of 2018 and FY 2018 were released on March 5, 2019, the company’s stock price experienced its largest daily decline since the company was originally listed. Although listed on the U.S. capital market, this can by no means be interpreted as good news.

  The Chinese government's stimulus subsidies for NEVs will be phased out and eventually eliminated. The long-term NEV subsidy policy implemented by the Chinese government has promoted the development of the Chinese NEV market and related automotive companies. However, for the sound development and competition of the NEV market, the Chinese government has decided to gradually reduce the stimulus subsidies for NEVs and will eventually eliminate the subsidies in 2020. It is certain that discontinuation of the subsidies will lead to higher prices for NEVs. NIO's product positioning strategy is aimed at the high-end luxury car segment market, and it is difficult to determine at this time how the elimination of the government subsidies will affect consumer confidence.

  NIO may again face a shortage of production capacity. The company planned to deliver the first lot of its first volume production ES8 model (details to be described later) in March 2018 (or in the first half of 2018), but due to factors such as a lack of production capacity, delivery of the vehicles from the first lot finally began in June 2018. The late delivery of the vehicles led to customer dissatisfaction, and the production capacity of the following ES8 finished vehicles and its second model, the ES6 (details will be described later), was disrupted. NIO had planned to build its own plant in the Jiading district of Shanghai, but that plan has been withdrawn according to its financial report released in March 2019. At present, NIO’s production will continue to be outsourced to JAC Motors, and its future production capacity is still unclear.



Partnership with JAC Motors and plans to construct own plant

  To produce and sell any automobiles in the Chinese market, a company must first obtain production certification from National Development and Reform Commission (NDRC), and then receive permission from Ministry of Industry and Information Technology (MIIT) to manufacture and sell vehicles. In addition, vehicles must be entered on the on-road motor vehicle production companies and products list. There are usually two ways for a new entrant emerging automaker such as NIO to produce and sell cars:

  • First, it can build its own manufacturing plant with the relevant qualifications and permits through various channels to produce and sell vehicles on its own.
  • Second, it can partner with a qualified and licensed auto OEM plants to consign the production of vehicles before selling its products.

  As of January 2019, NIO has not obtained approval from the MIIT, and is currently consigning the production of its two models, the ES8 and ES6, to JAC Motors.

 

Partnership with JAC Motors

  In April 2016, NIO and JAC signed a CNY 10 billion strategic partnership agreement. For the first three years, NIO will pay JAC the manufacturing costs for each vehicle and compensate JAC for any operating loss that a plant may incur. At present, the plant dedicated to consignment production is located in Hefei, Anhui Province, and the site area is about 6.67 million square meters, with a total floor area of 270,000 square meters. According to NIO, the scale of investment for the entire plant, technology systems, production line standards, installed equipment, hiring, management processes, etc. are being led by NIO, and JAC will cooperate in aligning its own system with that of the standards that NIO has indicated. The plant was completed at the end of 2017 and NIO manufactured its first mass production model, the ES8, and began shipments in June 2018. In addition, JAC announced in September 2018 that the second model, the ES6, will also be produced at the Hefei plant, with deliveries starting in June 2019.

 

Construction plans for its first plant

  In the prospectus required for its listing in the U.S. at the end of 2018, NIO stated its construction plans for its own plant. To receive permission from the MIIT, a company’s own factory is a necessary condition. The original plan was to secure a parcel of land of approximately 533,400 square meters in the Jiading district of Shanghai for the company’s second plant following that of Hefei's consignment production factory, with plans for NIO to construct its own factory. However, in the financial report for the fourth quarter of 2018 and the full year released on March 5, 2019, NIO clarified that the plan has already been withdrawn and that it will continue the consignment arrangement with JAC.

  There are many factors that resulted in NIO withdrawing the plan. In addition to poor financial conditions, another possible factor in NIO’s decision not to move forward with the plan is related to the construction of Telsa’s Giga Factory in the Lingang district of Shanghai where construction officially began in January 2019. The latest version of the “Automotive Industry Investment Management Regulations” (hereinafter referred to as “regulations”) issued by the Chinese government has tightened the regulations on production capacity, especially regulations on local production capacity. Conversely, the "regulations" state that it was decided to transfer the authority for the control of investment projects for the entire automotive industry from a centralized to regional system, requiring the company to restart the EV production certification process. The “regulations” impose severe restrictions on all new EV manufacturing plants to be built. In addition to having to meet certain investment scale requirements, one condition is that an EV plant project located in the same province must have reached the planned production capacity. In other words, Tesla was first to be awarded the production certification by the city of Shanghai, so NIO can construct its own plant only when the production capacity of the Tesla Shanghai plant reaches the target production volumes stipulated by the “regulations”. If NIO continues with its original construction plans, its involvement will likely be very passive.



