Nio CEO On How Targeting High-End Market Gives EV Maker An Advantage

Nio Inc. NIO CEO William Li believes the Chinese electric vehicle maker’s approach of targeting the premium segment from the beginning gives it a higher chance of success, cnEVpost reported Sunday.

What Happened: “I think the approach of targeting the high-end market has a higher probability of success than doing it for a market that sells for 100,000 yuan ($15,500) instead. There are many reasons behind this, including taxes and the cost of batteries,” Li said during a speech delivered at a financial forum held in Tsinghua University, as per the report.

See also: How to Buy Nio Stock

Li was also quoted as saying that while the latest technology could be used in higher-priced vehicles, EV makers cannot afford to use a lot of the new technology in cheaper vehicles.

Further, the CEO noted that slower innovation for the Chinese market by traditional luxury brands led to his company focusing on the high-end segment, according to the report.

See Also: Does Nio Stand To Benefit From Chinese City Chongqing's Subsidies For Battery Swap Stations?

Why It Matters: Nio has previously said it is not seeing any serious competition in the premium EV segment in China. Li had noted that while several local players are mimicking Nio's technology, user community contact and direct service model, it will be difficult for others to build a premium brand, primarily due to pricing pressure.

Nio is relying on service offerings to make an impact on customers in China. The company has pioneered the concept of battery-as-a-service that would allow users to rent a battery instead of buying one, helping to trim the cost for EV owners. The company is also tapping into brand loyalty through its Nio Life lifestyle app.

Nio plans to commercially launch the ET7, its first-ever EV sedan, in the first quarter of 2022. Earlier this month, Nio unveiled its ambitious plan to enter the Norway electric vehicle market for its first overseas foray.

Price Action: Nio shares closed almost 0.8% lower in Friday’s trading at $34.06.

Read Next: Nio, Tesla Battery Supplier CATL To Launch Sodium-Ion Battery In July

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