Why It’s Time For Nio to Go Big

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For investors, Nio (NIO) has traditionally represented a bold move. This relatively new electric vehicle (EV) manufacturer has chosen a unique strategy, focusing on investing heavily and diligently in building its battery-swapping stations. Although primarily recognized for its flagship Nio premium EV brand, the company has recently introduced two subsidiary brands, Onvo and Firefly, which are anticipated to substantially increase deliveries as production ramps up.

Given the current situation, it seems prudent for Nio to aim for growth with its fresh brand offerings, as per a study suggesting that China may soon see the decline of numerous electric vehicle brands.

Dire warning

AlixPartners Consultancy issued a concerning prediction: Out of the 129 electric vehicle (EV) and plug-in hybrid brands currently operating in China, only 15 are projected to remain financially sustainable by 2030. This potentially unfavorable outlook could pose challenges for most automakers not based in China, particularly BYD, which is one of China’s dominant players in the industry.

In simple terms, it is projected that around 75% of China’s electric vehicle (EV) and plug-in hybrid market share will be controlled by approximately 15 surviving brands within the same timeframe. These 15 brands are estimated to sell an average of about 1.02 million units each year, indicating a potentially profitable sector for those who can endure the market consolidation and potential bankruptcies.

What’s the problem?

At first sight, it appears that China’s market for new energy vehicles (NEVs) is thriving. In June alone, NEV sales surged by 30% and represented an impressive 53% of all new vehicle sales in China. Out of this significant portion of the broader market, Chinese electric vehicle (EV) brands make up approximately 71% of NEV sales.

In essence, China’s electric vehicle manufacturers find themselves in a challenging situation due to their own achievements and government subsidies. The densely populated and fiercely competitive industry has spurred remarkable innovations in battery technology and cost efficiency. However, this same competition has led to an intense and unsustainable price war that makes it hard for them to maintain market share and profit margins.

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Time to go big

In simpler terms, given that China’s current market conditions are favorable for electric vehicle (EV) companies like Nio, which already has a well-known premium EV brand, and is rapidly increasing production and deliveries of two additional brands, it has the opportunity to increase its sales significantly. This could either help the company reach the point where it can operate at a break-even level, or make itself an attractive option for potential mergers and consolidation in the industry.

By now, Nio intends to double its car deliveries from 2024 to the present year, resulting in approximately 450,000 vehicles. However, the company is slightly off track to meet this goal. If that objective isn’t challenging enough, management also aims to reach break-even point by the end of 2025. This would be a substantial and noteworthy accomplishment, but Nio has been making strides in reducing costs and enhancing profit margins, even amidst an ongoing price war.

As an ardent supporter of Nio, I can’t help but feel excited about the remainder of 2025. The Chinese EV industry is poised for significant consolidation, and I truly believe that this could be a golden opportunity for Nio. To capitalize on this, it seems prudent to invest more in marketing, incentives, and production efficiencies. By doing so, we can propel our new brands to unparalleled heights. It’s time for Nio to think big, to step up, and prepare for the day when many competitors will have to pack their bags and go home.

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2025-07-18 01:47