Chinese EV maker Nio releases a smartphone it expects at least half of its users to buy

Chinese electrical car maker Nio launches a smartphone at an occasion in Shanghai on Sept. 21, 2023.

Evelyn Cheng | CNBC

SHANGHAI — Chinese electrical automobile model Nio on Thursday launched an Android smartphone, which the corporate expects at the very least half its customers to purchase, CEO William Li informed CNBC in an unique interview forward of the launch.

The telephone, priced from round $900 to $1,000, is an Android gadget that is about $150 cheaper versus a comparable Huawei telephone, Li mentioned in Mandarin.

He informed CNBC that amongst Nio customers from which the corporate makes a revenue, greater than half are iPhone customers, whereas the opposite half makes use of flagship Android telephones from Huawei and different manufacturers.

“I believe this portion of users are very likely to use this new form [of device] when they are changing their phones,” Li mentioned in accordance with a CNBC translation, citing the telephone’s general efficiency and automobile connectivity.

Nio is the primary high-end Chinese electrical automobile model to launch its personal smartphone, which Li mentioned the corporate developed in a few yr. Electric automobile corporations in China have sought to make in-car leisure and cell phone connectivity a promoting level for his or her automobiles.

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Swedish electrical automobile maker Polestar, which counts China as a serious market, informed CNBC earlier this month it plans to launch a telephone in December.

Smartphone corporations Apple and Xiaomi have lengthy been reportedly engaged on their very own automobiles.

Less than two years in the past, Huawei launched the Aito model, which sells electrical automobiles in China which are built-in with the smartphone firm’s working system. Huawei additionally sells its in-car software program to different electrical automobile corporations similar to Avatr and BAIC’s Arcfox.

That connectivity permits drivers to sync their private gadget settings — similar to for music — with the automobile. Nio additionally has a standalone cell app.

A smartphone for automobiles

While the brand new Nio gadget resembles a typical smartphone, it comes with a particular button that acts as a key for the automobile, Li informed CNBC on Wednesday.

The Nio smartphone additionally permits customers to attach extra seamlessly with the automobile, similar to when transitioning between the telephone and the car throughout on-line conferences, he mentioned.

What we’re pursuing is the automobile expertise and the emotional expertise we are able to present to our customers.

The new gadget is a chance for Nio to make more cash per consumer.

“We pay more attention to the value that each user brings to our entire brand, and it is more convenient to connect users. It is also more efficient than before,” Li mentioned. “What we are pursuing is the car experience and the emotional experience we can provide to our users.”

The telephone is on the market to all shoppers in China, not simply those that personal Nio automobiles, Li added.

He identified that the Nio telephone app has 600,000 lively customers a day, about 1.5-times the variety of automobile customers.

Nio holds a product occasion in Shanghai on Sept. 21, 2023.

Evelyn Cheng | CNBC

Nio’s month-to-month deliveries rose to round 20,000 in August and July, after a decline in supply quantity the prior three months.

In the second quarter ended June 30, Nio reported that income from the “other sales” class was primarily pushed by a lift within the gross sales of used automobiles, equipment and energy providers, which greater than doubled from a yr in the past to 1.59 billion yuan ($217.86 million) regardless of a decline in complete income.

The firm attributed the year-on-year and quarter-on-quarter improve in different gross sales to “continued growth of our users.”

Europe market

However, Nio does not have plans to launch the smartphone in Europe — at the very least not till the market grows bigger, Li mentioned.

Nio is in 5 nations in Europe, together with Germany, and the corporate wants time to concentrate on growing native automobile providers, Li mentioned, noting these are essential for auto merchandise.

When requested in regards to the European Union’s anti-subsidy probe into Chinese EVs, Li mentioned the corporate was nonetheless studying the small print.

We consider time continues to be on Nio’s facet.

It’s extra essential for the world to cooperate, particularly on addressing local weather points, he added.

“I don’t think anyone should block users from using good products through multiple ways” similar to investigations, he mentioned.

Investing for the long run

In China, the penetration of recent vitality automobiles has expanded rapidly, however an general slowdown in financial progress has weighed in the marketplace.

Competition within the home electrical automobile market is “fierce,” Li mentioned, noting challenges for trade friends as effectively.

But he expects enterprise investments will assist Nio create boundaries to entry. “We believe time is still on Nio’s side,” Li mentioned.

He famous the corporate spends about $500 million on analysis and growth each quarter. Other main areas of funding for the corporate, he mentioned, are battery charging and growth of a mass market model.

Nio beforehand mentioned it plans to launch a car within the second half of subsequent yr underneath the mass market model “Alps.”

The firm has confronted financing challenges greater than as soon as since its founding in late 2014. Earlier this yr, Nio mentioned it was delaying some spending plans because of lackluster deliveries.

But the corporate subsequently obtained almost $740 million from an Abu Dhabi-backed fund. Nio additionally introduced this week a refinancing plan for a portion of its debt.