Friday, July 19, 2024

China’s Nio cuts prices and ends free battery swaps as sales plummet


SHANGHAI (Reuters) – Nio (9866.HK) said on Monday it will slash prices for all its models and end free battery swap services for new buyers, as the Chinese electric car maker faces mounting pressure over profit losses and tepid sales. .

Nio will slash prices by 30,000 yuan ($4,200) for all models including its facelifted ES6 and ES8 SUVs starting June 12, according to a company statement. This equates to discounts ranging from 6% to 9% on Nio cars.

It added that the company will no longer offer free battery swap services to buyers who place deposits on Monday and later.

More than 40 auto brands operating in China including BYD (002594.SZ) and Volkswagen (VOWG_p.DE) have joined a price war launched by Tesla (TSLA.O) this year in a battle for market share as demand for cars plummets, With ripples spreading across the country’s broader auto industry.

“Modifications have been discussed internally for a long time, and we’ve taken tips and suggestions from some users,” Nio CEO William Lee said on the company’s social media app, noting the price cuts and the new policy on battery swaps.

“It’s the best timing to publish it…but we can’t make everyone happy,” he said.

Nio was offering trade-in services for free at least four times each month to existing owners. It is among only a handful of electric vehicle makers betting on battery replacement as the main power option for electric vehicles, while main competitor Tesla (TSLA.O) has dismissed battery replacement as “problematic and unsuitable for widespread use.”

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Nio said in February that it would accelerate the expansion of its mixture barter network with a plan to build 1,000 swapping stations in China this year, bringing the total number of such sites to 2,300 by the end of the year.

However, the company’s loss-making investment in battery replacement stations has been questioned by investors for its impact on its profitability. Its net loss was 4.7 billion yuan in the first quarter, compared to 1.8 billion yuan in the same period last year.

Nio sales slumped in April and May as the price war intensified in China and overall demand weakened. With its pure electric cars priced at more than 300,000 yuan, Nio delivered 43,854 vehicles in the first five months.

By comparison, Tesla’s sales in China were more than five times those of Nio’s over the same period, while BYD (002594.SZ) sold 923,343 vehicles, thanks to its offerings of both hybrid and pure electric cars for less than 300,000 yuan.

Shares of Nio in Hong Kong rose nearly 5% on Monday. Shares are down about 20% so far this year.

($1 = 7.1388 yuan)

(Reporting by Zhang Yan, Brenda Goh) Editing by Kim Coghill and Tom Hogg

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Rosario Tejeda
Rosario Tejeda
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