Author: The Office

From December 18th, it has been exactly one week since the release of the NIO ET5. Two small incidents have occurred regarding the ET5 in this week.

Apart from various verbal conflicts, rumors that the ET5’s orders have exceeded 100,000 have begun to circulate online. However, Ma Lin, the Senior Director of Communications at NIO, countered the rumor on Weibo: NIO has not announced the order numbers for the ET5.

Whether the number is really 100,000 or not, the NIO ET5, as a luxury mid-size intelligent electric vehicle, has already become a phenomenon with an overwhelming popularity. On the day after NIO Day, Qin Lihong, the CEO of NIO, stated that “the intention of the ET5 is very clear—it enters the luxury mid-size car market to differentiate and gain market share from mainstream high-end brands and leading intelligent electric vehicle brands in the market.”

So, the question is: if the ET5 starts mass deliveries tomorrow, where will it finally stand in the luxury mid-size car market?

Perhaps we can try to speculate.

The ET5 Challenges the 3, 4, and C

First, let’s answer a question: who is the leader in China’s luxury mid-size car market?

According to the China Automobile Dealers Association, in the past year (December 2020 – November 2021), the Mercedes-Benz C-Class, BMW 3 Series, and Audi A4L sold 131,089, 173,830, and 128,953 units respectively in China.

For comparison, NIO has sold a total of 87,947 units in the past year. Considering that NIO is entering 25 overseas markets, including the United States, it is foreseeable that if the ET5 is strong enough, it could double NIO’s sales volume throughout its lifecycle.

However, the precondition is that even if the Chinese luxury car market maintains good growth, the ET5 still needs to surpass the 3, 4, and C and at least take away some of their market share to achieve similar growth.

In other words, can the ET5 win a head-to-head confrontation against them?Let’s start with power when comparing vehicles as a means of transportation, power is one of the fundamental experiential attributes that can greatly influence consumer choices.

Benefitting from the high-performance genes of the NIO brand, the ET5 has won thoroughly, both in the literal and figurative senses.

Firstly, the ET5 series only features one powertrain system – a full-drive system powered by a front 150 kW induction motor and a rear 210 kW permanent magnet motor. To put this into perspective, the power output of full-drive systems in some of the strongest competitors, such as the 2022 BMW 330Li xDrive M package, is only 190 kW.

In other words, if NIO were to release a rear-wheel drive version of the ET5, none of the vehicles in the 3, 4, or C series could compare. Unfortunately, NIO has refused the “let the opponent lose with dignity” strategy and only offers the fully-drive version with 360 kW.

This also provides the ET5 with a peak torque of up to 700 N·m and an acceleration capability of as low as 4.3 seconds to reach 100 km/h.

Next, let’s talk about the traditional advantage of fuel vehicles and the traditional disadvantage of electric vehicles: energy supplementation. On this issue, BBA provides a substantial experience: you can always rely on a nationwide and widely distributed gas station network.

The pressure is now on NIO, and ET5’s card in the energy supplementation dimension is battery swapping. Battery swapping can provide an energy supplementation experience comparable to gas stations, and because of its flexible upgrade advantage, it can even provide flexible rental options for daily commutes of 75 kWh, holiday travel of 100 kWh or even 150 kWh after receiving the ET5.

The only bug is the density of the battery swapping network. However, this issue is slowly being addressed by NIO. Two indicators illustrate the issue: the charging station-to-vehicle ratio and the electric area-to-station ratio.

The charging station-to-vehicle ratio is easy to understand. 2021 was a year of blossoming for NIO’s battery swapping stations, rising from 177 stations in January to the latest data of 743 stations today, which directly led to a drop in NIO’s station-to-vehicle ratio from 606 cars per station to 204 cars per station.

In other words, although NIO’s cars are selling well, it cannot keep up with the growth of NIO Power, and the growth rate of battery swapping stations is roughly three times that of sales growth.

The electric area-to-station ratio is defined as residential areas within 3 km of a battery swapping station, and with the crazy increase in battery swapping stations, NIO’s coverage of electric areas has also increased from 20.32% in January to 42.9%. You might ask, what if I am part of the remaining 57.1%?NIO is also paying attention to this issue, so from 2022 to 2025, NIO plans to add 600 battery swap stations every year, with the long-term goal of achieving a 90% coverage rate for battery swap stations by 2025.

Now, let’s talk about the experience of sitting in the car. Intelligent and electric vehicles are undoubtedly the trend of the automotive industry. From the Mercedes-Benz EQS, BMW iX, and Audi e-tron GT, it can be seen that BBA is also accelerating its transformation to follow the trend. However, when it comes to the midsize sedan market, BBA has not yet completed the actual transformation.

Starting with the ET5, a small climax at the NIO Day event on December 18th was that NIO finally chose to fully equip the ET5 with the NAD intelligent driving system originally designed for the ET7 without any cutbacks.

This makes the comparison of this part even more fierce than the power comparison. A recognized fact is that NAD is the most powerful hardware quality and has the greatest iteration space for intelligent driving systems, including the industry’s first pre-installed 1000+ Tops computing power platform for mass-produced vehicles, a millimeter-wave and vision double 360-degree coverage, and a Sensor Bar composed of a 1550nm laser radar of equivalent 300 lines and dual 8 million pixel cameras. This is no longer in the same dimension of competition as the black box auxiliary driving solutions currently installed in 3, 4, and C that are mainly developed by suppliers and cannot be updated OTA.

