Episode two of a ten-part series with which heise/Autos takes a look at the Chinese car market. There, Chinese electric car manufacturers are warming up – partly with strong support from the so-called Communist Party – in order to soon roll up the domestic and international markets with a lot of momentum and a colorful bouquet of the most modern cars. This should not remain without consequences for the German car manufacturers, whose largest single global market has been China for several years.
On the one hand, this will foreseeably change the picture on German and European roads, but will also have an impact on German producers and their sales in China, the world’s largest single market.
When people talk about electric car brands in China, they usually mean Nio, Xpeng or Li Auto. The three deliver a duel that can best be compared to the eternal premium match between Audi, BMW and Mercedes. A competition without losers, the participants see themselves as the gold standard in their segment and there is a lot of national pride. Experts and investors believe that Nio has the best chance of becoming a global competitor in the long term.
The beginning: the Bitauto platform
The brand’s founder and CEO is William Li. He was born in 1974 as the son of a dairy farmer. Rather less interested in the family business, he founded the Bitauto platform in 2000. Companies and the self-employed in the up-and-coming Chinese automotive industry can present their services on the site. In addition, there is market news as well as data and information of all kinds. The portal goes public in 2010, and in 2013 William Li sells the company. Now the site provides data on new and used cars and is valued at around a billion dollars.
The money and Li invests in a total of forty companies, creating a huge and prosperous network. In 2014 he raised a total of 2.8 billion dollars and founded Nio. Two years later, he presented the EP9 sports car, which primarily serves to attract attention. Each investor can secure a copy for $1.5 million.
William Li – From dairy farmer to billionaire
The company has not made any profit since then. Like Tesla for much of its history, Nio is stuck deep in the red. In 2020, bankruptcy can only be secured by a government loan from the city of Hefei in the south-east of the People’s Republic. In return, Nio undertook to build a factory and research center there.
In the third quarter of 2022 alone, the company reported an operating loss of around $500 million (or 0.36 cents per share). Analysts still believe in the brand. Because sales increased by 32.6 percent compared to the third quarter of 2021. Thanks to a total of 31,607 cars delivered. In the fourth quarter of 2022 there should be between 43,000 and 48,000 units.
bet on the future
On the one hand, belief in the brand is based on the prominent financiers behind the brand. With Tencent, Baidu and Lenovo, three of the country’s largest IT and high-tech companies are involved. On the other hand, it’s the technology. In the People’s Republic, Nio operates several hundred battery exchange stations. The vehicles move automatically onto a lifting platform, the empty battery is pulled out and a full one is inserted. All of this within three minutes. Although the Better Place company failed miserably in Israel with the same technology, the system is extremely popular in China.
From groceries to TVs to clothes
Like almost everything Nio offers. For example, its own social media platform. It is used for customer loyalty. If the users are active here, they collect loyalty points. For example, by attending certain events that Nio sponsors, sharing a photo, or purchasing products. Almost anything can be bought on the Nio platform, from groceries to televisions to clothing. The automaker gets a portion of the purchase price. There are also entertainment offers for the car.
The Nio ET7 is already available in Germany.
The poor quarterly figures do not prevent Nio from driving globalization. In the heart of Silicon Valley, in San Jose, the brand maintains a research and development center, the global design center is in Munich and the center for “advanced engineering” is in Oxford, UK. This involves the further development of new technologies that are still in the early stages. In addition, there is the subsidiary XPT, which develops batteries and electric motors – not exclusively for Nio, but also for external customers.
Audi is suing Nio
The first Nio models have also been available in Germany since October 2022. The Chinese leave no doubt as to which brands they want to lure customers away from: Audi, BMW, Mercedes. The models have the quality. That makes the competition nervous. Nio has two SUVs on offer – ES6 and ES8. Because Audi offers two similar-sounding vehicles, the S6 and the S8, the company sued the new competitor to protect its trademark rights. The amount in dispute is 150,000 euros. Much more important, however, is that Nio may have to come up with a new name. Audi’s approach is not well received across the industry. Especially since there is simply no risk of confusing the vehicles.
(fpi)
