Chinese electric car startups Nio and Xpeng are shifting their focus to a more affordable segment of the market, with intentions to introduce newly branded vehicles this year.
Nio’s CEO, William Li, disclosed to CNBC’s Eunice Yoon that their inaugural mass-market car would be an SUV priced lower than Tesla’s Model Y, which starts at 249,900 yuan ($35,197) in China.
Initially targeting the premium market upon its launch approximately a decade ago, Nio’s vehicles are typically priced at $50,000 or higher, offering additional services like Nio clubhouses and a network of battery charging and swapping stations.
The move by Nio and Xpeng to launch mass-market brands positions them in direct competition with local contender BYD and German automaker Volkswagen.
This shift occurs against the backdrop of fierce price competition in China’s new energy car market, encompassing battery-only and hybrid-powered vehicles, which now constitute over 40% of new passenger car sales in the country.
Li indicated that the main brand is unlikely to undergo significant price adjustments, anticipating market price fluctuations to persist.
Nio is set to reveal its new brand, named Onvo or “Le Dao” in Chinese, in mid-May, targeting families as the primary consumer segment.
Meanwhile, Xpeng, whose cars are priced slightly lower than Nio’s, plans to introduce its sub-brand Mona in the next two to three months, with Vice Chairman and Co-President Brian Gu stating that the new cars would be priced below 150,000 yuan ($20,700).
Gu emphasized Xpeng’s capability to bring differentiated technology to the mass market through scale, technology, and cost control, formerly reserved for the premium segment.
Xpeng has distinguished itself with driver-assist software, positioning it as a prominent feature in China. In contrast, Tesla’s comparable full self-drive software remains unavailable in the country.
Gu outlined plans to differentiate the technology available for the mass market brand from the existing one, noting the limited competition in the mass market segment compared to the plethora of brands in the premium segment.
Tesla’s Model Y, priced below 250,000 yuan, reigns as the best-selling purely battery-powered electric SUV in China, according to Autohome data for the first quarter.
Despite undercutting the Model Y, Li stated that the first car from the new brand would be priced around $30,000 (213,000 yuan), falling short of BYD’s offerings.
BYD, a major player in the Chinese battery and electric car market, has predominantly found success in the lower end of the mass market.
While launching premium and luxury cars under new brands in the past year, BYD revealed plans for a new hybrid-powered car priced between 120,000 yuan to 150,000 yuan in the second quarter.
