Nandini Roy Choudhury, writer
Brief news
- Onvo, a new budget electric vehicle brand from Nio, has launched its L60 SUV at a competitive price of 149,900 yuan ($21,210) with a battery subscription model, undercutting Tesla’s Model Y.
- Nio plans to expand Onvo into Europe next year, aiming to navigate tariffs and market challenges faced by its premium brand.
- The electric vehicle market in China is intensifying, with various brands, including Zeekr and Xpeng, introducing new models at lower price points.
Detailed news
HEFEI, China— Another Chinese electric vehicle is attempting to undermine Tesla by offering a more substantial discount.
Onvo, the lower-priced brand that was established by the premium electric car manufacturer Nio, has announced that its inaugural vehicle, the L60 SUV, will be priced at as low as 149,900 Chinese yuan ($21,210) when battery services are purchased through a monthly subscription, with a subscription fee of 599 yuan. That is the equivalent of just over $1,000 per year for the battery to be “rented.”
The starting price for a model that includes the battery and the car is 206,900 yuan. Deliveries are scheduled to commence on September 28.
Nio shares experienced a brief increase of over 3.5% in U.S. trading on Thursday following the launch of the Onvo L60.
The L60’s new price is even lower than the previous announcement made by the company. The L60 was announced by Nio to be priced at 219,900 yuan when the Onvo brand was introduced in May, in contrast to Tesla’s Model Y, which is priced at 249,900 yuan.
In an exclusive interview with CNBC on Thursday, Nio CEO William Li expressed his intention to introduce Onvo in Europe as early as next year. However, he was unable to provide a specific timeframe.
He stated that the company would be able to more effectively access a global market by utilizing the lower-priced brand, as the premium Nio brand is facing increasing tariffs and other obstacles in its efforts to penetrate its target overseas markets of Europe and the United States.
Li stated that the two brands are targeted at significantly different price points, which raises the question of whether Onvo would stifle Nio-branded sales. He observed that Nio’s deliveries have improved since the company announced its intentions for Onvo.
The electric car industry in China has experienced a significant increase in competition in recent years, with Nio and other companies competing for a portion of Tesla’s market share.
Supported by Geely On September 20, Zeekr will introduce its inaugural midsize electric SUV, the Zeekr 7X, in China, with an initial price of 239,900 yuan.
In late August, Xpeng announced that its mass market brand, Mona, would commence sales of its M03 electric coupe in China. A driving range of 515 kilometers (320 miles) and some parking assist features are included in the base version, which is priced at 119,800 yuan.
The Mona M03 will be sold for 155,800 yuan in a version that includes the more advanced “Max” driver assist features and a driving range of 580 kilometers.
In contrast, Tesla’s most affordable vehicle, the Model 3, is priced at 231,900 yuan in China, following a price reduction in April.
Chinese electric vehicle manufacturers have steadily expanded their operations abroad, frequently commencing with Europe. Nevertheless, the European Union is on the brink of concluding a process that would result in the imposition of higher tariffs on battery electric vehicles manufactured in China and imported into the country beginning in early November. Last year, the bloc initiated an inquiry into the subsidies utilized by Chinese electric vehicle manufacturers.
As of a July announcement from the European Commission, Nio’s vehicles would be subject to a 20.8% duty, despite the fact that they cooperated with the EU’s investigation. This is higher than the 19.9% tariffs that are scheduled for Geely cars and the 17.4% tariffs that are scheduled for BYD cars.
Li informed investors during an earnings call on September 5 that Nio intends to commence deliveries in the United Arab Emirates during the fourth quarter.
According to a FactSet transcript, Li stated that the current tariff in Europe has resulted in a higher cost of selling or exporting vehicles from China to Europe.
But in the interim, it does not imply that we have ceased our operations in that location,” Li stated. “We have recently inaugurated our NIO house in Amsterdam and are currently in the process of installing and deploying our power swap stations throughout Europe.”
He anticipates that the L60 will achieve 10,000 monthly deliveries in December and 20,000 vehicle deliveries per month the following year. He anticipates a 15% vehicle margin for the new Onvo-branded vehicles.
The brand has already opened over 100 stores in China as of early September and intends to have over 200 stores in the country by the end of the year.
Li stated during the earnings call that Onvo and Firefly, a brand that is even more affordable and is scheduled to commence deliveries next year, would endeavor to introduce vehicles for the international market.
“Therefore, we will concentrate on the five European markets that we have already initiated.” We are also aware that the establishment of NIO as a premium brand in the European market will require a prolonged period of time, and we are exceedingly patient with this.
Source : CNBC News
