Chinese electric car company Nio launches its low-cost Onvo brand on Wednesday, May 15, 2024, in Shanghai, China.
CNBC Evelyn Cheng
BEIJING – China’s electric car company Neo plans to expand to the Middle East this year, CEO William Li said in the earnings call on Friday, at a time when competitors have increased their global footprint.
The nearly 10-year-old company will also begin shipping its cheapest brand, Firefly, in the first half of next year, Li said.
Nio, which recently received funding from a Middle East-based investor, saw its highest shipment of 20,544 vehicles in May.
The US-listed Chinese company, which has been operating at a loss, plans to start offering products and services in the United Arab Emirates later this year, Li said, according to a FactSet transcript.
Nio is mainly sold in China and parts of Europe, with a focus on higher end markets. Li said the brand could break even if monthly sales reach about 30,000 vehicles.
Competitors BYD it has also made the United Arab Emirates an entry point to the Middle East. The battery and electric car giant said in November it opened a showroom in Dubai Festival City as part of its collaboration with Al-Futtaim Electric Mobility Company.
As competition in China’s electric car market intensifies, Nio launched a low-cost brand called Onvo in May. The Onvo L60 SUV, which will be launched in September, starts at 219,900 yuan ($30,349) Tesla Model Y 249,900 yuan.
Li said there is a price of L60 only for pre-sales, not the final price.
“We continue to believe that the Onvo L60 will be a key factor affecting NIO’s potential outlook in 2H24,” Nomura analysts said in a note on Friday. He rated the stock neutral.
third car brand Nio
A cheaper brand, Firefly, is also in the works, Nio’s Li said.
He told investors that Firefly will deliver the first car in the first half of next year, priced between 100,000 yuan and 200,000 yuan.
The Firefly will share the same sales points as the Nio brand cars, Li said, noting it will be similar to the sales models used by MINI and BMW.
Part of BYD’s strategy is to release vehicles and sub-brands for different market segments. Initial EV Xpeng also plans to release a low-cost brand, Mona, this month and begin mass delivery in the third quarter.
Nio said research and development expenses in the first quarter were 2.86 billion yuan, down 6.9% from the year-ago period.
The operating loss during the first quarter was 5.5% higher than the previous year at 5.39 billion yuan.
Onvo store expansion
Onvo, which has a separate sales channel from Nio, plans to open about 100 stores in China, Li said, adding that each location would require an investment of about 1 million yuan to 2 million yuan.
“We also know that the competition in ONVO’s segment is stronger than NIO’s,” Li said. “In that case, we will also strike a balance between volume and margin. We will not boost sales volume at the expense of the margin of our vehicles.”
Onvo is expected to break even with about 20,000 to 30,000 vehicle sales per month, he said.
The company also plans to spend about 200,000 to 300,000 yuan for each older battery swap station to be compatible with Onvo cars, Li said.
Power subsidiary Nio is set to receive fresh investment of up to 1.5 billion yuan from a fund backed by the Chinese city of Wuhan, the company said in late May.
