On-and-off rumors of Nio, Inc. (NYSE: NIO) taking a plunge into the mass Chinese electric vehicle market, which is now dominated by Tesla, Inc.’s (NASDAQ: TSLA) made-in-China Model 3 vehicles, are on again.
What Happened: Nio is working up plans to launch a lower-price model that is internally considered a sub-brand, the Chinese media outlet Yicai reported Thursday.
In the past, there have been rumors of Nio launching a mass market model. When questions regarding the rumors have been posed to Nio management, it has not ruled out the possibility.
Nio has signaled that any potential mass market model would come under a different brand name, given its intention to preserve the premium positioning of the Nio brand.
“It’s possible that Nio will foray into the mass market, but the Nio brand will continue to focus on the premium market,” William Li, Nio’s founder, chairman and CEO, said on the company’s first-quarter earnings call.
The reduction in investments in joint ventures with GAC and Changan has given Nio the flexibility and possibility to try different approaches to enter the mass market, Li said at the time.
The Yicai report also suggests that the “Gemini” model the company announced recently will use the Nio brand and will be positioned in the premium segment.
The ET7 sedan Nio plans to commercially launch in the first quarter of 2022 will be pitched against German luxury automaker Bayerische Motoren Werke Aktiengesellschaft’s (OTC: BMWYY) 5 Series luxury car.
Why It’s Important: The Nio brand has premimum positioning: the average price of a Nio vehicle is around 430,000 yuan ($67,255), the Yicai report said.
In comparison, the starting price of a standard range made-in-China Model 3 vehicle is 250,900 yuan.
With competition in the EV race heating up, it pays to make one’s presence felt in the mid- to lower-tier market too, as has been evident from the resounding success of the Wuling Hongguang Mini EVs, which is priced at $4,500 and is the top-selling EV model in China since its July 2020 rollout.
At last check, Nio shares were up 0.36% at $42.90.
Photo courtesy of Nio.
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