Nio reportedly launched a more affordable electric car brand in China in a bid to gain a firmer foothold in the world’s most competitive market as Tesla momentum slipped.
The brand, called Onvo, would target family users with its first model which competed directly with Tesla’s Model Y and the Toyota RAV4 SUVs, Nio chief executive officer William Li said at an event in Shanghai, according to Bloomberg.
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The launch vehicle, the medium size L60 SUV, was “longer, wider, and roomier than the Model Y,” he said.
The report said the L60, with customer deliveries expected from September, would start at CNY219,900 (US$30,400).
Bloomberg noted the Model Y started at CNY249,900 yuan in China while the most basic Nio model was priced from CNY 298,000.
Bloomberg said Shanghai based Nio, which posted an annual loss of CNY20.7bn last year and failed to meet its sales target, wants to boost market share and profitability by expanding its product line while improving efficiency. While Onvo would stand apart from the Nio brand, which was positioned as a premium vehicle maker, it would share much of the same infrastructure including includes the charging network and sales and service hubs, in addition to supply chain and research and development.
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By GlobalDataOnvo “has been further enabled by Nio’s capabilities and resources accumulated in the past 10 years,” Li reportedly said, adding the new brand would allow the company to reach more customers.
Bloomberg said Nio deliveries fell in the first quarter of 2024 amid heightened competition and price cuts by rivals including BYD and Li Auto. Tesla, which had rolled out several rounds of price cuts in China, was also a victim. While sales of new-energy passenger vehicles rose 28% in April from a year earlier, a category that included EVs and plug-in hybrids, Tesla deliveries fell 18%.
Targeting mass market users, Onvo won’t grant its owners access to Nio Houses, the exclusive lounge like spaces where owners can get free drinks and take social classes, Li reportedly said in a media briefing. The cars would come with a cheaper battery pack, reducing monthly leasing fees.
The brand would also focus on “core needs,” rather than use more expensive technologies like lidar based advanced driving systems and high performance motors to increase acceleration, Bloomberg quoted Alan Ai, senior vice president of Nio and the president of Onvo, as saying.
Li said the unit was expected to start contributing to Nio profitability when monthly sales reached about 20,000 vehicles.
Onvo expected to launch one new model per year, with its second car targeting larger families, Bloomberg said.
