Electric-vehicle maker Nio Inc. plans to intensify its European expansion as a price war in the company’s vast home market of China squeezes margins.
(Bloomberg) — Electric-vehicle maker Nio Inc. plans to intensify its European expansion as a price war in the company’s vast home market of China squeezes margins.
Nio will unveil a model next quarter that caters to European demand for compact cars and will also be sold in China, Chief Executive Officer William Li said at a media briefing Monday ahead of the Shanghai auto show.
Next year, the company will launch a fresh brand of vehicles for the European market that will be made at a new factory in China, Nio President Qin Lihong said at the briefing. The project is codenamed Firefly.
In China, a Tesla Inc.-triggered price war led to cuts of over 10,000 yuan ($1,455) to one in five cars in the first quarter, according to Bloomberg analysis. Heated competition in the world’s largest auto market is prompting Shanghai-based Nio to push further offshore, two years after its first overseas foray in Norway.
Cracking Europe has been harder than expected, said Qin. An original plan to deploy 20 battery-swap stations in Norway has been delayed, with only 65% installed so far, he said.
“We underestimated the innovation and uncertainties of all processes, including permission, labor acquisition, a lot of matters,” he said. “We’ve learned our lessons.”
Nio reiterated plans to double overall sales in 2023 to around 250,000 vehicles, as well as break even in core businesses in the fourth quarter.
Recent drops in lithium prices will help Nio achieve a better gross margin from the second quarter, Li said. Nio delivered 122,486 cars in 2022.
Li said building cars in China can be up to 20% cheaper than elsewhere, though the company will consider relocating its supply chain or manufacturing if economies of scale are available in other regions.
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