Model 3 Long Range Edition is Here, Will NIO Suffer Again?

Tesla recently announced the price of the Model 3 Long Range Edition, which includes a rear-wheel drive Long Range Edition priced at RMB 339,050 after subsidy, and the high-performance Model 3 Performance Edition priced at RMB 419,800 before subsidy. For more details, please refer to our “More Articles” section at the end of this article.

The news was enthusiastically received by almost everyone on the internet. However, some people believe that this is the beginning of a nightmare for NIO, and discussions about whether NIO “will suffer again” have also become popular among netizens.

Although it is regrettable for NIO to face this situation, there are still things that need to be said. So, will the arrival of Tesla pose a serious threat to NIO?

In fact, it is not necessary to worry too much. Evaluating NIO and Tesla requires a comprehensive perspective due to the fact that they are both electric vehicle manufacturers. Simply comparing NIO and Tesla is obviously biased.

As two automobile manufacturers, product, service, and reputation are all important factors for evaluation. So, what is the difference between NIO and Tesla? Perhaps we can start by considering their differences.

Firstly, from the product perspective:

The ES6 is a luxurious urban SUV, while the Model 3 is defined as an electric luxurious performance sedan. In terms of “car type,” there is a fundamental difference between an SUV and a sedan.

In China, the usage of cars and living environments are different from those abroad, with an average income of only one car per person. Therefore, cars need to be able to do more, such as commuting, family trips, and weekend getaways. As a result, space and vehicle shape become crucial considerations. Luxury is also an important factor as practicality and “face” must be considered together.In terms of space, the ES6 is positioned as a mid-size SUV with a body size of 4850mm in length, 1965mm in width, and 1758mm in height. Its wheelbase is 2900mm, which is typical of the size that Chinese people love for luxury cars. The size of NIO’s SUV is similar to that of the Audi Q5L, which has a long wheelbase, and is spacious enough for family use, providing a comfortable riding experience for the elderly and children.

On the other hand, the Model 3 is positioned as a B-class sedan with a body size of 4694mm in length, 1850mm in width, and 1443mm in height. Its wheelbase is 2875mm, which is not much different from BBA’s cars in the same class. However, comparing it with the ES6 is not fair because they belong to different car models and levels.

SUVs are generally superior to sedans in terms of storage and loading capacity, and the ES6 is also a mid-size car. It doesn’t make sense to compare the size of a C-class SUV with that of a B-class sedan.

Moving on to the interior materials, NIO did not disappoint us this time. They meet the typical “luxury brand” standards, and the look and feel are up to par. They use everything that can display luxury, such as genuine leather, soft fabric, and superfine velvet.

The Model 3’s minimalist design has indeed won many Tesla fans, especially the large touch screen. However, this design brings a learning curve for users, and it is difficult for some car owners in China to accept it. Additionally, Tesla’s interior materials are not as radical as they used to be, while NIO seems to be more in line with Chinese people’s taste in this regard.

Regarding the sense of luxury, XPeng and WM (WmAuto) initially followed the low-price route, which basically met their price range, but they did not stand out. Tesla was slow to react in this regard, while NIO filled the gap in the luxury electric car industry.

In terms of workmanship, NIO’s early model ES8 had problems such as gaps and assembly issues between sheet metal, but after iterative upgrades, especially on the ES6, the entire workmanship and materials performance have been very good.

Of course, Tesla is no exception. The previous imported version had problems such as misaligned front fenders, large body gaps, and uneven roof panels. Although the domestic version has improved slightly in terms of manufacturing details, the precision of craftsmanship has not yet reached the level expected for this price range.When it comes to configuration, the ES6 Sport Edition is compared to the Model 3 Long Range Edition, where NIO offers standard features such as a smart AI voice interaction system called NOMI, an electric sensing tailgate, front row soundproof glass, rear privacy glass, leather seats, wireless phone charging, 10-color ambient lighting, an in-car air purifier with PM2.5 filter and a panoramic sunroof that can be opened.

The Long Range Edition of the Model 3 offers an advanced interior package that includes heated rear seats, a 15-speaker premium sound system, single-color ambient lighting, and front fog lights, making Tesla lag behind in terms of comfort configuration.

In terms of driving experience, based solely on power performance, the ES6 Sport Edition with front and rear permanent magnet synchronous motors is comparable to the rear-wheel-drive version of the Model 3. Since the Model 3 is rear-wheel drive, it has a lot more playability and can “drift” off the track easily, while the ES6’s suspension is more comfortable and suitable for weekend family outings. Model 3 is more suitable for young people who focus more on extreme control.

