Global Courant 2023-04-19 04:14:01
SHANGHAI – Chinese electric car company Nio will keep its prices high instead of lowering them, CEO William Li told CNBC in an interview.
“For us, we will definitely not join the price war,” said Li, who argued that Nio’s products and services are worth the price. That’s according to a CNBC translation of his comments in Mandarin.
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Tesla, Elon Musk’s car company, cut prices in the US and China this year. Nio also sells cars in the premium segment of the market, but its SUVs and sedans can be much more expensive than Tesla’s models.
Li said his company will focus on improving its customer service, such as adding battery swap and charging stations. The swap technology claims to replace batteries in minutes, so drivers don’t have to wait for a recharge.
Many new products are coming onto the market, which of course means more competition for us. But for users, they have a wider choice.
Nio announced last week that starting June 1, people who make a down payment on some of its car models will be able to use the company’s battery-swap service free of charge only four times a month. That’s down from six free swaps a month earlier.
The company also said last week it would start charging drivers 380 yuan ($56) a month to use its assisted driving system, called Navigate on Pilot (NOP) plus. The software has been tested for free.
New energy electric vehicles are on display at a Nio store in Shanghai, China, March 19, 2023.
Future publication | Future publication | Getty Images
Providing technology to assist drivers with parking, highway lane changes and other tasks has increasingly become a selling point for electric car companies in China.
According to Li, who is also Nio’s founder and chairman, such technology for assisted cars may currently rank only 9th or 10th in user needs. He said people’s assessment of the technology will change once they try it, and that he expects assisted driving to become a standard car feature.
Nio’s car sales grew 37% last year to 45.51 billion yuan ($6.61 billion), with the company still at a loss overall.
The revenue comes mainly from China, where government policies have accelerated the growth of electric car sales. According to the China Passenger Car Association, the penetration rate of passenger car sales in March was 34%, including hybrid and pure electric vehicles.
That’s faster than Nio expected, Li said.
“There are a lot of new products entering the market, which of course means fiercer competition for us,” he said. “But for users, they have a wider selection.”
Competitive landscape
In the first quarter, 1.3 million new energy passenger cars were sold in China, 22% more than a year ago.
Within that market, Nio said it delivered 31,041 vehicles in the first quarter, up 20.5% year-over-year. Another US-listed Chinese electric car brand, Li Auto, saw deliveries in the first quarter are up more than 60% to more than 52,000 vehicles.
BYD remains by far the dominant market player in China. It sold 264,647 fully battery-powered passenger cars in the first three months of the year, an increase of more than 80% from a year ago. Sales of hybrid passenger cars doubled from a year ago to 283,270 in the first quarter.
Tesla shipped more than 422,000 cars worldwide in the first quarter, up 36% from a year ago. The company has not released figures for China, which typically accounts for more than 20% of Tesla’s sales.
Geopolitics and global expansion
In the past two years, Nio has started deliveries to European countries such as Norway and Germany. Tensions between China and the US have escalated, while relations between Europe and Beijing are also not smooth.
Sustainable global development requires good products for users around the world, something that cannot be done by relying on a single country, Li said.
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“Despite the major geopolitical challenges we face, we want to continue to serve our customers, monitor the pace of investments and manage operational risks well,” he said.
When asked about the US market, Li said the company was moving ahead with its plans. “But we know that the challenges are definitely going to get bigger and bigger,” he said without elaborating.