The most obvious difference is that all currently produced auxiliary driving systems still require the driver to concentrate on the road ahead after being activated, while NAD, according to Qin Lihong’s previous statement, when it reaches a mature state, refers to true autonomous driving, which is a function that NIO is responsible for as a backup.

So far, we have analyzed power, energy supplementation, and intelligent driving. Of course, there are more than these factors to convince consumers to open their wallets, such as styling and interior design, brand tone, or chassis, steering, and other mechanical quality tuning, etc. However, due to various factors (such as aesthetic differences among individuals, and the fact that we cannot currently drive the ET5), we will not delve into them here.

Undoubtedly, NIO has a lot more to do, but based on the preliminary conclusion drawn from the above analysis, the overall strength of the ET5 is not to be underestimated, and BBA should have a moderate sense of crisis from the perspective of brand continuity.

Model 3 Holds the Title against ET5

Finally, let’s talk about the internal market of intelligent electric vehicles.

Although many people are happy to watch the show, we didn’t initially plan to analyze the pros and cons of the Tesla Model 3 and the ET5. The reason is simple: this is a fast-growing incremental market.Tesla CFO Zachary Kirkhorn said in last quarter’s earnings conference call, “The best thing we see in this field (intelligent electric vehicle market) is that consumers seem to have a profound awakening to the desire for electric vehicles. To be honest, this caught us a little off guard.”

Looking around the world, the growth of China’s new energy vehicle market continues to exceed expectations.

Simply put, China’s intelligent electric vehicle market is rapidly shifting from the Innovator group in the theory of Diffusion of Innovation to the Early Adopter group, which will result in a 3-5 times increase in the overall market size, and all players involved in it will achieve significant growth as a result.

But do you remember the beginning of the article? Qin Lihong said that the ET5 hopes to differentiate not only from the BBA we previously mentioned, but also from “the leading intelligent electric vehicle brand’s market share in this market.”

Combining mid-size sedans at the same price point with the leading intelligent electric vehicle brand, the only model in direct competition with the ET5 is actually the Tesla Model 3 Performance.

In terms of accounting data, the total power of the Model 3 Performance is not as high as that of the ET5, but because of its lighter body, the Model 3 Performance’s 3.3-second acceleration from 0-100 km/h is faster than that of the ET5.

Moreover, Tesla has also developed a Track Mode for the Model 3 Performance, in which owners can freely set the motor bias percentage, adjust the different output torques of the front and rear motors, adjust the level of control of the electronic stability system for the vehicle, and adjust the strength of energy recovery.

Tesla’s core logic is to create a pure electric driving machine with high playability. As the chassis of the new BMW 3 series becomes softer and softer to cater to the consumer market, Tesla’s product strategy has been highly praised by many driving enthusiasts.

What about NIO? NIO is not like that.

The ET5 is obviously a model that focuses on power performance, but NIO has also thought about many other things besides this. In addition to the aforementioned layout for energy recovery and intelligent driving, the ET5 also debuted a critical thought from NIO: the PanoCinema panoramic digital cockpit.

Regarding the cockpit of intelligent vehicles, the only consensus in the entire industry is that it has not been reached. Different underlying operating systems, screen layouts, interaction standards, and software ecosystems are all continually evolving. The fragmentation of the entire industry has to some extent slowed down the speed of iterative updates in the overall experience.NIO chose to promote the integration of AR and VR into the car cabin, which was both unexpected and reasonable. Specifically, NIO collaborated with AR technology company Nreal to develop an exclusive AR headset that can project a super large screen equivalent to 201 inches at a distance of 6 meters, and a VR headset jointly developed with VR interaction technology company NOLO VR that can achieve 4K-level display.

In addition, NIO equipped the cabin with a 1000W-level 7.1.4 Dolby panoramic sound system composed of 23 speakers, and integrated the vehicle controller’s computing power and data interface calls for new software design.

All of this points to NIO’s attempt to redefine the audio-visual entertainment experience of intelligent vehicles, which is not only a greater exploration than the Model 3 cabin but also a new attempt at the forefront of the entire industry.

Whether PanoCinema panoramic digital cabin of ET5 will succeed is unknown, but it is clear that an endless sea of screens is not the ultimate destination of intelligent cabins.

Furthermore, although we have already spent considerable space discussing NIO Power earlier, and although Tesla has a quite extensive Supercharger network layout in China, we still need to mention NIO’s battery swap network, which has a fundamental difference from other brand’s energy replenishment systems in their high-speed layout.

As of now, NIO has connected the Jingha, Jinghu, Jinggangao, Hukun, and the Chaoshan Highway in the Yangtze River Delta, and the Jingjinji high-speed loop, and NIO’s long-term goal is to build a high-speed network that covers the five vertical and three horizontal lines of the Beijing-Tianjin-Hebei, Yangtze River Delta, Guangdong-Hong Kong-Macao Greater Bay Area, Chengdu-Chongqing, and Central Plains Economic Zone.

When you look at it this way, the phenomenon-level hype of ET5 is actually reasonable: even though there is no car available for test driving yet, and even though exhibition cars cannot enter the cabin in the current situation, based solely on this publicly available production information, ET5 is enough to create a great stir in the luxury mid-size sedan market, regardless of the traditional camp or the emerging intelligent electric market.

So who does ET5 move the cake of? The answer may be, “I want it all.”

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.