Autonomous driving and range are still the Model 3’s strong suits.

Tesla’s basic version of the Autopilot can achieve L2-level assisted driving functions, and its FSD even has a fully automatic driving ability, while NIO is only at the L2 level.

Regarding range, this is also the biggest concern among netizens about NIO. The Long Range Edition of the Model 3 has a range of up to 668km, thanks to Tesla’s outstanding tri-electric system, which makes its range performance excellent and even higher than NIO’s highest-end ES6 with 70kWh and 84kWh range. Coupled with Tesla’s proprietary Supercharge system, this version is indeed more competitive, while the ES6’s range maxes out at 510km and lags behind.

However, NIO has announced that it will launch a 100kWh battery pack in the fourth quarter of this year, with a range of over 610km, which is slightly lower than the Model 3, but still meets the needs of most new energy vehicle owners for intercity travel.

Moreover, NIO also has an important “battery swap” service system, which is NIO’s ace in the hole, where products and services are paired and provide full life cycle service for vehicles. In the future, if there is a high-end battery, NIO can achieve rapid upgrades without replacing the entire car, while Tesla cannot upgrade the battery pack. We will also explain the battery swapping service in more detail.

Therefore, looking at the product from various angles will provide a clearer understanding that if you are looking for playability and range, the Model 3 with a longer range is better, but if you are looking for a comfortable family car, the ES6 will do. However, it is important to note that these two cars are not the same type or level of product and satisfy different levels of customer needs.As we said earlier, Chinese consumers prioritize vehicle space and luxury as necessities rather than following trends. For the same price, Chinese consumers prefer to choose an all-around competitor like the ES6, which embodies typical “Chinese luxury” in terms of space, material, and configuration.

This doesn’t mean that the Model 3 is not good enough compared to the ES6. Tesla emphasizes the driving performance of its vehicles, and its target customer group is generally younger people who have a special demand for performance and individuality. On the other hand, NIO obviously focuses on family users with homes and even children, and strengthens the sense of luxury and technology creation, as well as improving the configuration based on the preferences of Chinese consumers.

Both sedans and SUVs are working towards diversifying the electric vehicle market and providing consumers with multifaceted choices. Whether to choose ES6 or Model 3 depends on the consumers’ own needs.

Secondly, we’ll look at the market perspective.

As we mentioned before, ES6 and Model 3 are not products in the same demand segment.

Therefore, in terms of the market, Tesla’s long-term impact is actually positive. The CEO of Li Auto also mentioned during his live broadcast on Xueqiu that he thinks Tesla is more like a “catfish,” promoting the domestic market. Tesla can prompt domestic companies to do better in developing products and serving C-end users.

Moreover, the arrival of long-range endurance can also promote market growth. Currently, electric vehicles are still a niche market. To obtain more room for growth, more people need to understand and purchase electric vehicles. Tesla is indeed like Apple, which can educate users to switch to electric vehicles in the initial stage of the market, just as feature phones have evolved into smartphones.

When someone wants to buy an electric vehicle because of Tesla’s influence, they will search and discover other products such as NIO, which are more luxurious and cheaper in the same level, potentially changing their purchasing behavior and further promoting market growth.

Taking a longer-term perspective, according to data from the China Passenger Car Association, global sales of new energy vehicles in 2019 were 2.2 million units, a year-on-year increase of 10%, but still only accounting for 2.5% of the global passenger car market share.

This means that the market for new energy vehicles is very young and growing rapidly. Although NIO’s overall sales seem to be less than Tesla’s, it’s because the market is still small, and in other words, there are not many people who want to buy new energy vehicles overall. As the market expands, even if Tesla remains the market leader, NIO and other companies still have their own market facing Chinese or global users.

Relationship between electric and gas vehicles

During the NIO online media communication meeting, Dr. Shen Fei, the deputy general manager of NIO Power Management, also mentioned that there must be a horizontal dimension in the competition between electric vehicles, and that the competition between traditional fuel car manufacturers is actually the current strategic goal, although it is often considered to be the competition between new energy vehicle manufacturers.

William Li, the CEO of IDEAL Automakers, has also expressed similar views. Traditional cars have developed somewhat lagging behind in recent years. Currently, intelligence is the norm and smartphones have already entered the 5G era. Computers and televisions have also developed very well, but as the most expensive vehicle to purchase, automobiles are still lagging behind. However, the development of electrically driven vehicles can make up for these deficiencies.

