Is it wise for NIO to enter the European market?-CnEVPost

NIO recently raised $1.7 billion in capital markets. In addition to buying back a portion of NIO China stake, the funds raised will be used for high-level driverless systems and overseas market expansion.

"We're hoping to be able to start initial trials in countries where EVs are more popular in the second half of next year." After giving a relatively vague timeline for the launch of the BaaS business on August 20 and speaking to the media, William Li Bin made it clear that "2022 will be the start of broader market entry, and 2023 and 2024 more fully."

What William Li Bin calls "the more popular countries for electric cars" speaks for itself. Data show that from January to July this year, by the influence of subsidy policy, the cumulative number of electric vehicle registrations in Europe has reached 500,000 (including plug-in), surpassing China's 486,000 units, becoming the world's largest new energy vehicle market.

This may mean that Europe will be the first stop of NIO's overseas market.

Europe's new energy vehicle market is expected to perform well by 2020, and has recently gained momentum to become the world's largest new energy vehicle market.

As China's new energy vehicle subsidies continue to recede, it will be difficult for new energy vehicle sales to resume their rapid growth in the short term.

However, European countries regard the subsidies for new energy vehicles as the key to revitalize the automotive consumer market, so the various subsidies and favorable policies will be maintained in a short period of time.

In Germany, for example, through the establishment of a new "environmental bonus" to stimulate sales of new energy vehicles.

The policy is as follows: the price of 40,000 euros below the electric car subsidy from 4,000 euros each to 6,000 euros; hybrid models from 3,000 euros to 4,500 euros; new 40,000 euros above the electric car subsidy of 5,000 euros, hybrid models subsidies of 4,000 euros.

For NIO, the European market for new energy vehicles is vast. But European consumers do not have a particular preference for electric vehicles, and in many European countries, plug-in hybrids also have a significant market, which means that NIO, which focuses on the electric vehicle market, has to limp forward.

Constraints on the development of electric vehicles charging station facilities, currently in Europe is still inadequate.

European governments, with the huge resources of China, can not easily roll out the construction of charging stations across the country in a short period of time.

The current NIO's mileage and power station facilities in Europe are more than enough for commuting within the city, but there is still a big question mark over whether it can allay consumers' fears during self-driving trips and more cross-country travel in Europe.

It is planned that the NIO will enter the European market in the second half of 2021, and initially it will definitely be sold in Europe as a complete vehicle export.

In Europe, since Tesla has its own factory in Berlin, it will have a relatively large tariff cost cost advantage.

The traditional car companies, be it Audi, BMW, Mercedes-Benz, Volkswagen, PSA, Renault, etc., will have a large number of electric vehicles on the market after 2021, covering all segments from sedans, SUVs, MPVs to high-performance vehicles.

These auto giants have an unmatched advantage over NIO in terms of brand appeal and consumer preference. How to compete with these rivals, is a big problem in front of NIO.

NIO's strengths in China are its customer operations and switching technology. But in the European market, NIO will not be able to maintain its position as a luxury brand in China.

Without the aura of a luxury brand, how to do a good job of customer operations and attract customers to the NIO brand. Especially the high conversion rate of existing customers to new customers in Europe to replicate, but also need NIO to think.

The partnership with Mobileye is the key to NIO's fate

Promoting the development and commercialization of driverless solutions at L4 level is also one of the main objectives of this NIO fundraising.

Achieving a breakthrough in high level driverless technology is more urgent than entering Europe. The new Mercedes-Benz S-Class and the XC90 based on the SPA2 platform will be equipped with L4 level driverless technology in certain scenarios, and it is urgent for NIO, which is known for its technology flair, and other new carmakers to accelerate their investment in L4 level driverless technology.

Mobileye is one of the stronger of the many global OEMs with its hardware and software capabilities in visual recognition.

But in Tesla's past experience, it went through the initial cooperation with Mobileye, and then because of that 2014 Autopilot accident caused by the Autopilot accident after the dispute over who has the right to referee for driverless technology, it turned to seek NVIDIA's chips and do software system development itself.

As the whole driverless system becomes more and more complex, Tesla finally decided to develop its own proprietary driverless control chip in order to achieve the best performance.

Mobileye has gone from being an Israeli startup to a subsidiary of global chip giant Intel, which has its own very big ambitions and intentions for the driverless field with its leading image recognition and processing technology.

For the automaker, this means that Mobileye has never given up on its technology exploration, and it will leverage Intel's chip capabilities to develop a new generation of driverless systems with more advanced performance image recognition software and hardware combination system.

But in the meantime, it's this stronger technology that dictates it won't compromise with automakers.

It will seek large amounts of data and require a higher level of priority than traditional OEM control systems in making the final decision about driverlessness.

With NIO's current size and voice, there's no clear prospect of whether it can achieve control or win-win for Mobileye.

According to the agreement between NIO and the Hefei city government, NIO needs to complete the launch of 6-8 models by 2024, with a revenue of 120 billion yuan, and strive to achieve the launch of the domestic version of the science and technology in 2025.

This means that NIO, which currently has only two models on sale, needs to complete the launch of at least four models in the next little over three years.

With many competitors in the domestic pure electric market, NIO needs to develop a new generation vehicle platform to further optimize its range, connected car and performance.

At the same time, its biggest selling point - electric technology, but also need to continue to invest, in order to enhance the appeal to domestic consumers, to help sales can continue to red. According to a IV_Technology commentary, these are far more important than entering the conservative European car market.

So far, there are few precedents where a domestic brand can gain a foothold in the European market. According to the review, instead of blindly entering the European market, NIO should first accumulate enough technology in order to ensure sustainable development of the company.

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