According to three individuals who know the situation, despite the possibility of tariffs in the region, Chinese EV manufacturer Nio (9866. HK) is contemplating setting up a dealer network in Europe to boost sales growth.
In October last year, Nio, an aspirant competitor to Tesla (TSLA.O) with luxury models, entered Germany, the Netherlands, Sweden, and Denmark. Nio allows clients to buy straight from its stores or online or to lease the cars for as little as one month.
However, according to two individuals, the corporation has begun evaluating dealers in important European countries after its president claimed last month that European sales were falling short of projections.
The move coincides with strong efforts by Chinese EV manufacturers, such as Xpeng (9868. HK), Zeekr, and BYD (002594. SZ), to grow in Europe, where they can sell their vehicles for greater prices than in their oversaturated home market.
Without going into further detail, someone stated that Nio had discovered that Europe has its “peculiarities” and that the business planned to enter other European nations. According to LinkedIn postings, Nio has been hiring in France, Italy, Hungary, Switzerland, and Austria.
According to a third source, dealers are being evaluated for the Project “Firefly,” a new, more reasonably priced EV brand that the corporation plans to sell to Europe starting in 2025, and the Nio-branded vehicles marketed in Europe.
According to the source, utilizing dealers will relieve Nio’s financial strain as it prioritizes investing in research and battery switching stations in China.
Nio stated that it was dedicated to creating a direct sales network and that there had been no adjustments made to the brand’s marketing and sales strategies in Europe. However, it is assessing its channel strategy for Europe, which may include direct sales, agencies, or dealers, as part of the Firefly initiative. In a statement sent via email, Nio stated, “We will select the model that best suits the local market and the brand’s development needs.”
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Even as the European Commission contemplates implementing tariffs to defend EU producers against Chinese-made EVs that it claims benefit from state subsidies, the business is intensifying its efforts in Europe.
Nio does not break out its European sales and is China’s ninth-largest seller of electric and hybrid vehicles.
The president of Nio, Qin Lihong, told Chinese media last month that the company’s actual operational numbers were three to four times higher than the 832 vehicles reported as having been sold in Europe during the first half of 2023. But he said it wasn’t enough for him.
Instead of utilizing dealers in China, Nio depends on a direct sales strategy similar to the one used by Tesla (TSLA.O).
By the end of September, Nio had 137 Nio Houses in operation, six of which were in Europe. At these locations, the firm offers test drives and showcases its vehicles, cafés, and meeting spaces for its customers who own Nio vehicles.
As they grow internationally, other Chinese EV manufacturers have attempted various strategies in various areas.
For instance, BYD (002594. SZ) has gained market share in Southeast Asia by establishing distribution alliances with significant local businesses. These alliances have enabled the automobile manufacturer to broaden its market, gauge customer preferences, and traverse the region’s intricate regulatory framework.