Electric vehicles provide consumers with additional choices. In the past, BBA mainly held the market share of luxury SUVs. They were basically taken by Audi’s Q5L, BMW’s X3, and Mercedes-Benz’s GLC. However, compared with the same level of ES6, ES6 will provide a different experience.

First, let’s talk about performance. According to the main sales models of various car models, the 2020 Q5L 40 TFSI stylish model, 2020 X3 xDrive28i luxury model, and 2020 GLC 260 L luxury model are all equipped with a 2.0T engine with maximum power of 140kW, 165kW and 145kW respectively.

The average maximum torque of the three gasoline vehicles is 320 N·m. The Q5L, X3, and GLC have a 0-100 km/h acceleration of 8.6 s, 7.6 s, and 8.4 s respectively. If you have driven these three cars, you will know that their powertrain is only sufficient, and if you want strong explosive force, it’s not possible.

However, the ES6 has a wheelbase of 2900mm, and the Performance version’s acceleration time reaches 4.7 seconds, which is 2.9 seconds faster than the fastest BMW X3. Although it is only 2.9 seconds, it can give you a good experience of quickly passing through congested urban routes.

Moreover, the dynamic experience of ES6 far exceeds the other three cars. It is equipped with air suspension, which has excellent support during fast cornering and does not feel hard during long-term driving. The most significant advantage of electric vehicles is the smoothness and responsiveness of the “accelerator” which is absolutely superior to gasoline vehicles, without the jerkiness caused by transmission. ES6’s combination of permanent magnet synchronous motor and AC asynchronous motor can achieve four-wheel drive, enhancing vehicle stability in winter.Due to the absence of an engine, the NVH control of the ES6 electric vehicle is superior to that of the three gasoline-powered vehicles mentioned above by more than one level. At this point, listening to music, having conversations and others while inside the car will become a complete enjoyment.

Even the entry-level ES6 has a torque of 610 N·m, which is basically the same as the torque of a 3.0T engine in a gasoline-powered car, but the price of a 3.0T car is also expensive.

In terms of intelligence, this should be what the new car manufacturers are most willing to compare with traditional manufacturers, because it is really a “crushing” comparison. NIO can achieve vehicle-wide OTA upgrades, while the above three models cannot. OTA can upgrade the software without changing the hardware, thereby achieving an upgrade of the entire vehicle performance. Theoretically, a vehicle after OTA is almost no different from a new car.

It doesn’t stop there. NIO ES6 can achieve L2+ level of assisted driving, which will free your hands and feet under specific conditions when driving on long trips. ES6 also comes with a smart entertainment system, and the large screen in the car can bring rich entertainment experience and also enable remote control of the vehicle.

Finally, let’s talk about the cost of ownership. Many people think NIO’s cars are expensive, but in fact, compared with gasoline-powered cars of the same level, they still have price advantages. The key is that the cost of ownership of the ES6 electric vehicle is much lower than the three models mentioned above, which can be seen through comparison.

Moreover, this is only the basic cost of ownership. As an electric car, it has the advantage of “road use rights” and can be exempted from license plate lottery in first-tier cities like Shanghai. For gasoline-powered cars, the license plate must meet the requirement of continuous three-year social security, and the average auction price is around 100,000 yuan with a mediary fee of 10,000 yuan.

Of course, if not in a license plate lottery city, it doesn’t matter. But if one lives in a designated city, ES6 can save nearly 100,000 yuan.

Of course, the opposition will also say that as an electric vehicle, how can ES6 solve the problems of battery decay and the resale value of used cars, which may be slightly worse off than gasoline-powered cars. Battery decay is a common problem in the industry, but in terms of resale value, it is because the overall energy density of early batteries was low and used electric cars have no practical value.# NIO Power: The Core of NIO’s Service System

NIO, a company founded only six years ago, has made it to the top 10 luxury car brands in terms of sales in the second half of 2019. How did it achieve this remarkable feat? The answer lies in NIO’s service system, particularly its NIO Power mobile intelligent recharging service.

While range anxiety may seem like the most pressing issue for electric vehicle (EV) drivers, deep down, what consumers worry about is running out of energy. Gasoline vehicles also run out of energy, but people don’t worry about range anxiety because filling up gas is easy. The importance of NIO’s battery-swapping technology is that it has changed the way people approach EV recharging, taking away the anxiety of being stranded because of an empty battery.

