(Bloomberg) — Chinese electric car upstart Nio Inc. will take its first step outside its home market, opening a showroom and beginning to sell vehicles in environmentally conscious Norway.
Nio will start delivering the latest version of its ES8 all-electric six- or seven-seat sports utility vehicle to the Nordic nation in September, Chief Executive Officer William Li said at an event in Shanghai Thursday. Its first electric vehicle sedan, the ET7, will launch in the second half of 2022. Preorders for the ES8 are expected to start shortly.
“Launching in the European market will definitively help us grow,” Li said. It will set a “higher bar as we’re entering developed countries with more aggressive competition.”
Choosing Norway as its European beachhead presents opportunities and challenges for Shanghai-based, U.S.-listed Nio. Norway last year became the first nation in the world to see electric cars seize a majority of annual vehicle sales, thanks to green-friendly government incentives and extensive charging infrastructure. The country wants all cars sold there to be zero-emission in 2025. However, little known outside China, Nio will be going up against more-established EVs like Audi’s e-Tron SUV, Tesla Inc.’s Model 3 sedan and Nissan Motor Co.’s Leaf hatchback.
Even traditional Chinese automakers, from Great Wall Motor Co. to Geely Automobile Holdings Ltd., have struggled to crack overseas markets, held back by a lack of name recognition, perceived question marks over their quality and reliability, and a dearth of dealer and service networks. Both Great Wall and Geely got less than 10% of their revenue outside their home market last year, according to compiled by Bloomberg.
It’s also a risky move for a company that less than two years ago was on the brink of collapse before getting a funding lifeline from the Hefei municipal government. While Nio last week reported a narrower first-quarter loss, it’s facing stiff competition in China from rival startups Xpeng Inc. and Li Auto Inc., as well as facing new challenges from tech giants like Baidu Inc. and Xiaomi Corp., which are pouring billions of dollars into EV investments. Global automakers from BMW AG to Volkswagen AG are also rolling out new models to grab a bigger slice of the market.
Nio is also planning to bring its upmarket Nio Houses — a combination showroom, meeting space and cafe for car enthusiasts — to Europe. Spending on the splashy club-like Nio Houses contributed to the cash burn that almost sank the company, and had to be wound back as it preserved money.
The company has leased a 2,150-square-meter space spread in central Oslo for its first showroom and will have four smaller-sized Nio Spaces in Bergen, Stavanger, Trondheim and Kristiansand. Merchandise from the Nio Life line will arrive at some point.
Nio is planning on going with a direct sales model, supported by service centers and mobile-service cars, in Norway, unlike other Chinese carmakers that have opted to partner with local dealers. Aichi Automobile has delivered more than 1,000 vehicles in Europe since making its first exports in May 2020, while Xpeng delivered 100 of its G3 SUVs to Norway in December, and has made a second shipment, a spokeswoman said, without giving specific details.
Nio will also build four battery-swap stations in Norway this year with another 12 planned in 2022 across five cities. By constructing battery-swap stations, Nio is setting up the infrastructure for not only charging options but also its battery-as-a-service concept, whereby customers can buy a car and lease the battery. That makes for much lower upfront payments. Initially, battery-swap stations will be made in China and shipped to Europe, although over time, Nio may consider local production.
Beyond Norway, some analysts expect Europe to overtake China as the world’s biggest EV market this year. The region make account for 44% of global passenger EV sales in 2021, compared with 39% for China, according to BloombergNEF.
Li also said Nio one day plans to enter the U.S. market, but hasn’t any specific time frame. “Under the current international relations situation, it’s tougher for Chinese-background companies to enter overseas markets compared with years ago,” he said.
In China, Nio has delivered a total of 102,803 vehicles as of April 30. Like the rest of the auto industry, the company has been hit by the global chip shortage, suspending production for five days from late March to early April. It forecast deliveries of 21,000 to 22,000 cars this quarter because of “significant challenges” in the supply chain, Li said last week.
Shares in Nio are down 23% this year but over the past 12 months have posted an extraordinary 942% gain.