Ali Hasan
As the EV rivalry get more and more heated with time, you’re going to see more and more car manufacturers that will try to topple Tesla as the new undisputed champion of EV manufacturing. At this moment, Tesla is comfortably sitting at the top as it had an early mover advantage but they lack top of the line car manufacturing and proper infrastructure as it’s not in their DNA.
The problem that Tesla faces is that they don’t have years of experience in manufacturing, assembling, developing and testing at a huge scale. They have the drive as well as the vision but they lack in heritage and legacy. This is where other car manufacturers thrive as they have been into business when Elon Musk wasn’t even born (no offence to him).
As other car manufacturers catch up with hybrid solutions and EV technology, they will gain some market share and provide not just EV but also better after sales services as they have a huge organized network with deep penetration into remote areas that Tesla maybe lacking.
Nio wants to dethrone Tesla in China
Only time will tell what will happen in the future but you don’t have to wait to witness a rivalry as 2 big firms are about to compete for the same market share in China. Nio which is a Chinese EV manufacturer is spreading its influence in China as it gains more and more market share.
Since Nio is a local brand, it understands the demographics more than Tesla and could even defeat them in China when it comes to EV sales and after sales services. But everything’s not great for them either as they’re facing their own fare share of problems.
Since starting in 2014, Nio has racked up $6 billion in losses. During the covid-19 pandemic, China’s automotive market was down and so was Nio’s stock price. This happened due to Covid-19 lockdown. Nio was almost on the brink of bankruptcy but it turned that around and looks for a bright future. With everything that I told you just now, can Nio defeat Tesla in China? Stay tuned as we’re about to find out.
Coming back to the bankruptcy phase when Nio ran out of cash and needed an injection of fresh funding just to survive 2020, it was bailed out by the Chinese government. It received $1.4 billion in funding as a bailout in exchange for a 24.1% stake. But after it received some help from the government, it made $628 million in sales and delivered nearly 12,206 cars in the Q3 of 2020.
Nio also fired more than 2,000 employees just to survive and stay in business. This happened due to low demand and less production of their cars.
When Nio was started in 2014 William Li, he was inspired by Tesla and had a similar vision for himself. He wanted to create an automotive company that could give Tesla a run for their money and create a change where more and more people use EVs for a better future.
After their launch, many companies invested in NIO such as:-
- Tencent
- Temasek
- Baidu
- Sequoia
- Lenovo
- TPG
It has raised more than $5.4 billion in funding over 10 rounds. Its first model, the NIO EP9 sports car, debuted the same day the brand was established. Their cars come with a pre-installed AI that will do everything for you and is voice activated. It can respond to functions like roll the windows up/down, raise/lower the temperature and can even take a selfie.
As of 2021, Nio sells 3 EVs which are as follows:-
- EC6 which is a mid-size SUV
- ES6 which too is a mid-size SUV
- ES8 which is a full-size SUV
Nio cars are priced on the higher end and they’re placing themselves as more of a premium brand for customers who love their SUVs as well as who want to go green. They’re providing services that no other manufacturer is providing such as:-
- Customers can opt for pick and drop for repairs where someone will pick up their cars and get it repaired for them
- If you need charging, they have mobile charging trucks that will arrive at your doorstep and charge your EV
- In 2018, they opened their 1st battery swap station in Shenzhen and now have a presence in over 162 location across china so far
- The battery swap feature allows customers to swap their batteries for a fully charged one in just 10 minutes
Amazingly this tech was once considered by Tesla but they later dropped it. Many experts believe that battery swapping is only a temporary solution until we get our hands on batteries that can charge in just a few minutes. Later Nio launched the idea named “Battery as a Service” or “BaaS” which encouraged users to buy their cars without the battery and lease the battery separately on a monthly subscription basis.
In September 2018, the company filed for a US$1.8 billion IPO on the New York Stock Exchange. Nio believes that BaaS will help lower the purchase price of Nio EVs by about 25%. But the Chinese people are still reluctant to this approach and most of them buy their EVs along with the battery. According to Nio, only 1/3rd of their customers are opting for cars without the batteries.
For just $150 per month, Nio customers can get 6 battery replacements at more than 160 battery swap stations across china. But this isn’t enough as Tesla has more than 300 super charging stations across china. But if you take the total number of super charging stations that Tesla has across the globe, they have more than 2,000.
Nio doesn’t produce their own cars and instead outsources them. Nio joined hands with JAC motors to assemble and manufacture their EVs. Although Nio started producing cars on a huge scale, they’re still way behind the production volumes of Tesla and in order for them to give Tesla a run for their money, they need to catch up and ramp up production.
When the pandemic was over, the economy also recovered and the demand was back for automobiles but the Chinese customers are price-sensitive and they won’t altogether join the bandwagon to buy EVs, hence Nio will take more time to gain some ground.
After Nio gains some ground in China, they have plans to expand internationally in the markets of USA and Europe. But looks like they will 1st go to Europe as people are more in acceptance of EVs and their governments may also give better subsidies. Another problem with expanding in the USA is that the tensions between USA-China may take some time to resolve and this may hurt Nio’s global expansion plans.
On the other hand, Tesla is enjoying a dream run as its stock price has skyrocketed and now Tesla is the 5th most valuable company in the world. But this dream run gave Nio an advantage as its stock price also increased. Investors now believe that going electric is the future and they perceived Nio as the next best solution after Tesla.
This made Nio the 4th most valuable automaker in the world surpassing GM and Daimler by market capitalization at the start of December 2020. This is good news for Nio as it helps in creating hype and certainly increases the reputation of the company.
The sales of EVs are expected to triple and increase to 31.1 million units by 2030. This will certainly help every automaker as well as Nio. By 2030, Chinese manufacturers are expected to command 49% of the total global EV market while European firms will make up 27% and the Americans firms will have to be satisfied with 14%.
Now we finally come back to our question – can Nio defeat Tesla in China? Well, it depends on various factors and we can’t say anything about the future. The future is quite promising for the EV segment where all the car manufacturers will gain some ground if they have promising products and services.
As of now, Tesla is way ahead of the competition and Nio and other car manufacturers are playing catch-up but this may not last long as Tesla’s dream run could be over along with their dominance over the EV market.
As far as china is concerned which is the largest EV market in the world, who will win will depend on 2 factors:-
- What will happen to the US-China trade war when Joe Biden is the new POTUS?
- How will the Chinese government react in the future regarding EV segment. If they prefer a local player, they’ll give more preference to NIO. On the other hand, if they would want a competitive environment, then they would allow both Tesla and Nio to compete in a free market and let the world know which one is better.
Did you like our case study on Nio vs Tesla?
Would you buy an EV in the future?
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