With NIO’s “battery-swapping” service, drivers can exchange a depleted battery for a fully charged one at NIO’s official swapping stations. This is currently the most efficient way to recharge an EV, and its efficiency can be further improved as recharging stations upgrade. Even if the range increases or the battery capacity grows, swapping batteries will not increase charging time. This is perhaps the best advantage of the swapping technology, and it can also address issues such as battery degradation and residual value of the car in the secondhand market.

When NIO separates the battery from the vehicle, purchasing a NIO car will only be buying a “whole vehicle frame,” and the battery will be leased to the consumer by NIO’s battery-swapping stations. With this approach, there is no worry about battery degradation because it does not belong to the consumer. In addition, when the vehicle is sold as a used car, it will be traded without the battery, and the condition of the vehicle’s frame will become the determining factor for its value.In this service system, NIO doesn’t just provide battery swapping, but also offers lifetime free battery swapping, lifetime free maintenance, and one-click charging. Moreover, NIO has indicated that it will consider gradually opening these services to the market in the future.

According to official data published by NIO, as of March 2020, NIO has deployed 123 battery swapping stations in 51 cities, with over 17,000 battery swapping vehicles.

Since the launch of the free battery swapping service, the cumulative number of scans has exceeded 370,000, and the penetration rate of battery swapping has reached 48.1%. In other words, almost half of NIO users have used the battery swapping mode, which is extremely important for changing users’ perception.

If battery swapping becomes as convenient as refueling in the future, it will solve range anxiety.

The repurchase rate brought by word-of-mouth recommendations from users is very high. NIO’s service system is like a chain from top to bottom. It is this excellent service that strings together the “future” of NIO. NIO’s emphasis on users is an exemplar among modern enterprises. Some people might think that user operations are vague and intangible, and are even serving competitors, but this is not the case. If you linger in the NIO owners’ community for a long time, you will know that NIO owners’ love for NIO is from the bottom of their hearts.

They are numerous car owners who share similar values, and you will find that they seem to be the same person. The user operations of NIO are formidable, and they have formed their own fan culture.

There have been NIO owners who paid for NIO to advertise; owners in Macao who took NIO cars to the Macao International Auto Show at their own expense; owners in Hunan who invited more than 390 people for test drives in 400 days, and successfully converted 45 of them into owners.

Opponents might say that these people are “stupid,” but don’t forget that these people are car owners who can spend 300,000-400,000 yuan to buy a car. They are not only not stupid but also the elites of society, so they do these things precisely because they identify with NIO.

It is important to note that, just like the repurchase rate of Apple phones, if NIO users can achieve the highest repurchase rate, NIO will become an even more formidable company. This will be a hit to break the circle of competitors.

Li Bin also stated that looking back at the past year, NIO’s investment in products and services has paid off. One data point: “For every 100 cars we sell, 69 are recommended by loyal customers.”Therefore, good service brings good word of mouth, and good word of mouth also contributes to NIO’s success. You should know that although NIO may seem niche compared to Tesla, the trajectory of commercial development will tell you that being niche is actually being mainstream.

In conclusion, the Long Range version of Model 3 is good, and so is the ES6, because they are two products that meet different demands. Though it is difficult to put them together, the essence of business lies in controlling demand, not just in a single product. As a local company, NIO understands Chinese consumers, and that is its competitive advantage.

Tesla has an impact on NIO and new car manufacturing, but it is not so great because “human nature” is changing, and people’s demands cannot be satisfied by a single product or brand. Even though Sour and Spicy Potato Shreds are delicious, there are also people who love Stir-fried Green Peppers and Eggs.

Tesla’s deep-level influence is on the market level, and it is beneficial. According to data from INSIDE EVs, in 2019, global new energy passenger car sales were 2.2 million units, accounting for just 2.5% of global passenger car sales, making it a small niche market. Therefore, Tesla can actually drive market growth.

The superiority of NIO ES6 compared to other luxury SUVs at the same level is evident in terms of performance, smoothness of throttle and acceleration, and the overall tuning of the chassis. Additionally, the total cost of car use during the entire usage cycle is much lower. However, the weakness is also very obvious– short battery life.

Once you experience NIO’s battery swap service, you will find that it will become NIO’s trump card, and NIO’s users will undoubtedly become a cornerstone of its success. Services and products should be developed in parallel, which will create significant pressure for NIO in the short term. But in the long run, NIO’s strategic path is clear.

This article is a translation by ChatGPT of a Chinese report from 42HOW. If you have any questions about it, please email bd@42how.com.