China’s Tesla rival Nio slashes prices for new Onvo-branded cars

HEFEI, China – Another Chinese electric car is about to take off Teslawith steeper discounts.

Onvo, a low-cost brand launched by a premium electric car company Neoannounced the first car, the L60 SUV, will start as low as 149,900 Chinese yuan ($21,210) when buying battery service through a monthly subscription, starting at 599 yuan. That equates to just over $1,000 a year to “rent” a battery.

Models with batteries and cars start at 206,900 yuan. Shipping is set to begin September 28.

Nio shares briefly rose more than 3.5% in US trading Thursday following the launch of the Onvo L60.

The new price of the L60 is even lower than what the company previously announced. When Nio launched its Onvo brand in May, the company said the L60 would sell for 219,900 yuan versus Tesla’s Model Y at 249,900 yuan.

Nio CEO William Li told CNBC in an exclusive interview that he hopes to launch Onvo in Europe as soon as next year, but did not have a specific time to show.

He said the low-priced brand would help the company reach the global market, given rising tariffs and other challenges for Nio’s premium brand to reach overseas market targets in Europe and the US.

As for whether Onvo will cannibalize Nio-branded sales, Li said the two brands aim at very different price segments. He noted how Nio’s delivery has improved since the company announced plans for Onvo.

China’s electric car industry has become highly competitive over the past few years, with Nio and other companies competing for a share of Tesla’s market share.

Geely– supported Zeekr is set to launch its first midsize electric SUV, the Zeekr 7X, in China on September 20, starting at 239,900 yuan.

Xpeng in late August announced mass market brand Mona will start sales of the M03 electric coupe in China. The base version starts at 119,800 yuan, with a driving range of 515 kilometers (320 miles) and some parking assist features.

The Mona M03 version with advanced “Max” driver assistance features and a driving range of 580 kilometers will be sold for 155,800 yuan.

In comparison, Tesla’s cheapest car – the Model 3 – costs 231,900 yuan in China, after a price cut in April.

Chinese electric car companies have gradually expanded overseas, often starting with Europe. However, the European Union is nearing the end of a process that will increase tariffs on battery electric cars imported from China from early November. The bloc launched an investigation into Chinese EV makers’ use of subsidies last year.

The Nio cooperates with the EU probe but is not sampled, which means that the cars will be subject to a 20.8% duty, according to a July announcement from the European Commission. That is higher than the rate of 19.9% ​​scheduled for Geely cars, and 17.4% for BYD.

In the fourth quarter, Nio plans to start deliveries in the United Arab Emirates, Li told investors in an earnings call on September 5.

“Because of the current tariffs in Europe, selling or exporting cars from China to Europe is becoming more expensive,” Li said, according to a FactSet transcript.

“So we will focus on the five existing European markets that have already started. We also know that to establish the premium brand NIO in the European market will also take more time, and we are very patient.”

“But in the meantime, that doesn’t mean we stop our activities there,” Li said. “Earlier this year, we opened the NIO house in Amsterdam, and we are still installing and distributing power swap stations in Europe.”

They expect the L60 to reach 10,000 monthly deliveries in December, and 20,000 monthly vehicle deliveries next year. They expect a 15% vehicle margin on the new Onvo brand cars.

The brand aims to have more than 200 stores in China by the end of this year, and has already opened more than 100 as of early September.

Li said at the earnings call that Onvo and Firefly, a lower-priced brand set to begin deliveries next year, will release vehicles for the international market.

– CNBC’s Sonia Heng contributed to this report.