Nio targets mass-market Chinese buyers with affordable Onvo brand

Posted by Admin May 15, 2024 Bussiness

Nio has launched a new electric vehicle (EV) brand targeted at China’s cost-conscious middle-income consumers amid fierce competition in the world’s largest EV market.

The Shanghai-based carmaker said the L60 Onvo-branded SUV, which is equipped with an autonomous driving system, will take on Tesla’s bestselling Model Y. The carmaker enjoys an edge in production cost over its US rival.

Nio said deliveries of the new car will begin in September.

“Onvo vehicles will give family users the best experience at acceptable prices,” William Li, co-founder and CEO of Nio, said at a launch ceremony in Shanghai on Wednesday. “A balance between product experience and cost of building the vehicles will be struck.”

Nio staff pose for a group photo with the company’s 500,000th vehicle at the Hefei plant in east China’s Anhui province on May 9, 2024. Photo: Xinhua

The entry-level version of the L60, which has a driving range of 555km, is priced at 219,900 yuan (US$30,454), 12 per cent lower than the basic edition of the Shanghai-made Model Y, which is priced at 249,900 yuan.

Tesla sold 456,394 units of the Model Y in mainland China last year, an increase of 44.8 per cent from 2022. It outsold all other SUVs, including its petrol-powered rivals, in the world’s biggest car market.

Nio said the new brand, known as Ledao in Chinese, is built for mainstream Chinese consumers with the aim of creating an enjoyable driving experience for families.

Currently, all cars under Nio’s namesake brand are priced at more than 300,000 yuan on the mainland. Nio-branded cars compete against the likes of BMW’s X5 and Audi’s Q7.

Unlike other EV makers that have been adjusting prices to bolster deliveries in the highly competitive market, Nio has avoided discounts, which Li said was a deliberate tactic to maintain its brand value.

Nio handed 15,620 vehicles to mainland customers in April, an increase of 134.6 per cent from a year earlier.

In the first four months of this year, the company sold 45,673 vehicles, 21.2 per cent more than a year earlier.

China’s EV sector, one of the main drivers of the economy, is expected to see sales growth of 20 per cent this year, compared with 37 per cent in 2023, according to a forecast by Fitch Ratings in November.

BYD, the world’s largest EV builder, fired the first salvo in the price war in February, slashing the prices of nearly all of its cars by 5 to 20 per cent to accelerate a transition from petrol vehicles to electric cars on the mainland.

Since then, the prices of 50 models across a range of brands have dropped by 10 per cent on average, Goldman Sachs said in a report last month.

Xpeng, another premium EV assembler in China, also plans to launch a mass-market brand to widen its customer base in a slowing market.

Models under this new brand will be fitted with autonomous driving systems and will be priced between 100,000 yuan and 150,000 yuan, He Xiaopeng, the Guangzhou-based carmaker’s co-founder and CEO, said in March.