Chinese electric car company Nio introduced its lower-cost brand, Onvo, on Wednesday, May 15, 2024, in Shanghai, China. The launch aims to provide a more affordable alternative to Tesla, with a steeper discount.
Onvo’s initial model, the L60 SUV, will be available starting at 149,900 Chinese yuan ($21,210) if consumers opt for battery services via a monthly subscription, starting at 599 yuan. This equates to just over $1,000 annually for renting the battery. For buyers who choose to purchase the car and the battery together, the price starts at 206,900 yuan. Deliveries are scheduled to begin on September 28.
Following the announcement, Nio shares saw a brief rise of over 3.5% in U.S. trading. The price for the L60 is lower than previously announced. Initially, Nio indicated that the L60 would start at 219,900 yuan, compared to Tesla’s Model Y, which begins at 249,900 yuan.
Nio CEO William Li disclosed in an exclusive interview that the company aims to launch Onvo in Europe by next year, though no specific timeframe was provided. He mentioned that the lower-cost brand would enable Nio to better penetrate global markets, owing to increasing tariffs and other challenges affecting the flagship Nio brand’s entry into key overseas markets such as Europe and the U.S.
Addressing concerns about Onvo potentially affecting Nio-branded sales, Li clarified that the two brands target different price segments. He also noted that Nio’s deliveries have seen improvement since the announcement of Onvo’s introduction.
China’s electric vehicle sector has seen intensified competition in recent years, with several companies attempting to capture Tesla’s market share. Geely-backed Zeekr is expected to launch its first midsize electric SUV, the Zeekr 7X, in China on September 20, starting at 239,900 yuan. Xpeng announced in late August that its mass-market brand, Mona, would begin sales of its M03 electric coupe in China. The base version will start at 119,800 yuan, with a driving range of 515 kilometers (320 miles) and some parking assist features. The advanced version, equipped with “Max” driver assist features and a driving range of 580 kilometers, will sell for 155,800 yuan.
Comparatively, Tesla’s least expensive model, the Model 3, is priced at 231,900 yuan in China following a price reduction in April.
Chinese electric car manufacturers are increasingly expanding overseas, often initially targeting Europe. The European Union is nearing the completion of a process that will increase tariffs on imported Chinese-made battery electric vehicles starting early November. Nio participated in the EU’s investigation but was not sampled, meaning its cars will be subject to a 20.8% duty as per a July announcement from the European Commission. This is higher than the scheduled tariffs for Geely at 19.9% and BYD at 17.4%.
In the fourth quarter, Nio also plans to commence deliveries in the United Arab Emirates, according to Li. He highlighted that exporting cars from China to Europe has become more costly due to the tariffs.
Li further commented that despite the European tariff situation, Nio remains active in Europe, having recently opened a Nio house in Amsterdam and continuing the deployment of power swap stations. He projects that the L60 will reach 10,000 monthly deliveries by December and 20,000 monthly deliveries next year, aiming for a 15% vehicle margin on Onvo-branded cars. The brand plans to establish over 200 stores in China by the end of the year, having already opened more than 100 by early September.
Li also mentioned that Onvo and Firefly, another lower-priced brand set to begin deliveries next year, would focus on releasing vehicles for the international market.
This report includes contributions from CNBC’s Sonia Heng.
