Nio founder and CEO William Lee poses outside the New York Stock Exchange to celebrate his company’s IPO.
Photo: New York Stock Exchange
BEIJING – Chinese electric vehicle startups Nio And Shpeng are turning to the cheaper segment of the market and plan to release new brands of cars this year.
Nio’s first such mass-produced vehicle will be an SUV, cheaper than Tesla“Model Y,” CEO William Lee told CNBC’s Eunice Yoon on Thursday. The Tesla SUV in China starts at 249,900 yuan ($35,197).
Like many early entrants into the Chinese electric vehicle market, US-listed Nio targeted the premium market when it launched about a decade ago. Its cars can cost around $50,000 or more, offering buyers additional services such as Nio Clubs and a network of charging and battery swapping stations.
Nio and Xpeng’s plans to launch mass-market brands put the companies in more direct competition with a local rival. BID and German automaker Volkswagen.
The new vehicles come amid a bitter price war in China’s new energy vehicle market, which includes battery- and hybrid-powered vehicles. Such vehicles now account for more than 40% of new passenger cars sold in the country.
Lee said he doesn’t expect the mainstream brand to adjust prices significantly, although he expects price volatility in the market to continue for some time.
Nio plans to launch its new brand in mid-May called Onvo, or “Le Dao” in Chinese, a name the company says is meant to reflect families – its target consumer segment – spending quality time together happily.
Xpeng, which sells its cars in a slightly lower price range than Nio, plans to launch its new sub-brand Mona in the next two to three months, Vice Chairman and Co-President Brian Gu told CNBC on Thursday.
Gu said the new cars will be priced under 150,000 yuan ($20,700), below the price range Nio is targeting. Last summer, Xpeng said it would develop a new mass brand for this price range through a strategic partnership with ride-hailing app operator Didi.
“The reason we are willing to take on this segment is because we believe that through scale, technology and cost control we can achieve differentiation[d] technologies to the mass market,” Gu said, noting that in the past, only the premium market could benefit from higher-end technologies.
Xpeng has made its driver assistance software one of its strengths in China. Comparable Tesla self-driving software is not yet available in the country.
Gu said at a press briefing that Xpeng will differentiate the technology available for the mass market brand from the existing one.
He also noted that at least a dozen brands compete in the premium segment, while only two or three brands currently occupy about 80% of the Chinese mass market.
According to Autohome data for the first quarter of the year, the Tesla Model Y is the best-selling electric SUV in China, priced under 250,000 yuan.
Despite the Model Y’s price cut, Li said the new brand’s first car will cost around $30,000 (213,000 yuan) – not as cheap as BYD.
Chinese battery and electric vehicle giant BYD has achieved most of its success in the lower end of the mass market. Last year, the company launched premium and luxury cars under new brands, taking the company’s product offerings from less than 100,000 yuan to more than 1 million yuan.
Among several new vehicles planned for this year, BYD said on Thursday it will launch a new hybrid vehicle in the second quarter priced between 120,000 and 150,000 yuan.