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Exclusive: How NIO plans to stay a step ahead of Tesla and German rivals in China

NIO’s Flagship House in Shanghai (Yuzhu Zheng/Schmidt Hammer Lassen Architects)

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In a high-end shopping district in Shanghai, China sits one of the newest, premium electric vehicles in the market: the mid-sized, all-electric NIO ES6 sports utility vehicle.

Taking the spotlight inside an expansive showroom of curved glass windows, terrazzo floors, and light douglas fir wood walls, the NIO House retail gallery is as much a high-tech electronics store as it is an experience.

Five years ago, NIO didn’t even exist; it was merely an idea in tech-mogul William Li’s head. Li partnered up with Jack Cheng, a former Fiat and Ford Executive, and Lihong Qin, a former real estate executive, to form a next-generation automobile company. Since then, NIO has delivered over 15,000 vehicles, employs over 9,500 people, and built an extensive charging and battery swapping network, as the company looks to become the de-facto brand in the burgeoning electric mobility market.

NIO CEO William Li at the Shanghai Auto Show. (Christian Prenzler/Teslarati)

NIO’s journey over the last five years hasn’t been comfortable, or cheap; the company has raised over $3.5B from investors, including a public offering on the New York Stock Exchange last year (NYSE: NIO). But the fact that the company is producing and delivering vehicles to consumers puts NIO in rare company. Aside from Tesla who spent nine years to bring their first mass production vehicle to the market, other electric vehicle companies, including Faraday Future, Lucid Motors, Canoo, and Byton have yet to deliver a vehicle to customers, let alone build a factory for car production.

While it’s become commonplace to hear NIO being referred to as “the Tesla of China” – both are publicly traded companies that design and manufacture premium electric vehicles – the differences far outweigh their similarities.  Where Tesla seeks to streamline its retail presence, NIO is investing heavily into the buildout of designer showrooms and members-only clubs for vehicle owners. Tesla has focused exclusively on fast-charging solutions, yet NIO is placing a massive bet on battery swapping technology and a move-fast-at-lower-risk manufacturing strategy that puts the company a step ahead of the competition.

Manufacturing in China

Five and a half hours outside of Shanghai (two hours by bullet train) in Hefei, China, NIO is building thousands of electric vehicles in a state of the art factory. Spooling up production last April, it’s an understatement to say that NIO was new to the vehicle manufacturing business. While the company had spent years developing their electric platform and first SUV, the ES8, they lacked manufacturing expertise to bring it to market. Designing and building their own factory, costing billions and taking years, wasn’t an option. Instead, NIO partnered with the state-owned manufacturer, JAC Motors.

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JAC and NIO were considered an odd couple when the two announced their partnership in April 2016; JAC more well-known for their low-cost vehicles, rather than their craftsmanship. Outside of their automotive manufacturing expertise, JAC holds a highly coveted license to manufacture cars in China. Such a permit and strong relationship with the government is attractive to NIO and other automakers, including VW who is considering purchasing a large chunk of JAC. “Last November, the Chinese government endorsed this type of joint-manufacturing structure. With that preferential policy in place, NIO can put more investment and focus into R&D and the development of our user network and services,” William Li, NIO’s CEO, told Teslarati.

To counter perceptions of low-quality, NIO decided to bring on their own manufacturing team, to ensure that the vehicles were not only as high-quality as the competition, but better.

Victor Gu, General Manager of the NIO factory (Left) and Feng Shen, VP of Quality (Right) at the Hefei NIO House outside of the manufacturing facility. (Christian Prenzler/Teslarati)

Enter Feng Shen and Victor Gu, two former Volvo executives charged with setting up and running the 2.5M sqft NIO-JAC facility. While the two joined NIO at different times, Shen had previously recruited Gu to Join Volvo back in 2010. The two believe strongly in making high-quality vehicles, putting it at the top of their priorities. For example, NIO’s body scans over 1,000 different spots on each ES8 body.

“We put tremendous effort into controlling the quality of the vehicle,” Shen told Teslarati. “For example, every day we sample two vehicles, evaluating the quality of the vehicle through a custom quality audit.”

