China’s Nio Launches First Onvo SUV, Tesla Model Y Challenger

(Yicai) Sept. 19 — Nio is poised to launch the first model under the sub-brand of Chinese electric vehicle startup Onvo, challenging Tesla’s Model Y, the world’s best-selling electric vehicle.

The Onvo L60, a smart electric mid-size family SUV, will debut at a launch event in Beijing at 7:30 p.m. today. Its pre-sale price is CNY219,900 ($30,400), up from CNY249,900 for the Model Y in China.

The launch price will be slightly lower than the pre-sale price, said William Li, Nio’s founder, chairman and CEO, during the Shanghai-based automaker’s second-quarter financial results conference call on September 5.

As Ai Tiecheng, senior vice president and president of Onvo Auto, recently told Yicai, the L60 is “a larger and more upscale Model Y with the ability to swap batteries but with 10 percent lower production costs.”

“The CNY150,000 to CNY200,000 price range is the last bastion of fuel-powered vehicles produced by the joint venture, including popular models such as Toyota Motor’s Camry and RAV4 and Volkswagen Group’s Passat,” Ai noted.

“While electric vehicles now account for more than half of the overall market, traditional combustion engines still dominate this segment,” he said, adding that the L60 will enter this competitive segment with the option of leasing batteries.

The Onvo brand is targeting the mainstream market, with prices ranging from $30,000 to $50,000, and Nio says it has plans to introduce three to four more vehicles. The L60, which began pre-sales on May 15, has exceeded order expectations, the company added.

Onvo has been able to maintain profitability while undercutting Tesla’s Model Y in price thanks to technological advances in the five years since the latter’s debut, Ai noted. “New technologies have helped us reduce costs,” he said.

Asked during a financial conference call whether Nio would be more aggressive on pricing in light of fierce competition in China’s auto market, Li said: “We will try to find a balance between the margin of the vehicle and the price of the product to find a happy medium. Generally, we will not be too aggressive because we had to get a reasonable margin for the project.”

“While Nio focuses on the high-end business market, Onvo is targeting families,” Ai noted. “We are bringing some of Nio’s advanced technologies to the CNY 200,000 price point and aiming to spread R&D costs through economies of scale.”

The L60 shares production lines with some Nio models, which allows for cost reductions through supply chain expansion and better capacity utilization. Onvo will also leverage Nio’s existing service infrastructure.

Ai believes vehicles like the Onvo L60 have the potential to overtake the Model Y and become global sales leaders. Ai also expressed confidence in the growing competitiveness of Chinese electric vehicles.

“About 39 percent of customers who pre-ordered Onvo were considering Tesla,” Ai said, adding that the brand’s challenge is to build brand awareness among fuel-powered car owners and compete for new customers in the CNY150,000 to CNY200,000 price range.

Nio expects to deliver 20,000 units of the L60 this year, with monthly deliveries reaching 10,000 by December and 20,000 next year, according to Li. Nio will introduce its third brand, the Firefly, in the first half of next year, he also said.

Editors: Tang Shihua, Martin Kadiev