Partnerships for CASE technology products

在“CASE”方面的产品和合作

  NIO Pilot:The NIO Pilot is an ADAS system equipped on the ES8 and ES6. It is powered by the Mobileye EyeQ4 ADAS processor, equipped with learning capabilities, and capable of receiving online upgrades remotely. The ADAS system includes 12 ultrasonic sensors, four 360-degree cameras, 1 driver monitor, 5 millimeter wave radars, 1 trifocal camera, and Highway Pilot, as well as features such as Traffic Jam Pilot, Auto Parking Pilot, Automatic Emergency Braking, and Lane Departure Warning.

  NOMI Mate:NOMI Mate is known as NIO's world first in-vehicle AI system, integrating voice interactive systems and intelligent emotion engines based on in-vehicle computing capabilities and cloud computing platforms to create a completely new human-car interaction. The user can use the system to perform voice interactive navigation, search for information such as charging station locations, and indicate the remaining battery power. In addition, it is equipped with functions such as situation judgment, automatic door opening and closing, and uses sensors to open and close the trunk and sunroof in the event of rainy weather.

 

The field of autonomous driving

  NIO's autonomous driving capability level is between Level 2 and 3 and is currently undergoing internal verification testing, but has not yet been launched onto the market. If the verification is successful, it will implement OTA product upgrades.

Month, year Activities
Apr.2016 Started testing of autonomous driving systems
Oct.2016 Obtained a test license (plate) for unmanned driving field testing in California, USA
Mar.2018 Obtained a test license (plate) for the field testing of intelligent and connected cars in Shanghai, becoming one of the first companies in China to be certified
Apr.201  Obtained a test license (plate) for the field testing of autonomous vehicles in Beijing, becoming one of the first companies in Beijing to be certified

 

Partnerships with other finished car manufacturers and suppliers

Month, year Partner Main business of partner Cooperation details
Apr.2017 Changan Automobile Own-brand major OEM Changan and NIO announced their intention to establish a joint venture to cooperate in all areas relating to electric cars such as research and development, production, sales, and services.
My.2017 Continental Group Major German parts supplier Continental and NIO signed a strategic cooperation agreement to collaborate in the areas of fully electric vehicles, intelligent transportation system, and automated driving.
Dec.2017 Southern Heshun Electric Vehicle Service Heshun is a subsidiary of the China Southern Power Grid, a state-owned enterprise, involved in EV leasing, taxi dispatch services, and the design, operation and repair charging facilities. NIO signed a strategic cooperation framework agreement with Southern Heshun Electric Vehicle Service Co., Ltd. Based on mobile internet technology, the two companies will jointly build battery charging and swapping facilities with their platforms being interconnected.
Dec.2017 GAC Motor Own-brand major OEM GAC and NIO signed a strategic cooperation agreement and NEV project agreement. The two companies established a joint venture company, GAC NIO New Energy Vehicle, Co., Ltd., to cooperate in a number of areas, including the R&D of intelligent and connected NEVs and manufacturing of automotive parts, and operations.
Jul.2018  Bosch Group Major German parts supplier Bosch and NIO signed a strategic partnership agreement focused on sensor technology, automated driving, electric motor controls, and intelligent transportation systems. The signing ceremony in Berlin was attended by  Chinese Premier Li Keqiang and German Chancellor Dr. Angela Merkel.

 

Cloud computing and big data analysis

  In February 2019, during a special session at the 10th Battery Japan held at the Tokyo Big Sight exhibition center, Mr. James Deng, Energy Storage System Senior Director of NIO Inc., gave a presentation entitled "Cloud Computing and Big data Analysis for Power Battery". The summary is as follows:

    • NIO is not just an EV maker, but provides user experience and outstanding service.
    • NIO is building a Battery Platform using big data.
    • NIO provides the world's first battery swap service as part of its NIO Power charging solution services. Remote charging is also possible with the push of a button.

