Nio says it won't join the 'price war' and slash prices like Tesla

Nio's CEO says they will keep prices high, instead of cutting them.

Nio says it won't join the 'price war' and slash prices like Tesla

Important Points

Elon Musk’s auto company has slashed the prices of its cars in China and the U.S. this year.

William Li, the CEO of Nio, a Chinese electric vehicle company, told CNBC that he would not reduce prices but rather keep them high.

Li claimed that Nio's services and products are worth their price. CNBC translated his Mandarin-language remarks.

Tesla, Elon Musk’s auto company, slashed its prices this year in the U.S.A. and China. Nio, which also sells premium cars in the market segment, can be more expensive than Tesla models.

Li stated that his company would focus on improving customer service, such as adding charging stations and battery swapping. The technology is claimed to swap out batteries within minutes, so drivers do not have to wait to charge.

Nio announced that, starting on June 1, those who have paid deposits for certain car models can only use Nio's free battery swapping services four times per month. This is down from six swaps per month.

Last week, the company announced that it would begin charging drivers 380 Yuan ($56) per month for its Navigate on Pilot plus (NOP+) assisted driving system. The software was free for testing.

In China, electric car manufacturers are increasingly promoting technology that helps drivers park their cars, change highway lanes and perform other tasks.

Li, the founder and chairman of Nio, said that such assisted driving technologies may not be a priority for users at this time. He believes that people will be more accepting of the technology once they have tried it.

Nio's sales of vehicles grew 37% to 45.51 billion Yuan ($6.61billion) last year, but the company is still losing money.

Many new products are coming to the market, and this means that we will be facing a fiercer level of competition. CEO Nio

The company's revenues come primarily from China where government policies helped to accelerate the growth of electric car sales. According to the China Passenger Car Association, new energy vehicles (including hybrids and pure electric) accounted for 34% of passenger vehicle sales in March.

Li said, "That's faster than Nio expected."

He said, "Many new products are coming to the market which means fiercer competition for our company." "But users have more choices."

Competitive landscape

In China's first quarter, 1,3 million new energy cars were sold, up by 22% compared to a year earlier.

Nio, a Chinese electric car brand listed in the United States, delivered 31,041 cars during the first quarter of this year, an increase of 20,5% compared to last year. Li Auto, a U.S. listed Chinese electric car manufacturer, saw its first quarter deliveries increase by 60%, to more than 52,00 vehicles.

BYD is still the market leader in China. In the first quarter of this year, BYD sold 264 647 battery-only passenger cars, an increase of more than 80% over the same period last year. In the first quarter, hybrid passenger vehicles sales were up by more than 80% from a year earlier.

Tesla sold more than 422,000 vehicles worldwide in the first three months of 2018, up 36% compared to a year earlier. The company didn't break down figures for China which accounts for over 20% of Tesla revenue.

Geopolitics, globalization and expansion

Nio has begun delivering to European countries like Norway and Germany in the past two years. The tensions between China, the U.S. and Europe have increased.

Li stated that a sustainable global development depends on good products being available to users all over the world. This cannot be achieved by relying solely on one country.

He said: "Despite the geopolitical challenges, we want to continue to serve our customers. We will pay attention to investment pace and manage operational risk well."

Li responded that the company is moving forward with its plans when asked about the U.S. Market. He said: "But we are aware that challenges will only get bigger and better."