[SHANGHAI] Nio, which is preparing to launch its lower-priced Firefly and Onvo sub-brands in Europe, is recalibrating its expansion strategy due to challenges in growing its network in the region.
The company is set to launch Firefly, an entry-level brand that sells only one model, in Europe between June and August, Nio president Qin Lihong said at a briefing on Tuesday (Apr 22) ahead of the opening of the Shanghai auto show. That’s a slight delay from an initial target of the first half of this year.
Nio is betting a push into overseas markets will help revive sales that have fallen short of targets and seen it repeatedly post losses. But it’s faced unexpected challenges in expanding in Europe and the shift to forge alliances with local partners to build its presence in the region marks a significant strategic change. The carmaker used to rely heavily on wholly-owned and self-operated direct-sales networks.
“We have underestimated the time and complexity of establishing and developing sales and service networks in Europe,” chief executive officer William Li said on Tuesday in Shanghai. In China, Nio can open 100 stores for its Onvo brand in a single month, but “the cost of achieving the same level in Europe will be daunting,” he said.
The European expansion is part of plans to roll out the budget-friendly Firefly EV to about 20 new markets that also include the UK and South-east Asia, according to Qin. Right-hand drive vehicles are likely to be ready in October, with Singapore set to be one of the first countries where they will be available, he said. Its Onvo brand will also enter foreign markets this year.
Currently, Nio sells its own brand of EVs in five European countries – Norway, Germany, the Netherlands, Denmark, and Sweden. But the company expects headwinds to sales due to the longer-than-expected time it’s taking for the company to build its brand in the region, as well as European Union tariffs on imports of Chinese-made EVs and higher shipping expenses.
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Battery swaps
Back home in China, Nio is expanding its loss-making battery-swapping business. By the end of the year, it’s set to have stations across every county in 27 of China’s 31 provinces, municipalities, and autonomous regions.
That includes a partnership with Contemporary Amperex Technology, the world’s biggest battery maker, which said last month that it will invest up to 2.5 billion yuan (US$342 million) to build out a battery-swapping network across China with Nio.
The move had sparked speculation that CATL could seek a stake in Nio’s power unit. On Tuesday, Li declined to comment beyond saying Nio wouldn’t exclude any possibilities regarding the potential future of that division.
Nio’s executives said they expect to see significant sales growth in the latter half of this year, reiterating a target of doubling annual sales to around 440,000 vehicles and reaching profitability by the fourth quarter.
The company is implementing incentives to boost sales, including an offer of five years of free battery swapping for new customers – a move Nio expects will lift demand without putting significant strain on cash flow. It’s had a sluggish start for the year, delivering 42,094 vehicles in the first quarter and reported a full-year loss of 22.4 billion yuan in 2024.
Nio has struggled for years to break into the black, due mainly to its high research and development expenses and large operational costs, including investments in battery-swapping stations. Still, CEO Li is optimistic about a turnaround.
“The automotive industry is a long-term play,” he said. “I believe we’ll survive in the end.” BLOOMBERG
