Nio, a Chinese electric vehicle startup listed on the NYSE, will be in at least six European markets by 2022.
The firm shared its ambitions for Europe on its earnings call this week. Nio is already taking orders for its electric SUVs and shipping small batches in Norway, its first stop outside China. It didn’t identify which five countries it will enter next year.
The young carmaker challenges behemoths like Tesla and covets a slice of the luxury car market. I wasn’t convinced that the seven-year-old startup could lure customers away from Mercedez Benz or BMW. But recently, a friend, who used to be religious about German cars, paid about $70,000 for a Nio sports sedan.
What hooks him isn’t the car’s sleek design or its marketed 600-kilometer range. It’s the experience around owning a Nio.
When his wife goes shopping, my friend passes time with his daughter in one of Nio’s owner clubs, which sit in posh malls across China’s affluent cities. He shows me a Nio app, which has data on his car’s status and lets him speak to a human assistant in real-time. The app also has a news feature, an e-commerce store and a user forum. “I can’t believe I bought a lot of stuff off its store,” he says while scrolling through other owners’ posts. What Nio has created is an all-in-one “super app” that Chinese users have gotten used to, thanks to Tencent and Alibaba.
Now Nio is exporting that user experience to Europe, home to some of the world’s most revered automakers.
To be sure, Norway is a small market with a population of five million people. Nio still has a long way to go before proving its potential in larger markets like Germany and the United Kingdom. Its success, then, hinges on whether it could delegate real power to its country managers. It’s up to founder William Li to decide how much control to give to Alexander Schwarz, Nio’s first Europe CEO.
Orders in Norway had “exceeded expectation” and “a quarter” of the customers who tried its cars ended up placing an order, Nio said on this week’s call.
The company proposes a “battery-as-a-service” model that allows people to buy its car without a battery and pay for a BaaS subscription later. But the vision requires the setup of a charging network throughout a new country, which is no small feat in the age of COVID.
At least early customer feedback in Norway appears positive. “It seems that everyone is quite excited about the battery swapping stations and the battery as a service business model,” the firm revealed in its Q2 earnings.
As of June, Nio had over 40 staff in Norway. In Oslo, its Muji-esque customer club recently opened. It already operates a design center in Munich, an engineering force in the U.K. and an autonomous driving team in San Jose.
Xpeng, Nio’s archrival in China, has yet to expand out of China but has plans to do so, according to a recent analyst call. Starting 2023, Xpeng will launch “at least two or three new vehicles every year” supporting its flagship driver assistance system. It also “intends to make these future new models, including hardware, software and services simultaneously available in China and in international markets,”
It’s an exciting and challenging time for China’s new EV makers, which are supercharged with investor money and advanced technology. But as Chinese companies, they are coping with an increasingly hostile global environment. And as they let algorithms play a bigger role in steering vehicles, they will face a barrage of questions about how they protect user safety and data privacy.