The premium Chinese electric car marque is hoping to fend off competition in the domestic market by offering attractive price-cuts.
Chinese premium EV giant NIO offers discount of upto 30,000 Yuan ($4,200) to boost the sales of its EVs. It manufactures high-end electric cars to rival the products from prominent legacy luxury carmakers. However, it offers a lot more for the same price than these established names in the global automotive world. This formula has worked well for NIO for a long time. But the months of April and May were not great in terms of sales, forcing the EV giant to take appropriate measures to generate demand.
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NIO Offers Discount on EVs
The Chinese market is the most competitive and fast-expanding automobile market in the world with respect to electric vehicles. New players are emerging left and right with massive support from the government in the form of subsidies. That is how NIO came into existence in 2014. Within just 8 years, it has become an eminent player in China and is already serving some key European markets.
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For the month of May, it recorded a drop of 8% in monthly sales. Moreover, the profit margins have gone down to 5.1% in Q1 2023 (down from 18.1% in Q1 2022). This is particularly alarming because the overall market has been quite positive and most other carmakers have posted healthy results. To address this, CEO William Li said that these price-cuts have been discussed internally for quite a while after taking advice and suggestion from users.
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NIO Stops Free Battery Swapping Service
In a desperate bid to increase the depleting profit margins, the free battery swapping service of NIO will no longer be available with immediate effect. Instead, the EV owners will have to buy it separately for a one-time fee. Customers buying a NIO EV before July 31, 2023, can pay an additional 30,000 Yuan ($4,200) to get:
- 4 free battery swaps per month
- 10-year unlimited mileage
- Lifetime free internet (8GB monthly)
- Lifetime free roadside assistance
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Learn Electric Cars Says
The EV market is growing at an exponential pace and the Chinese market is at the heart of it. The environment to support EV start-ups is conducive resulting in a stark rise in competition. We see the top players struggling to post consistent sales. As a result, many of them are going down the tried and tested route of offering discounts to boost sales. We will have to wait and see how long this formula will work. Also, NIO is pinning a lot of hopes on its second-gen ES6 that was launched last month. One thing is for sure, the customers stand to benefit from these price wars.