Inside the NIO factory is a combined workforce of 2270 NIO and JAC employees, working to produce both the ES8 and ES6. The ES6 is in test production and expected to be in customers hands in June. NIO’s facility features some of the most advanced robotics in the industry, with their all-aluminum body line achieving 97.5% automation. NIO claims the body line is the most advanced of its type in China. The facility is currently able to produce 100,000 vehicles per year but can be expanded to produce 150,000 units and beyond.

The expansive white floors in NIO’s factory and ceiling that’s outfitted with 512 massive skylights fill the facility with natural light. The factory uses geothermal energy for heating and cooling, while thousands of solar panels produce energy to minimize the facility’s carbon footprint. Outside the facility, NIO is in the process of installing basketball courts and a soccer field on the factory grounds for employees to enjoy.

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Converting Metal into Cash

NIO has the capability to produce thousands of vehicles per month and has ample runway before reaching maximum production capacity. The company sells its vehicles direct-to-consumer, and its streamlined logistics allows the company to hold little inventory.

When NIO launched their three-row premium SUV, the ES8, last fall, demand seemed strong. Production was ramping up as the company worked to fulfill their order books, delivering over 3,000 vehicles per month in both November and December of 2018. Then came 2019, the company’s deliveries fell dramatically to a low of 811 vehicles in February. The company pointed to the overall tense economic climate in China, seasonality surrounding Chinese New Year, and dramatic cuts to electric vehicle subsidies in China.

Compared to their peers in the large and mid-size premium SUV segments, the vehicles are competitive. The ES8 starts at roughly $66,500 (without battery leasing), excluding subsidies and other EV incentives, which is significantly below competitors like the Volvo XC90 ($93,700). Additionally, the ES8 features fast acceleration, 0-60 mph in 4.4 seconds, and a technology-forward interior. The forthcoming ES6 is entering a much larger segment than its larger sibling and is priced 7-10% lower than its peers, by Teslarati’s estimates. While the recent sales drop spooked investors, sending the company’s stock down nearly 50% from recent highs, it’s unclear if reduced demand is a long-term issue.

Regardless of recent sales issues, NIO is plowing full steam ahead. The company has 35 NIO Houses and pop-up stores open throughout China. The stores are all exquisitely designed and are built for both potential customers and current owners. Potential customers can check out the vehicles, take test drives, and purchase NIO merchandise; current NIO owners can head upstairs to the owners-only club.

NIO’s clubs are focused on providing a “joyful lifestyle beyond the car.” Essentially, they are places where owners can hang out, enjoy a latte, read books, attend events, and socialize with other owners. NIO even creates a custom drink for each NIO House, allowing owners to try out new flavors at each location.

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The company believes that private clubs add value to a customers lifestyle and introduce them to a luxury-focused lifestyle. While not all owners will use the clubs regularly, NIO estimates that their owners visit 1-2 times per month. While it’s too soon to conclude whether NIO’s expansive retail spaces and clubs drive sales, it would be mild to stay that the company is betting big on the strategy.

If clubs and retail stores aren’t your schtick, NIO still has a plan for you, namely: the NIO App. Like the physical locations, the NIO app is both a place for potential customers and current owners. While the company has just over 15,000 vehicles on the road, NIO’s app has over 800,000 downloads and over 200,000 daily active users.

The NIO app is as much of a social media app as it is a vehicle-companion. Users can post photos, share their recent trips, report issues with their vehicles, or share general posts about their lives. While the app is currently only available in Mandarin, you can often find posts from users announcing their reservations, deliveries, or exciting road trips. The NIO app is great for fostering connections between potential users and current owners, allowing people to act as ambassadors for the brand; thus creating a continuous sales funnel for the company.

For owners, the app has a whole other layer of functionality. They can manage their vehicles, send bugs and feedback, and schedule a service appointment. Additionally, owners can use the “one-click for power” feature to have NIO specialist come to recharge their vehicle, either with a mobile van or at a NIO supercharger or swap station.

Building Out a Services Business.

To date, NIO has seen the service used over 100,000 times by customers. While charging at home is readily available for most EV owners in the US or EU, NIO reported that only 78% of their owners were able to install a home charger, making the service more than just an added value, but a necessity for some.

