- Company posts net loss of 587.2 million yuan for the second quarter, narrowing from a loss of about 1.2 billion yuan a year ago
- ‘It will not be enough for NIO to bolster profitability in the coming decade if it just focuses on expensive cars’: analyst
Premium Chinese electric vehicle (EV) company NIO plans to develop low-priced models for the mass market by next year, as the pace of electrification on China’s roads gathers pace.
William Li, the carmaker’s founder and CEO, said a more affordable new model will be launched under a new brand, but did not disclose any further details. He was speaking during a results briefing on Thursday. New York Stock Exchange-listed NIO posted a net loss of 587.2 million yuan (US$90.7 million) for the second quarter ended June 30, narrowing from a loss of about 1.2 billion yuan a year ago.
“Decreasing battery costs and the increasing sales volumes of our cars have created room for us to launch a new model under a new mass-market brand independent of NIO next year,” Li said. He added that NIO, which would maintain its status as an upmarket EV manufacturer, would also launch a cheaper EV model next year.
NIO’s announcement comes amid expectations that EVs will soon become more common on China’s roads. The China Passenger Car Association, for instance, recently forecast that full-year EV sales could more than double to 2.4 million this year. Earlier, Swiss bank UBS said carmakers will be able to achieve margin parity between traditional cars and EVs by 2025, as the cost of batteries comes down.
Shanghai-based NIO is also viewed as a bellwether start-up with the potential of challenging global leader Tesla. The US carmaker is the runaway leader in the premium EV segment in China.
Nio enhances production efficiency amid rising orders for its electric-powered SUVs
Established in 2014, NIO currently sells three premium EV models: the ES6 sport-utility vehicle and the ES8 and EC6 sedans. The ES6 starts at 358,000 yuan, while the ES8 is price between 468,000 yuan and 624,000 yuan. The basic model of the EC6 is priced at 368,000 yuan.
“EVs priced below 200,000 yuan have the largest customer base in China,” said Eric Han, a senior manager with Shanghai-based business advisory firm Suolei. “It will not be enough for NIO to bolster profitability in the coming decade if it just focuses on expensive cars,” he added.
NIO reported a dip in July sales while its two domestic competitors, Xpeng and Li Auto, posted record monthly deliveries. It delivered 7,931 vehicles last month, 2 per cent less than 8,083 units sold in June. Between April and June, it delivered 21,896 vehicles and expected third-quarter sales to reach a range of between 23,000 and 25,000 units.
In January, the EV maker unveiled the ET7, its fourth production model. The new EV’s extended edition will be able to travel about 1,000 kilometres on a single charge. The company expects to deliver the first batch of ET7s, starting at 448,000 yuan, early next year.
“As EV adoption begins to reach a tipping point worldwide, we believe it is imperative to speed up the launch of new products to provide more premium smart EV offerings, with superior holistic services, to the growing user base in the global market,” Li said.
Daniel Ren, SCMP