  The development of in-vehicle telematics has enabled NIO to develop a novel battery analysis method. NIO transmits information collected from vehicles (ES8), batteries, and in-vehicle devices into its service center, and performs big data analysis using a cloud computing platform.

 


  By using NIO’s BLMS (Battery Life Management System), it is possible to grasp in real time conditions such as battery current and voltage, and to estimate the battery’s SOH (State Of Health). At NIO, IDs have been assigned to each battery pack for verification purposes, and NIO has already accumulated 50,000 km worth of travel status data. The system grasps the status of the battery when it is initially installed in the vehicle, and retains information on overcharge (temperature, current). This makes it possible to predict the lifetime of fuses and connectors. With BAM (Battery Asset Modeling), residual values can be derived from indicators such as battery life cycle, and which can be used for analyses such as which type of battery is installed in a given vehicle, and used for automobile insurance purposes.

  By accumulating and analyzing additional information stored in the cloud, various utilization methods are assumed, such as device fault measures, battery replacement warning, new services and product development, and support for technology development.

 

 



Charging solution and services: Facilities and services integrated with the internet such as NIO Power and NIO Houses

  NIO is often compared to Tesla. Although Tesla is its main competitor and is used for comparison purposes, NIO often emphasizes its own uniqueness. While the revenue from vehicle sales are the company’s major source of income, NIO creates enjoyable lifestyles and experiences for its customers through other services and products. Currently, it offers the following attractive services:

 

NIO Power:Utilization of internet technology, providing charging solutions to users

京港澳高速沿线的蔚来换电站
NIO battery swap stations along the Beijing-Hong Kong-Macao Expressway

  Charging issues are a source of concern for EV owners. To address these issues, NIO offers its NIO Power service system, whose slogan is "charging that is more convenient than refueling". NIO Power is a charging solution that is powered by the mobile internet. It is a wide-ranging network of charging and battery swap stations, supported by NIO Cloud technology, allowing NIO users to enjoy power services with a single click using a dedicated smartphone app. The specific services provided by NIO Power are as follows:

  Dedicated charger: Installed for users having a fixed parking space. The standard charging station is 220V 32A (7kW). International standards have been adopted, so the charger is compatible with most NEVs currently in operation in mainland China. The NIO vehicle can be charged automatically, and the owner can remotely control the charge and make charging reservations using a smartphone.

  NIO’s “One Click Charging” smartphone app: The smartphone app uses the NIO Power Cloud service that is based on mobile internet and IoT technology. The service uses the app to connect users and NIO service specialists who pick up the vehicle and charge it on behalf of the user. NIO is the first company in the world to provide car owners with mobile internet and IOT technology based valet charging and battery swapping services.

  Battery Swap Stations: These facilities are a top focal point of NIO Power service solutions. NIO has received over 500 patents for its Battery Swap Station concept. The fully automated system enables a battery to be swapped in 3 minutes, with no need for the user to line up to have the battery replaced. Each time the battery is replaced, both the battery and the vehicle's electrical system are monitored to ensure the vehicle and battery are functioning optimally. The battery swap stations have a compact design, typically consisting of 3 standard parking spaces, and is expandable. NIO plans to build more than 1,100 battery swap stations throughout China by 2020. The first station opened in Shenzhen, Guangdong province in May 2018, and by November 2018, 18 stations were built along the Beijing-Hong Kong-Macao Expressway. NIO is currently planning to build battery swap stations in the eastern coastal area between Northern China and Shanghai.

  Power Mobile vehicles: Power Mobile is a brand-new power service developed by NIO. Power Mobile vehicles serve as mobile power banks, similar to super-fast chargers, a service which can go to its users to supply their vehicles with power. The charging can charge 100 km of range in 10 minutes.

  Battery Version Upgrades: This service is currently targeted at users of the ES8. An 84kW battery is equipped on the ES6, having a larger capacity than that of the ES8. NIO has announced an upgrade of the ES8 battery, and NIO will offer battery upgrades to some owners of the early ES8 vehicles at discounted prices. The specific contents of this service will be released in the second quarter of 2019.

