Chinese EV start-up Nio cuts prices by US$4,200, ends battery-swapping services as sales stutter
- Nio, whose cars are priced above 300,000 yuan, will cut prices of all its models by 30,000 yuan with immediate effect
- The Shanghai-based carmaker’s sales fell 5.7 per cent month on month to 7,079 units in May after it refused to succumb to a price war initiated by Tesla late last year
Chinese electric-vehicle (EV) start-up Nio has slashed prices of all its models by 30,000 yuan (US$4,200) to spur sales and will stop its free battery-swapping services in a bid to become profitable in an extremely cutthroat market.
The Shanghai-based carmaker said on Monday that the decision on the price cuts was made after gaining insights into consumers’ needs and was effective immediately.
While Nio users currently receive as many as four free battery-swapping services per month, the carmaker’s charging stations will start collecting about 100 yuan for the service from new buyers.
“Obviously, Nio is resolute in driving up deliveries by offering discounts,” said Zhao Zhen, a sales director with Shanghai-based dealer Wan Zhuo Auto. “The price reductions have come as a surprise to the market because industry officials expect the price war [among carmakers] to end soon.”
The price cuts come after Nio posted a month-on-month sales decline of fell 5.7 per cent to 7,079 units. Nio’s peers – Beijing-headquartered Li Auto and Guangzhou-based Xpeng – posted higher sales last month, up 10.1 per cent and 6 per cent, respectively. The trio are viewed as China’s best response to US carmaker Tesla in China, the world’s largest EV market.
Nio builds premium EVs, most of which are priced above 300,000 yuan. It was a major victim of the price war initiated by Tesla last October as the Shanghai-based carmaker kept prices unchanged.
“Economies of scale are key to break even,” Jefferies analysts said in a research note on Saturday. “Nio’s product line-up is lacking models that could achieve economies of scale. Until deliveries pick up, sticky high fixed costs will hinder profitability.”
William Li, co-founder and chief executive of Nio, told reporters during a briefing in April that a loss of sales was likely to be just a short-term hiccup, and the company was determined to keep the prices of its cars flat. He also said Nio would break even in the fourth quarter of this year.
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Chinese smart-battery swap stations can change EV batteries automatically
Nio’s first-quarter performance fell short of market expectations.
Last Friday, the company posted a net loss of 4.74 billion yuan in the three months to March 31, narrowing from a loss of 5.79 billion yuan in the previous quarter.
Its first-quarter revenue plummeted by 33.5 per cent from the previous quarter to 10.7 billion yuan, missing a median forecast of 12.3 billion yuan in a Bloomberg survey of analysts.
From January to May, Nio handed a total 43,854 vehicles to mainland customers, up 15.8 per cent on year. The company has a full-year sales goal of 240,000 units.
Following months of fierce competition, the price war might be coming to an end as carmakers were refraining from offering further discounts to attract budget-conscious customers, Citic Securities said in a note last month.
Many Chinese motorists who had been waiting on the sidelines in the expectation of further price cuts had decided to enter the market as they felt the party was over, Citic said.
