Author: Green Leaf

This is an article that should have been published after NIO Berlin 2022, but it’s worth writing about, so here it is now.

There are two main reasons for this: “Car companies going global” and “NIO going global”.

You might be wondering, “If car companies are going global, doesn’t that include NIO?” Well, yes and no.

The concept of “car companies going global” is easy to understand. With the development of new energy vehicles, it’s a major opportunity for Chinese car companies to truly achieve cross-border operations. When domestic car companies go overseas, they’re essentially selling cars in a larger market, just like Volkswagen, BMW, Mercedes-Benz, and Renault did when they entered the Chinese market.

Of course, NIO’s global expansion is also based on this opportunity, but with the added focus on “selling electricity”.

So, I will now discuss several aspects:

• NIO’s battery swapping network in Europe
• Why Europe is a good market for “selling electricity”
• NIO’s energy strategy in Europe
• The underlying logic of NIO’s subscription model in Europe

NIO’s Battery Swapping Network in Europe

At NIO Berlin 2022, NIO launched three models, the ET5, ET7, and EL7, and officially announced its expansion into four European countries: Germany, the Netherlands, Denmark, and Sweden.

Many netizens cheered for NIO’s global expansion with headlines such as “NIO enters BBA’s home turf” and “Chinese car companies go global”, but compared to the excitement of netizens, NIO’s CEO William Li seemed calm.

Li often says, “We decided to go to Europe when the company was first established, and we believe that NIO’s system will have a big impact there.”

This might be easily understood as NIO, as a “car company”, having a big impact in Europe, but I am here to tell you that Li’s impact is based on “energy trading” on top of the foundation of new energy vehicles.Therefore, if someone thinks that NIO’s European debut was just a facade and more about appearance than substance, aimed at impressing the capital market, they need to rethink the fundamental differences between “car enterprises going global” and “NIO going global.”

As of now, most other car companies’ strategies for going global involve cooperating with local dealerships to sell cars, whereas NIO is the only Chinese car company to build supplemental power stations in Europe. However, after Li Bin and Qin Lihong drove across Europe, they found that the penetration rate of electric cars in Europe was lower than expected but that the supercharging stations were better than expected.

So, why does NIO continue to insist on building a supplemental power system in Europe?

Firstly, the key factor is still the “battery swapping” technology, which will be the key to NIO’s success in Europe.

No battery swapping, no NIO

Battery swapping stations themselves are large advertising boards. As NIO enters the European market with a new brand, the swapping stations can be transformed into offline touchpoints to introduce more people to NIO.

But the deeper reason is that the “battery swapping” technology is the foundation of NIO’s energy layout.

Battery swapping stations and Virtual Power Plants (VPP)

To understand NIO’s energy layout in Europe, one must first understand battery swapping stations, and to understand battery swapping stations, one must understand the concept of VPP. Dr. Shen Fei previously explained NIO Power’s efforts in the past few years.

Several things that battery swapping stations can do were mentioned:

Orderly Charging

The blind construction of charging piles can only resolve the “charging” problem, but not the “electricity” problem.

As the penetration rate of electric vehicles increases rapidly, electric vehicles will become a new type of load in future power grids. Charging piles are the mainstream method of supplementing electric vehicle power. Due to the time and space uncertainty of electric vehicle charging, disordered charging will cause significant shocks to the grid.

Orderly charging uses technological means to guide and encourage users to charge their vehicles when the grid has an electricity surplus and to avoid charging when electricity is scarce.

Renewable energy sources such as wind power and photovoltaic power are greatly affected by season and weather and generally have problems with fluctuation and controllability. In particular, wind power, because of its randomness and anti-cyclic nature, is known as “garbage electricity.”Most wind power peaks at night when the wind is strong. Charging during off-peak hours at night can absorb more wind power, play a role in peak-shaving and actively avoid peak demand.

This balances the load curve of the power grid, alleviates the supply tension during peak hours, and utilizes the price difference between peak and off-peak electricity to provide price incentives to car owners, achieving lower electricity costs.

For many years, NIO has participated in the national power grid wind power consumption plan in Beijing-Tianjin-Hebei area, launched off-peak charging activities to encourage NIO car owners with a home charger to charge between 00:30-7:00 every day, and give NIO score rewards for participation.

In the second phase, a total of 4,241 users participated, with a total off-peak charging of 2.36 million kWh and a 167% increase in nocturnal charging. The proportion of off-peak charging has increased significantly.

Swapping stations are better at actively “off-peak charging” than charging piles. Through NIO’s energy cloud, user charging needs can be predicted, combined with local peak and off-peak electricity prices, and suitable off-peak charging strategies can be established for each swapping station.

According to official NIO data, there were a total of 1,067 swapping stations in China in August, with 575 participating in off-peak charging, a proportion of nearly 60%. The off-peak electricity increased from 12% to 20%, and displaced 4.1 million kWh of electricity in a month.

Frequency Regulation

Swapping stations have advantages in frequency regulation. They can accept power grid dispatching commands through a private network connected to the grid dispatching center to achieve minute-level or even second-level power response and participate in frequency regulation efficiently.

Taking Hefei as an example, on the evening of August 15, the Hefei Power Dispatching Control Center issued instructions to 15 NIO swapping stations in the city.

Within one minute, the Hefei power grid reduced the load by a total of 1.4 MW, with an average power reduction of about 100 kW per station, and each battery only increased charging time by about 5 minutes.

On the other hand, swapping stations that can discharge power back to the grid will be put into operation, further exploring the interaction between charging facilities and the power grid.

According to internal estimates by NIO, each second-generation battery swap station has the storage capacity of 600 to 700 kWh, and when a user replaces a battery, the remaining battery can discharge to the grid for 5 to 10 minutes, and can always accept instructions from the grid without affecting the user’s battery swapping experience.

