Nio Considers Dealer Network In Europe To Accelerate Sales Growth

Nio wants to compete with Tesla in Europe. (photo: @nioglobal)

JAKARTA - Nio, a Chinese electric car manufacturer that has ambitions to become a competitor to Tesla, is considering building a network of dealers in Europe to accelerate sales growth. According to a source, this is still done even though electric cars from China face potential tariff rules in the region.

Nio, who wants to be a competitor to Tesla with its premium models, will start operations in Norway in 2021. Next they enter the German, Dutch, Swedish and Danish markets in October 2022. This move allows customers to buy directly from Nio stores or online, or rent their cars in just a month.

However, the company has begun to assess that dealers in the European market are key, two sources said, after the company's president last month said sales in Europe did not meet expectations.

The move comes as Chinese electric car manufacturers, including Xpeng, Zeekr, and BYD, aggressively seek to expand their presence in Europe, where they can sell their cars at a higher price than in the saturated market in their home countries.

One source said that Nio found that Europe has its "uniqueness," without providing further explanation. The company also plans to expand to more countries in Europe. Nio has recruited employees in France, Italy, Hungary, Switzerland and Austria, according to LinkedIn's post.

A third source said that dealers are being considered both for Nio branded cars sold in Europe and the "Firefly" project, a more affordable electric car brand that is planned to be exported to Europe starting in 2025.

Another reason for using dealers is to reduce cash pressure on Nio, which prioritizes spending on research and battery exchange stations in China, the source said.

Nio said there had been no changes in its marketing and brand sales methods in Europe, and the company committed to building a live sales network.

However, the Firefly project is evaluating distribution channel models for Europe, including direct sales, agents, or dealers.

"We will choose the model that best suits the local market and brand development needs," Nio said in a written statement.

The company continues to strengthen its presence in Europe, even as the European Commission considers imposing tariffs to protect EU manufacturers from Chinese-made electric cars that are considered to benefit from state subsidies.

Nio, who is ninth based on sales volume among electric and hybrid car manufacturers in China, did not specify its sales in Europe.

Last month, Nio President Qin Lihong told Chinese media that reports that Nio had sold 832 cars in Europe in the first half of 2023 were not true, and the actual operating figure was three to four times that number. However, he said he was not satisfied with the figure.

Nio does not use dealers in China, but relies on a live sales model similar to that initiated by Tesla.

Until the end of September, Nio owned 137 Nio Houses, including six in Europe, where the company featured cars, offered driving trials, and owned cafes and meeting rooms for car owners.

Other Chinese electric car manufacturers have tried different approaches in other regions as they expand overseas.

For example, BYD has succeeded in gaining market share in Southeast Asia by building a distribution partnership with a large local conglomerate that allows the automaker to expand its reach, test consumer preferences, and navigate complex government regulations in the region.