 

NIO Houses: Provide users with opportunities to interact and a living space

  NIO sees its NIO Houses as one of its key innovations that embodies a business philosophy that is different to that of traditional car OEMs (including Tesla). NIO Houses are similar to the luxury brand showrooms of car OEMs, and many are located in the downtown areas of major cities in China (such as Beijing, Shanghai, Guangzhou, Shenzhen, Chengdu, and Xi'an). The difference between conventional showrooms is that NIO Houses serve not only to display vehicles, but also to provide owners with a living space and facilities such as meeting rooms, sharing spaces (labs), libraries, cafes, break rooms, and forums.

  The main role of NIO House is to build brand recognition and display vehicles, and more importantly to build brand identity for the owners, create a brand community, connect owners, and create opportunities to build user circles. It is not easy for NIO, a lesser-known emerging automaker, to establish a new luxury car brand in the emerging EV product area. NIO Houses reflect a bold and unique attempt to build brand recognition. With Mr. Bin (William) Li at the helm, who has had considerable success in the IT industry, there is also Tencent as a major shareholder. As a result, it can be said that the NIO Houses concept fully expresses their internet thinking.

Accord Inspire
NIO House in Shanghai China's NIO Houses Network
North China Beijing city The Malls at Oriental Plaza, NO 1 East Chang’an Street, Dongcheng District
Zhongguancun, Lixiangguoji, NO 58 Bei Si Huan Xi Lu, Haidian District
East China Shanghai city Hkri Taikoo Hui, NO 180 & 286 Shi Men Yi Lu, Jing’an District
Shanghai Tower, NO 501 Yin Cheng Zhong Lu, Pudong District
Nanjing city, Jinagsu province Xinjiekou, Central Hotel, NO 75 Zhong Shan Lu, Gulou District
Suzhou city, Jinagsu province Suzhou Center, NO 217 Xinggang Street, Suzhou Industrial Park
Hanzhou city, Zhejing province West Lake, Hubin Yintai in77, NO 18/19 Hubin Lu, Shangcheng District
Hefei city, Anhui province Xianjin Zhizao Jidi, NO 9766 Su Song Lu
Southern China Gaungzhou cit, Guangdong province Pearl River New Town, Ascott IFC Guangzhou, NO 5 Zhu Jiang Xi Lu
Shenzhen city, Guangdong province Ping’an International Financial Center, NO 5033 Yi Tian Lu, Futian District
Dongguan city, Guangdong province 1F Dongguan Guomao Center, NO 1 Hong Fu Dong Lu, Dongcheng Residential District
Northwestern of China Xi'an city, Shaanxi province Zhongda International, NO 72 Gao Xin Lu, Yanta District
Southwest of China Chengdu city, Sichuan province Tian Fu Da Dao, Yintai in99, NO 1199 North Tianfu Avenue


Product Positioning and Challenges

Positioning Considerations

  NIO has positioned its products as high-grade electric SUVs for the Chinese mainland market. It was conceived based on the factors below.

  China is the world's largest passenger car market. Above all, the luxury car segment market has sufficient momentum for continued to grow in the future. The annual average growth rate (CAGR) of the segment is expected to reach 12.4% by 2022. The market share of the SUV segment is also expected to grow significantly in the coming years, reaching 16.9 million units in 2022, with an average annual growth rate of 9.4%.

passenger vehicle sales volume in China by model type

The above graph was created by MarkLines based on the prospectus of NIO.

  There is no doubt that China is already a leader in the global NEV market. At the same time, it is clear that the trend of electrification is responsible for this. With strong stimulus subsidy policies and government support, China's NEV market is growing faster than that of any other market in the world. According to the NIO prospectus, the annual growth rate of the Chinese NEV market in 2013-2017 timeframe reached 141.5%. While during the same timeframe, the percentage was only 16.2% on a global basis. The annual growth rate of China's NEV market is expected to reach 37.1% in 2022 and the annual number of NEVs sold will reach 3.6 million units. The annual growth rate of the Chinese EV market from 2013 to 2017 was 147.9%. While during the same timeframe the percentage was 68.2% on a global basis. EVs accounted for 64.1% of China's NEV market in 2017, compared with 27.3% in rest of the world. The annual growth rate of China EV sales is expected to reach 40.8% in 2022.

