On Thursday, Chinese electric car company Nio unveiled an Android phone, and William Li, its CEO, spoke with CNBC in an exclusive interview. In this conversation, Li indicated that the company has no plans to expand the release of its smartphone to Europe until the market is more substantial.
At the launch of its own Android smartphone on Thursday, Chinese electric car brand Nio's CEO William Li stated, in a CNBC exclusive interview, that the phone, ranging from $900 to $1,000, is $150 less than a similar Huawei model. Li also noted that among Nio's profit-generating customers, over half are iPhone users, while the other half use high-end Android phones from Huawei and other brands, and he believes they would be likely to opt for the new device due to its performance and car connectivity. Li further added that the phone was developed in around one year and is the first high-end Chinese electric car brand to have released its own smartphone. By capitalizing on in-car entertainment and mobile phone connectivity, the electric car companies in China are looking to make their vehicles more attractive. Orders for the phone can be placed immediately with deliveries starting on Sept. 28.
Polestar, a Swedish electric car manufacturer with a large presence in China, reported to CNBC earlier this month their intention to introduce a mobile phone in December. Additionally, Apple and Xiaomi have been allegedly in the process of developing their own automobiles. Just under two years ago, Huawei debuted Aito, which distributes electric cars in China partnered with Huawei's operating system. Further, Huawei sells their vehicle software to other electric car companies, including Avatr and BAIC's Arcfox, allowing for drivers to sync their individual settings on their devices - such as music - to the car. Nio also has a separate app for smartphones.
Li told CNBC on Wednesday that the new Nio device looks like a regular phone, but has a special button which acts as a key for the car. He further explained that the smartphone offers users a more effortless connection with the car; for instance, they can easily shift from the phone to the auto during video conferences.
Li commented that the introduction of the new device is an avenue for Nio to generate more revenue per user. He noted that their focus was not solely on the car itself, but the overall experience that it could provide users. It is also more convenient and efficient than before. The Nio phone is accessible to all customers in China, regardless of Nio car ownership. He added that the Nio phone app is utilized by 600,000 customers daily, which is a 1.5-times higher amount than their car user base.
In August and July, deliveries of Nio's vehicles rose to around 20,000 after a decrease in shipments during the previous three months. In the second quarter which ended on June 30, Nio's revenue from the "other sales" category increased significantly from the year before to 1.59 billion yuan ($217.86 million). This boost was driven by a substantial rise in sales of used cars, accessories, and power services. The growth of these sales was attributed to an expansion in the number of its users.
Nio doesn't have any intentions of launching a smartphone in Europe right now, according to Li. The company is present in five EU countries, including Germany, and is focusing on developing local auto services, Li elaborated, as he underlined the importance of such services for automotive products. Concerning the EU's anti-subsidy investigation of Chinese EVs, Li mentioned he was still in the process of gathering further information.
He stressed the need for the world to collaborate, specifically when it comes to environmental problems. He continued, "I don't think anyone should be stopping people from utilizing good services by a range of methods, like investigations."
The rapid penetration of new energy vehicles in China has been constrained by the nation's sluggish economic growth. Li noted the intense competition in the domestic electric car market, yet he expressed optimism that investments from Nio would help it "create barriers to entry". Li affirmed that the company devotes $500 million on R&D every quarter and is investing heavily in battery charging and developing a mass market brand. He concluded confidently that “time remains on Nio’s side”.
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Nio previously declared it would be producing a car in the second half of 2021 under the name of 'Alps.' The company since its establishment in late 2014 has gone through financial problems repeatedly. Earlier this year, the firm declared that owing to low sales, certain spending plans would have to be postponed. However, it was then given almost $740 million from an Abu Dhabi-backed pool. Moreover, Nio declared this week a re-financing scheme for a part of its debt.
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