NIO's Potential Sub-Brand Said to Target USD 31,300 Market

Automotive Author: Contributor, Phate Zhang Editor: Luke Sheehan Jun 11, 2021 11:41 AM (GMT+8)

After a Thursday article about NIO's plans to launch a new, lower-positioned brand, a new report on Friday provided more details.


NIO is assembling a team internally to secretly create a new lower-end sub-brand that will target a market priced around CNY 200,000 yuan (USD 31,300), Tech Planet reported Friday.

NIO is the only local Chinese brand with a firm foothold in the high-end market, selling for at least CNY 358,000. If customers opt for its BaaS battery rental service, the barrier to purchase can be lowered by at least 70,000 yuan, but they will need to pay a monthly battery rental fee.

The latest data from China Automotive Technology and Research Center (CATARC) shows that NIO's average vehicle sales price in May was CNY 432,900 yuan, higher than BMW's CNY 391,000 yuan and slightly lower than Mercedes' CNY 435,600 yuan.

Tech Planet reported that NIO's sub-brand project is currently in a confidential stage, with the project name being a four-letter code internally, and the sub-brand name has not yet been finalized. NIO is currently building an R&D team for the project in Shanghai, the report said.

The brand targets consumer groups with 2-5 years of work experience, and will take a differentiated route from NIO's current high-end positioning, but will not be very low, the report said.

In order not to affect the high-end positioning of NIO's own brand, the new brand will probably remain relatively independent at the organizational level.

"In order to differentiate from NIO, it is highly likely that a relatively independent, new subsidiary will be established," Tech Planet quoted an unnamed NIO insider as saying, adding that senior director-level employees are already in place.

In response to a request for comment from CnEVPost, an NIO spokeswoman said no comment.

The latest report echoes a Thursday evening report on that said NIO is planning to launch a new, lower-positioned brand, which insiders are calling a sub-brand.

The ET7, which NIO will deliver in the first quarter of 2022 to compete with the BMW 5 Series, will be launched in the future to compete with the BMW 3 Series, reported, adding that this would be in line with the pattern of NIO's product launches.

It's worth noting that late last month, a tender announcement for a model codenamed "Gemini" issued by NIO's OEM JAC was widely reported by Chinese auto media, sparking speculation that the electric car company would launch an entry-level model.

But a few days ago, NIO clarified that "Gemini," to be launched next year, will carry the NIO brand and maintain its premium positioning.

For NIO, entering the mass market is something the company has been thinking about.

On March 2, during its fourth-quarter earnings call, William Li, founder, chairman and CEO of NIO, said that it is possible to make a new brand to enter the mass market, but the NIO brand will not do so.

NIO has made attempts a few years ago, such as forming joint ventures with GAC and Changan Automobile, but the company has reduced its shareholdings.

"We are actively looking at ways to enter the mass market more aggressively, which is a long-term strategy for us," Li said.

If NIO launches a model priced at around CNY 200,000, it will undoubtedly put pressure on the large number of companies that have announced their entry into the car-making business this year.

Generally speaking, if a brand is perceived by users as high-end, then its lower-priced models tend to be popular as well.

However, if a company enters the market from a lower-priced product, it can be extremely difficult to enter the high-end market. In the smartphone market, Xiaomi is a typical example.

Xiaomi announced on March 30 that it is entering the smart electric vehicle market with an expected investment of $10 billion over 10 years, with the first phase of 10 billion CNY, and that Lei Jun, CEO of Xiaomi Group, will also serve as CEO of the smart electric vehicle business.

"This is the last major venture of my life. I am willing to bet my entire reputation in life to personally lead the team for Xiaomi cars," Lei said.

On April 6, Lei said that the price range of the first Xiaomi car is CNY 100,000 to 300,000.

On April 14, XPeng unveiled the P5, the company's third product with its portfolio and the world's first LiDAR-equipped production smart car.

The P5 is smaller than the company's existing flagship sedan model, the XPeng P7, and its lower price is expected to allow the company to expand its user base. It is widely expected to have a price range of CNY 150,000 to CNY 200,000.

On June 1, Xia Yiping, CEO of Baidu's car-making arm Jidu Auto, said the company's first car will be priced at more than CNY 200,000 because of the higher cost of its intelligent parts.

According to Tech Planet, NIO's previous technology accumulation will be the support for the new sub-brand, including body technology. However, it will take time to rethink the work involved in the whole vehicle planning.

The report cited new energy vehicle industry sources as saying that the "main brand + sub-brand" model can effectively share business risks for companies in the expansion phase.

If a company adopts a multi-brand strategy, there are other brands available if one sub-brand proves unsuccessful. The brands that survive in the matrix are usually the ones that have been proven in the market, the source said.

This article was first published by Phate Zhang on CnEVPost, a website focusing on new energy vehicle news from China.