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All NIO owners can use the “one-click for power” feature 12 times per year at no cost, but after that NIO offers a per-time fee or a monthly subscription. NIO charges ¥980/month or ¥10,800/year ($145/month or $1604/year) to give owners the service 15 times per month. NIO opened this service up to non-NIO vehicles at the Shanghai Auto Show, allowing all EV owners to subscribe to the service.

A NIO Power mobile van charges up a ES8 (Christian Prenzler/Teslarati)

In addition to their power subscriptions, the company allows owners to lease their batteries. For ¥1660/mo ($247/mo) owners can lease either the 70kWh or 84kWh packs, dropping ¥100,000 ($15,000) off the purchase price of the vehicle. This opens up NIO’s vehicles to a wider audience, with the lowest ES8 costing ¥348,000 ($51,600) and the ES6 costing ¥258,000 ($38,300). In comparison, the Tesla Model X starts at ¥737,100 ($109,500) and the Model 3 costing ¥377,000 ($56,000). While NIO owners will continue leasing the battery pack for the entirety of their ownership, it will allow them to upgrade to larger capacity batteries in the future. Between power subscriptions and battery leases, NIO could be building out a substantial services business.

Is it sticking?

With production facilities, a strong retail presence, and a dedicated power-delivery network, NIO certainly doesn’t have a capacity issue. The company could start delivering 5,000+ cars next month and have plenty of capacity and staff to handle the volume. NIO’s vehicles don’t seem to be the problem, they’re well-built, packed full of industry-leading features, and competitively priced in their segments.

What is unclear, is whether NIO’s expensive retail and club strategy are truly generating enough sales. The company is doing minimal advertising, leaving their stores and app as its core sources for sales. With over 9,500 employees on payroll and a factory running below capacity, the company is under pressure to raise sales amid economic headwinds, which is no easy feat.

Between the company’s focus on electric SUV’s, a unique retail strategy, a lifestyle-focused app, and a variety of user-centric services, NIO differentiates itself from both competitors abroad and at home. Whether the upcoming ES6 is a hit, is to be seen, but the company has all the pieces in place to deliver a positive ownership experience for buyers.

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Christian Prenzler is currently the VP of Business Development at Teslarati, leading strategic partnerships, content development, email newsletters, and subscription programs. Additionally, Christian thoroughly enjoys investigating pivotal moments in the emerging mobility sector and sharing these stories with Teslarati's readers. He has been closely following and writing on Tesla and disruptive technology for over seven years. You can contact Christian here: christian@teslarati.com

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Elon Musk reveals Tesla’s next Robotaxi expansion in more ways than one

Tesla Robotaxi is growing in more ways than one. Tesla wants to expand and hopes to reach half the U.S. population by the end of the year.

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Credit: Tesla

Tesla CEO Elon Musk revealed the company’s plans for its next expansion of the Robotaxi in terms of both the geofence in Austin and the platform overall, as it looks to move to new areas outside of Texas.

Tesla launched the Robotaxi platform last month on June 22, and has since expanded both the pool of users and the area that the driverless Model Y vehicles can travel within.

The first expansion of the geofence caught the attention of nearly everyone and became a huge headline as Tesla picked a very interesting shape for the new geofence, resembling male reproductive parts.

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The next expansion will likely absolve this shape. Musk revealed last night that the new geofence will be “well in excess of what competitors are doing,” and it could happen “hopefully in a week or two.”

Musk’s full quote regarding the expansion of the geofence and the timing was:

“As some may have noted, we have already expanded our service area in Austin. It’s bigger and longer, and it’s going to get even bigger and longer. We are expecting to greatly increase the service area to well in excess of what competitors are doing, hopefully in a week or two.”

The expansion will not stop there, either. As Tesla has operated the Robotaxi platform in Austin for the past month, it has been working with regulators in other areas, like California, Arizona, Nevada, and Florida, to get the driverless ride-hailing system activated in more U.S. states.

Tesla confirmed that they are in talks with each of these states regarding the potential expansion of Robotaxi.

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Musk added:

“As we get the approvals and prove out safety, we will be launching the autonomous ride-hailing across most of the country. I think we will probably have autonomous ride-hailing in probably half the population of the US by the end of the year.”

We know that Tesla and Musk have been prone to aggressive and sometimes outlandish timelines regarding self-driving technology specifically. Regulatory approvals could happen by the end of the year in several areas, and working on these large metros is the best way to reach half of the U.S. population.

