Chinese upstart Nio plans to undercut Tesla with new budget brand

Nio, which makes a range of premium electric cars such as the up-market ES8 electric SUV, which it recently started shipping to  Norway, is embarking on a plan to introduce a budget electric car brand to take on Tesla and other EV makers.

At the company’s second-quarter earnings call, Nio founder, chair and CEO Li Bin said that the preparations for Nio’s entry into the mass market have been accelerated, and while the name of the new brand was not revealed, Li Bin reportedly said: “The relationship between the Nio brand and this new brand is similar to Lexus and Toyota, Audi and Volkswagen.”

Nio is unlikely to aim for the very low end of the market, as popular and very cheap Wuling Mini EV has done, but Li Bin was reported as saying by Chinese media that the mass market” is really lacking” in competitive smart electric products.

“Nio hopes that there are products that can provide better products and services at lower prices than Tesla,” he was quoted as saying.

What form Nio’s budget offerings will take and how soon they will make it to market is not yet known. But what is certain that the company will face a serious production ramp, Tesla-style, if it is to succeed in its aspirations to make affordable EVs en masse.

Currently, Nio makes three electric cars, and has three more including the ET7 with solid state battery slated to launch in early 2022 and plans to introduce another two later that year. The three new models will use the company’s second-generation platform known as NT2.0.

Nio is selling just shy of the same number of electric cars that Tesla was when it introduced the Model 3, with two premium cars and the limited production Roadster under its belt. In its latest reporting period it stated it had delivered 4,433 ES8s, 9,935 ES6s, and 7,528 EC6s (21,896 total), compared to Tesla’s 25,708 Model S and Model X in Q2 2017.

In April, it sold its 100,000th vehicle since it first started making EVs in May 2018.

Its flagship ES8 sells for 448,000 yuan (about $A95,000 converted), the EC6 sells for 368,000 yuan (around $A78,000 converted) and the ES6 sells for 358,000 yuan (around $A76,000 converted).

Each vehicle can be purchased in combination with a battery-as-a-service plan that cuts the sticker price of the vehicle, and owners can also use Nio’s unique battery-swap network to avoid having to recharge.

While Li Bin has not divulged more details about at what price point its budget brand will enter the market, one only needs look to Tesla’s China website to see that it will need to come in under 235,000 yuan ($A49,610 converted) to beat the Californian EV maker’s Shanghai-made Model 3.

Autonomous aspirations

But whether Nio will compete on Tesla’s core product – autonomous driving – is yet to be seen. Nio hit a roadblock on Monday with a fatal crash of a driver using Nio’s self-driving suite, which also caused the NYSE-listed company’s stock to fall.

Tesla has hit its own roadblock this week as the US-based NHTSA launches an investigation into Tesla’s Autopilot not avoiding, and crashing into, parked emergency vehicles at night.

Neither company yet has true Level 5 autonomous driving software enabled in its cars (other than Tesla’s beta FSD that still requires human supervision), but it has been shown that in the case of Tesla it is easy to “cheat” Autopilot, which is essentially an advanced driver-assist suite, by adding a weight to the steering wheel.

NHTSA could insist that Tesla adds other driver-monitoring functions to its cars, such as eye and head movement cameras.

While Nio’s Li Bin did not address the questions around the safety of semi-autonomous functions, he did say, according to Chinese media, that the development of the company’s next-generation autonomous driving system is progressing smoothly, and  that Nio’s autonomous driving will fully surpass the experience of other mainstream autonomous driving systems.

By 2022, Nio’s three new models based on the NT2.0 platform, including the ET7, will be delivered. Li Bin revealed that NT2.0 will be installed on ET7 first, and the other two new models will be announced in due course.

In addition, Nio will accelerate the research and development of new products and full-stack technology, increase investment in the construction of charging and replacement and sales and service networks, and make full preparations for the delivery of three new products next year.