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

New-energy electrical autos are seen at a Nio retailer in Shanghai, China, March 19, 2023.

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SHANGHAI — Chinese language electrical automobile firm Nio will maintain its costs excessive relatively than reduce them, CEO William Li informed CNBC in an interview.

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

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

Li stated his firm will deal with enhancing its buyer companies — akin to including battery swapping and charging stations. The swapping know-how claims to alter 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 without 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 could 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.

There are a lot of new merchandise coming to market, which in fact means fiercer competitors for us. However for customers, they’ve a extra plentiful choice.

Providing know-how to help drivers with parking, freeway lane adjustments and different duties has more and more turn into a promoting level for electrical automobile firms in China.

Such assisted driving know-how proper now might solely rank ninth or tenth amongst customers’ wants, based on Li, who can be Nio’s founder and chairman. He stated individuals’s evaluation of the tech will change as soon as they fight it, and that he expects assisted driving to turn into a normal automobile characteristic.

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

Why this company is called China's Tesla

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

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

Bloomberg | Bloomberg | Getty Pictures

That is quicker than Nio anticipated, Li stated.

“There are a lot of new merchandise coming to market, which in fact means fiercer competitors for us,” he stated. “However for customers, they’ve a extra plentiful choice.”

Aggressive panorama

Within the first quarter, 1.3 million new vitality passenger automobiles had been offered in China, up 22% from a yr 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 soar by greater than 60% to greater than 52,000 autos.

Tesla issues price cuts in Germany and Singapore

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 yr, up greater than 80% from a yr in the past. Hybrid passenger automobile gross sales doubled from a yr 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 yr in the past. The corporate didn’t escape figures for China, which generally accounts for properly over 20% of Tesla’s income.

Geopolitics and international enlargement

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

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

Learn extra about electrical autos from CNBC Professional

“Regardless of the large challenges we face from geopolitics, we nonetheless need to follow serving our prospects, take note of the tempo of funding and handle operational dangers properly,” 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 higher and higher,” he stated, with out elaborating.