ET5 potentially obliterates competition in the mid-size premium luxury segment ruled for decades by BMW and others and more recently Tesla.
Editor's note: This is a guest post from Rafi Khan, an NIO investor, and does not represent the views of CnEVPost.
If you have ideas you would like to share with our readers, feel free to send them to us. Articles written for the purpose of link building will not be considered and such emails will not be answered.
Country standard bearer, industry disruptor, competition obliterator, middle-class life enhancer – ET5 can be a water-shed seminal product transformer for NIO.
In the mid-1960s, Toyota introduced the Corolla.
Global auto industry consumer purchasing, Japanese standing in quality, technology, engineering, and workmanship perceptions were transformed for the next 60 years.
- New, different Toyota models bigger & smaller were introduced
- New brands like Lexus evolved
- New auto companies emulating Toyota like Hyundai came into being
- New countries like South Korea seeking to emulate Japan developed their own auto industries
- Newly found jobs for millions of auto workers evolved
Ford had a similar global transformative effect first with its Model T over a century ago & then with its Ford pickup truck.
The launch of ET5 could be such a seminal moment for China, NIO, EV & AV sectors.
There was a frenzy at all NIO Houses & Spaces with the formal launch of ET5.
There may be reasons why the ET5 launch created such a frenzy:
Tens of millions of Chinese
- Strive for a better life
- Seek the status of owning a car, now increasingly an EV
- Have endured & sacrificed with the highest savings rates in the world to fulfill their dream of auto ownership
- Have endured years of waiting, bids, auctions, and lotteries just to fulfill their dream of car ownership
- Thirst for recognition of their hard work & their sought after new upper-middle-class status
- Typically have to pay RMB 100,000 in cities like Shanghai just to even have the chance to buy an ICE vehicle registration plate
- Typically have to endure lotteries with little chance of even getting the chance to qualify for auto purchaser status
Now along comes NIO with its E5:
- No wait for vehicle registration plates
- No payment of circa RMB 100,000 Bid/Auction fee & VPT
- RMB 70,000 price entry reduction courtesy of BaaS
- RMB 11,000 price reduction courtesy of the Chinese government
- Extra price reduction courtesy of some district governments in cities including Shanghai and Beijing
- Dual motor, AWD, aluminum body all standard
- Performance of sports racing car
- Ultimate premium luxury status as confirmed by JD Power & others
- Ultimate status / social recognition with the exclusive membership of NIO Houses
- AR/VR; LiDAR safety; ADaaS Level 4 Autonomy potential that are world-leading features.
In summary, ET5 potentially obliterates competition in the mid-size premium luxury segment ruled for decades by BMW & others and more recently TSLA whilst at the same time giving enhanced status potential to millions that may have been looking to buy BYD or XPEV offerings.
All for price entry point as low as RMB 228,000 which is much lower than the cheapest entry-level single motor RWD TSLA Model 3.
Hence the nationwide frenzy for ET5.
Until customers actually pay non-refundable deposits with firm orders, it would be foolhardy for any management to make future plans for any new model.
But now with firm orders for ET5 in hand, NIO management can potentially look forward to:
- Mass production of ET5 at NeoPark
- Ramp up of that mass production
- Introduction of ET5 to Europe
- Major positive media coverage of ET5
- Beneficial knock-on sales effect to other NIO models
- Enhanced battery swap licensing partner potential as competitors try to figure how to compete with BaaS NIO ET5 price entry points
- Outlook for 24/7 3-shift NeoPark production
- Rest assured on 3 shift 24 hours production at NeoPark similar to current working at Giga Shanghai, the annual production capacity is not slated 300,000 but much higher than that
- Bestselling premium mid-size EV in China & Europe potential for perhaps decades to come – just as it was for Toyota Corolla in 1966
From a company perspective:
- Accelerated destruction of BBA ICE business
- Accelerated movement to break even & profitability
- Leap-frogging over BBA in premium luxury
- Leap-frogging over TSLA in price entry, features & quality
- Lower per EV manufacturing costs as deliveries exponentially rise
- Recognition of NIO's leadership role in EV industry development
- Enterprising Chinese cities seeking to be NIO partners for future expansions
ET5 is great for consumers but also great for NIO margins & profits:
- BaaS monthly premiums are for life
- ADaaS monthly premiums of RMB 680 per month are for life
- Capitalizing ADaaS premiums give you circa RMB 50,000 in value which is 20% gross margins alone which NIO is very happy to let flow in on a monthly basis for years to come
- NIO Life sales will surge as ET5 sales explode
NIO is happy to play the long game & patiently see profits & margins grow.
Just as in the early 1900s with Ford & in the 1960s with Toyota.
The launch of ET5 in September 2022 may be a seminal point in time for the EV industry; Chinese EV global dominance & leadership in EVs & NIO in its quest to be a Generation Life Style Eco-friendly behemoth.
The frenzy in NIO Houses & NIO Spaces points to that.
Not a Financial Advisor, Nor an Auto Analyst JMHO DYODD