Nio is changing its global strategy with U.S., EU tariffs on the horizon
Ai Tiecheng, Senior Vice President of NIO and President of ONVO, speaks during the press conference of ONVO, NIO’s new subsidiary brand, on May 15, 2024 in Shanghai, China. NIO launches its second brand ONVO and its first model L60 on May 15.
Vcg | Visual China Group | Getty Images
Nio launched its lower-priced brand Onvo on Wednesday with a new L60 SUV that’s about $4,000 cheaper 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 have some changes. We can look more for local partners.”
That can include local distribution or production, Li said, describing the strategy overall as “global capability, local operation.”
The company had initially focused on the premium end of the market and has started sales in parts of Europe.
State-owned automaker GAC’s international department told CNBC last month that its push overseas would also incorporate a more flexible approach, partnering with local factories in some markets or investing directly.
BYD has relied on local distributors for its overseas expansion, while building factories in certain markets.
Li has not specified when Onvo-branded cars would begin sales outside China.
The Biden administration this week announced tariffs of 100% on imports of Chinese electric cars, while the European Union is mulling similar measures. It comes amid growing U.S.-China tensions that have recently focused on advanced semiconductors.
Li reiterated his view that the U.S. tariffs are “unreasonable” especially given the impact to consumers and climate goals.
He described Chinese tariffs on car imports as “reasonable,” and said Nio has called on the Chinese government to eliminate tariffs on imports of new energy vehicles. The category includes hybrid and battery-only powered cars.
New energy vehicle sales have grown rapidly in China, the world’s largest auto market.
The fierce competition has pushed Tesla and other companies to cut prices.
Nio’s Li said Thursday he expects the bulk of the price war is past, and that about 10 automakers will eventually lose out on the China market, leaving about 20 to 30 players. He expects those survivors to include global automakers, domestic Chinese players and startups.
Li maintained that Nio would focus on “stable” prices.
For its lower-priced Onvo brand, the company aims to release one new car model a year, including another SUV for larger families set to begin deliveries next year, Li said.
He estimated that if Onvo can sell about 20,000 units a month, the brand would have a positive impact on Nio overall. The startup, which is listed in the U.S., has been operating at a loss.
On top of investment in research, battery charging and swap stations, the company operates a range of services including Nio House clubhouses that its premium brand users can access for free.
Onvo users won’t have access to Nio House, but can tap into the parent company’s network of battery chargers and swap stations, Li said.
One of Nio’s strategies is to separate the sale of a car body from its power system. A customer can choose to pay less upfront for a vehicle, and pay for battery services based on a monthly subscription.
Onvo’s battery service subscription plan will be released in September, Li said. That’s when the L60 is set to begin deliveries.
