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Nio says it won’t join the ‘price war’ and slash prices like Tesla

Nio CEO William Li speaks on the Shanghai auto present in 2021. The 2023 present kicked off Tuesday.

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SHANGHAI — Chinese language electrical automobile firm Nio will hold its costs excessive quite than minimize them, CEO William Li instructed CNBC in an interview.

“For us, we will definitely not be a part of the value struggle,” Li stated, claiming Nio’s services and products are definitely worth the worth. That is in response to a CNBC translation of his Mandarin-language remarks.

Tesla, Elon Musk’s automobile firm, this 12 months slashed costs within the U.S. and China. Nio additionally sells automobiles within the premium phase of the market, however its SUVs and sedans could be far dearer than Tesla’s fashions.

Li stated his firm will give attention to enhancing its buyer providers — equivalent to including battery swapping and charging stations. The swapping expertise claims to vary out batteries in minutes in order that drivers do not have to attend for charging.

Nio introduced final week that beginning June 1, individuals who put down deposits for a few of its automobile fashions will solely get to make use of the corporate’s battery swapping service at no cost 4 occasions a month. That is down from as many as six free swaps a month beforehand.

The corporate additionally stated final week it will begin charging drivers 380 yuan ($56) a month to make use of its assisted driving system, known as Navigate on Pilot (NOP) plus. The software program has been free to check.

Providing expertise to help drivers with parking, freeway lane adjustments and different duties has more and more turn out to be a promoting level for electrical automobile corporations in China.

Such assisted driving expertise proper now could solely rank ninth or tenth amongst customers’ wants, in response to Li, who can also be Nio’s founder and chairman. He stated folks’s evaluation of the tech will change as soon as they struggle it, and that he expects assisted driving to turn out to be a regular automobile characteristic.

Nio’s automobile gross sales grew by 37% final 12 months to 45.51 billion yuan ($6.61 billion), with the corporate general nonetheless working at a loss.

There are lots of new merchandise coming to market, which after all means fiercer competitors for us. However for customers, they’ve a extra considerable choice.

Its income comes primarily from China, the place authorities insurance policies have helped speed up development in electrical automobile gross sales. New power autos — which incorporates hybrid and pure electrical — noticed penetration of passenger automobile gross sales attain 34% in March, in response to the China Passenger Automotive Affiliation.

That is sooner than Nio anticipated, Li stated.

“There are lots of new merchandise coming to market, which after all means fiercer competitors for us,” he stated. “However for customers, they’ve a extra considerable choice.”

Aggressive panorama

Within the first quarter, 1.3 million new power passenger automobiles have been offered in China, up 22% from a 12 months in the past.

Inside that market, Nio stated it delivered 31,041 autos within the first quarter, up by 20.5% year-on-year. One other U.S.-listed Chinese language electrical automobile model, Li Auto, noticed first quarter deliveries bounce by greater than 60% to greater than 52,000 autos.

Learn extra about electrical autos from CNBC Professional

BYD stays by far the dominant market participant in China. It offered 264,647 purely battery-powered passenger automobiles within the first three months of the 12 months, up greater than 80% from a 12 months in the past. Hybrid passenger automobile gross sales doubled from a 12 months in the past to 283,270 within the first quarter.

Tesla delivered greater than 422,000 automobiles worldwide within the first quarter, up 36% from a 12 months in the past. The corporate didn’t escape figures for China, which generally accounts for nicely over 20% of Tesla’s income.

Geopolitics and international enlargement

Within the final two years, Nio started deliveries to European international locations equivalent to Norway and Germany. Tensions between China and the U.S. have escalated, whereas relations between Europe and Beijing haven’t been clean both.

Sustainable international improvement requires good merchandise for customers world wide, one thing that can’t be performed by counting on a single nation, Li stated.

“Regardless of the large challenges we face from geopolitics, we nonetheless wish to stick with serving our clients, take note of the tempo of funding and handle operational dangers nicely,” he stated.

When requested about U.S. market, Li stated the corporate was continuing with its plans. “However we all know challenges will definitely be larger and larger,” he stated, with out elaborating.