Nio's Onvo brand undermines Tesla Model Y

Chinese electric car company Nio launched its lower-priced brand Onvo on Wednesday, May 15, 2024 in Shanghai, China.

CNBC | Evelyn Cheng

SHANGHAI – Chinese electric car company Nio revealed Wednesday that the first car for its new, lower-priced Onvo brand will be about $4,000 cheaper than Teslas similar to Model Y.

Deliveries of Onvo's first car, the L60 SUV, will begin in September, the company said. Pre-sales started after Wednesday's launch event.

Nio CEO William Li said he expects Onvo to start selling its cars abroad at some point, but did not specify when, according to an interview with CNBC's Eunice Yoon.

Since its launch about a decade ago, Nio has focused on the premium segment of cars, priced around 300,000 yuan ($41,500) or higher. The company has since expanded into Europe, but monthly deliveries in China have generally remained modest compared to the competition.

Onvo's L60 starts at 219,900 yuan ($30,439), versus the Model Y's 249,900 yuan. Elon Musk's electric SUV is one of the best-selling pure battery electric cars in China.

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Fierce competition in China's electric car market has attracted new entrants and prompted many companies to cut prices.

Smartphone company Xiaomi In late March, he entered the electric car market with his SU7 sedan to rival Tesla's Model 3 with a price that was also about $4,000 cheaper.

According to Tesla's Chinese website, the Model 3 has since dropped its price by about $2,000 to 231,900 yuan. Xiaomi said on Wednesday it had delivered 10,000 SU7 vehicles.

BYD, which sold more cars than Elon Musk's automaker last year, including hybrids, usually sells cars in the price range of 100,000 yuan or less. BYD has started to expand into higher price segments in recent years.

Nio CEO Li confirmed to CNBC that the L60 uses cheaper batteries from BYD.

Global competition from Chinese EV makers has also led to stiff new tariffs from the Biden administration on US vehicle imports. Chinese EVs will be subject to a 100% tariff, the government announced earlier this week.

When asked about the new duties, Li called them “completely unreasonable,” pointing to the impact on consumers and climate goals. This is evident from a CNBC translation from Mandarin.

A 'new standard' family car that can compete with Tesla

Onvo wants to set a “new standard” for the family car, Alan Ai, president of its Nio sub-brand, said Wednesday at the launch event in Mandarin, as translated by CNBC.

The brand's name stands for 'On Voyage', while the Chinese name 'Le Dao' is meant to evoke a family having a happy time together.

During his presentation, Ai made many comparisons with the Model Y and other cars.

He claimed the L60's interior was more spacious than Tesla's Model Y and Toyota's Rav4. He also showed videos claiming that Onvo's new car had better shock absorption and tighter eights than competitors.

Onvo's advertised range on a single charge is at least as far as (or even further) that of the Model Y, depending on the version.

As a sub-brand, Onvo vehicles have access to many of these brands Nio's battery swapping and charging stations, Ai said.

He also showed videos of Onvo models using driver assistance technology to navigate country roads and city streets.

Tesla's driver assistance software, Full Self Driving, is not yet available in China, but is widely expected to be nearing Beijing's approval for rollout.

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