NEV sales volume in China by power type

The above graph was created by MarkLines based on the prospectus of NIO.

global BEV sales volume by region

The above graph was created by MarkLines based on the prospectus of NIO.

  China's high-end EV segment market has huge potential and has not been tapped. In 2017, the year before the NIO's first mass production model ES8 was launched, among the 10 best-selling EV models in the Chinese market (e.g. Geely 3xe 400, BJEVi EX 260, JAC iEV 6s, BYD Song EV 300, SAIC Roewe ERX 5 etc), only the Tesla Model X belonged to the luxury car segment, and the other nine models belonged to the entry class segment, vehicles with a sales prices less than CNY170,000 after the government subsidies have been applied. This indicates that China's luxury EV market has huge potential.

 

Battle in the luxury EV segment market

  The first example that can be given is the battle against NIO's competitor Tesla. The Tesla Giga Factory started construction in Shanghai Lingang in January 2019. If mass production in China comes to fruition, Telsa’s Model 3 prices will fall, intensifying the competition with NIO. The construction of the Tesla plant has already adversely affected NIO's plans to construct its own plant.

  The next example is the attacks from other joint ventures or foreign brands. With the implementation of China's double credit regulations (producing NEVs which meet the regulation results in a plus credit, and producing the conventional fuel-powered vehicles which do not meet the regulation results in a minus credit. The credit calculation bonus/bonus rate changes due to factors such as the type of new energy, range, or displacement. The Chinese government allows companies to freely trade positive credit among themselves, and all automakers are obliged to achieve a positive total credit) companies need to acquire sufficient NEV credits. To satisfy the regulations, many joint venture OEMs that do not have a history of manufacturing NEVs will introduce NEV models to the Chinese market in the coming years. Some of these companies will enter the luxury car segment market, which will increase the number of companies competing with the NIO.

  Finally, there is the battle against domestic brand vehicles including those of other emerging automakers. NIO's second model, the ES6, is less expensive than the ES8. NIO is positioning the ES6 between high-end and middle-class vehicle market segments. Many of the new and old brand products (models) will likely crease more competition for NIO in this market segment positioning battle.



Introduction of current models

EP9

EP9
NIO EP9

The EV sports car EP9 was the first model produced by NIO.

On February 23, 2017, this NIO EP9 model recorded a top speed of 275 km/hour at the Circuit of the Americas Race Track (COTA) in Austin, Texas, winning the crown as the world's fastest self-driving car at that time. On May 12, 2017, EP9 recorded a record-breaking 1-lap top speed of 6 minutes and 45 seconds on the North loop track at the Nürburgring motorsports complex in Germany. Although the EP9 cannot be legally driven on public roads in mainland China, the race results had the effect of bringing a lot of good publicity to NIO during its founding period.

 

ES8

ES8
NIO ES8

  The ES8 is a 7-seater electric SUV. The NEDC cruising distance is 355 km (220.6 miles) and the suggested retail price starts from CNY 448,000.

  For other detailed specifications and information, refer to the following URL:

https://www.marklines.com/en/green_vehicles/model/598

  This ES8 model is NIO's first mass production model. Prior to being launched to market, the ES8 was first presented to its major investors such as Tencent's Mr. Pony Ma, JD's Mr. Richard Liu, and Xiaomi's Mr. Lei Jun. NIO started accepting pre-order sales from general public consumers in December 2017. The initial deliveries were scheduled to commence in March 2017, but that date was postponed to June 2018. As of January 2019, the cumulative sales volumes of the ES8 has exceeded 10,000. The monthly delivery volumes were 1,805 units in January and 811 units in February 2019.

 

ES6

ES6
NIO ES6

  The ES6 is a 5-seater electric SUV. The NEDC range is 410/430km (254.7/267.2 miles) or 480/510km (298.3/ 316.9 miles), and the suggested retail price starts from CNY 358,000.

For other detailed specifications and information, refer to the following URL:

https://www.marklines.com/en/green_vehicles/model/702

  This ES6 model is NIO’s second mass production model. It is less expensive than the ES8, and is positioned as a middle and high-end car segment model. NIO started accepting pre-order sales from general public consumers in December 2018. Mass production and deliveries will start in June 2019.

 


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Keywords:China, NIO, NEV, BEV, EV, Emerging Chinese OEM, ES6, ES8

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