Tesla said its expansion of the geofence in Austin is conservative and controlled due to its obsession with safety, even admitting at one point during the Earnings Call that they are being “paranoid.” Expanding the geofence is necessary, but Tesla realizes any significant mistake by Robotaxi could take it back to square one.

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Tesla warns customers of incentive strategy on EVs as tax credit nears end

If you’re thinking of buying a Tesla, the time to order is now, the company claimed.

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(Credit: Tesla)

Tesla has warned customers about its incentive strategy for qualifying electric vehicles, as the days of both the $7,500 EV tax credit for new EVs and the $4,000 credit for used EVs are coming to a close.

Both tax credits, which impact some of the vehicles in the Tesla lineup, are set to be eliminated at the end of Q3. The phase out of these consumer credits was always in the plans of the Trump Administration, but now we’re in the final quarter of their existence.

As a result, EV companies are scrambling to see how they can reduce costs or make their vehicles more affordable for customers. The $7,500 will price many consumers out of many EVs on the market, and Tesla is not immune to that.

However, Tesla has made a significant push into Q3 deliveries, rolling out numerous incentives to customers, including 0% APR on select purchases, lease deals, free upgrades on certain inventory units, and more.

The extensive list of incentives on Tesla vehicles in the quarter will not get any longer, either. During last night’s Tesla Earnings Call for the second quarter of 2025, company executives stated that their intention for these incentives was to encourage customers to place orders early in the quarter.

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Tesla will only be able to apply the $7,500 credit with deliveries that occur before the end of September. Even if an order is placed before then, delivery must be completed by September 31 to receive the tax credit.

CFO Vaibhav Taneja confirmed that the incentives for the quarter are already out and encouraged customers to place an order sooner rather than later:

“Given the abrupt change, we have a limited supply of vehicles in the US this quarter. As we are already within lead times to order parts for cars, we have rolled out all our planned incentives already and will start pairing them back as we start to sell. If you are in the US and looking to buy a car, let’s roll now as we may not be able to guarantee delivery for orders placed in the later part of August and beyond.”

The loss of the incentives will impact every EV maker in the United States. Tesla has a plan moving forward, and it said last night that its affordable models would be rolled out in Q4, as introducing these cars any earlier could have detrimental effects on Model 3 and Model Y sales.

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Tesla Model Y awarded Top Safety Pick+ from IIHS

The new Model Y continues to impress with this new award.

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(Credit: Tesla)

The 2025 Tesla Model Y was one of two midsize luxury SUVs to receive the Top Safety Pick+ award from the Insurance Institute for Highway Safety (IIHS).

To qualify for the IIHS’s Top Safety Pick+ or even the lower-tier Top Safety Pick label, vehicles need good ratings in the small overlap front and side crash tests, an acceptable or good rating in the pedestrian front crash prevention evaluation, and acceptable or good ratings for headlights across all trim levels.

The difference between the two labels is that an “Acceptable” rating in the moderate overlap front test will get a car the Top Safety Pick rating, but a “Good” rating in this category will win the elusive Top Safety Pick+ category.

The 2025 Model Y, codenamed “Juniper” internally by Tesla, was released in the United States earlier this year and received the top rating across each of the categories, automatically qualifying it for the Top Safety Pick+ label:

Other vehicles in Tesla’s lineup have extraordinary marks in crash testing according to other agencies, like the National Highway Traffic Safety Administration (NHTSA), but there are reasons those cars are not on the IIHS lists.

In 2024, we reported that the IIHS had evaluated some Tesla vehicles for the necessary tests to achieve these marks. Joe Young of the agency told us that the Model 3, for example, was not featured on either the Top Safety Pick or Top Safety Pick+ lists because the vehicle had several missing tests.

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Here’s why the Tesla Model 3 wasn’t an IIHS Top Safety Pick+, and why it could be soon

This is not to say those other Tesla vehicles would not perform well. The Cybertruck performed better than any pickup has ever in NHTSA crash testing assessments.

The Model Y is Tesla’s most popular vehicle and was the best-selling car in the world over the past two years. Tesla’s intense focus on safety continues to show that this priority goes into every decision the company makes regarding design and engineering. This focus has continued to pay dividends as some real-world crashes save the lives of those inside the cars.

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