Dr. Shen Fei, who came from the power grid industry and originally wanted to start a business in the field of energy internet, has discussed why he joined NIO:

“I wasn’t interested in the electric vehicle industry at first. When fast charging piles at that time had a maximum power of only 60 kW, which was only one-thousandth of a power grid device, it was not stimulating at all. But when Li Bin said he wanted to do battery swapping, I was energized as soon as I heard about it.

My imagined battery swapping station is “a touchpoint for collecting and storing energy distributed throughout the city,” which, in addition to charging electric vehicle users, has a lot of potential in the future when combined with energy storage.”

Looking back on NIO’s attempts in China, Dr. Shen Fei really treated battery swapping stations as energy storage stations, and when Li Bin invited him to be in charge of NIO Power, he naturally did not stop at just serving users, but had a bigger vision.

NIO’s Energy Dream

NIO is the Chinese automaker that is most closely associated with State Grid, and compared to other automakers who make a lot of noise but do little to cooperate with the grid, NIO has been working hard to coordinate with the grid.

When Li Bin established battery swapping as NIO’s long-term strategy, the company became closely linked with energy.

Battery swapping stations can become virtual power plants. What is a virtual power plant?

A virtual power plant (VPP) is:

“A solution that enhances power system flexibility by aggregating and centrally dispatching distributed energy resources.”

VPP aggregates and integrates independent distributed energy resources into a unified whole, and dispatches their power generation, energy storage, or flexible power demand through central information technology monitoring, prediction, and optimization.

This allows them to participate in power market transactions and provide flexibility to system operators.Simply put, a virtual power plant, regardless of appearances and concepts, is essentially about market-based trading in electricity.

This is also the main reason why battery swapping stations in China have difficulty making profits.

Many people think that the battery swapping model is unsustainable due to high costs, because they only see that battery swapping stations can only make money from car owners. However, battery swapping can not only make money from car owners, but also from electricity market transactions.

However, China’s process of electricity marketization is slow, mainly due to energy security and other factors, while Europe is different. They have implemented “electricity marketization” very early, and battery swapping in Europe will be more profitable than in China.

Remember, this is one of the core goals for NIO in Europe. NIO intends to participate in Europe’s “power trading” and achieve real profits.

Electricity Market

The electricity market is divided into the “medium and long-term market, day-ahead market, intra-day market, and real-time market.”

In terms of time, “electricity trading is carried out from long-term contracts and short-term contracts to the intra-day market deadline, while ancillary services are carried out from long-term contracts and short-term contracts until real-time dispatch.”

The arrangement of the trading system can be a centralized trading market, such as the electricity exchange (EX) or electricity pool (Pool), or a decentralized trading market, such as bilateral contracts (BT) or over-the-counter (OTC) trading.

The way market prices are determined can include using the pay-as-bid (PAB) method or the system marginal price (SMP) method. In Europe, for example, the transnational balancing market is operated by the transmission system operators (TSO) of each country participating in the ENTSO-E organization.

For the medium and long-term market, explicit auctions are used to auction cross-border transmission capacity separately, and are cleared at the marginal electricity price in descending order of market bids.

However, explicit auctions have several drawbacks:

• There may be a mismatch between purchased capacity and actual transmission capacity demand;- Possible mismatch between purchased capacity and actual trend;
• Price signals formed by different transaction mechanisms cannot be timely transmitted to the energy market and feedback corrected.

Therefore, the day-ahead and intra-day markets, which attach more importance to timeliness, adopt the implicit auction.

The execution of implicit auctions requires technical support for the physical connection of the transmission network and transaction coupling calculation, which optimizes the cross-border transmission channel capacity and energy transactions for unified clearing.

The advantage of this mechanism is that it can automatically match the corresponding transmission capacity for cross-border energy transactions, maximize the effective allocation of transmission resources, avoid the problem of opposite trends, and provide more accurate price signals for market transactions.

In the day-ahead and intra-day coupled markets, different market transaction mechanisms exist in various European countries.

Taking EPEX SPOT, the power exchange of the five countries that NIO has entered in as an example:

The EPEX SPOT day-ahead market starts at 9:30 on the day before the operating day, aggregating member state market participant application information and cross-border channel available transmission capacity.

Conduct centralized bidding clearing, and at 12:42, the market will announce a clearing result. If the market clearing price exceeds the market price threshold of each country, the market will open for 10 minutes during the period when the market exceeds the price threshold, and market participants can adjust their application information.

The second clearing result will be published at 12:55 for confirmation by various national trading centers and TSOs.

The winning bid power curves and cross-border channel capacity allocation will be announced at 14:00.### Continuous Trading in Intraday Market

The intraday continuous trading market offers three trading products, namely, 60-minute continuous trading, 30-minute continuous trading, and 15-minute continuous trading, which are customized for different countries’ trading systems.

Except for Nordic countries starting at 2:00 pm one day prior, other countries start the continuous trading at 3:00 pm one day prior and it continues until the market delivery time. Member countries participate in the intraday continuous market based on their respective market demands, and the trading products and delivery end time vary from country to country.

The price of the European electricity market is often seen in the news, such as “negative electricity price” and “French electricity prices soared 400%.” However, this only concerns the trading subjects participating in the electricity market and does not directly reflect on electricity bills. Therefore, do not blame rashly when you see the news.

Usually, the electricity bill is adjusted only after the contract is changed. Although the electricity bill in Europe has indeed increased a lot, it is not as exaggerated as the news describes.

Taking Germany as an example, the electricity bill has been maintained at below 50 euros per MWh for many years, with only a few years’ exceptions.

1 MWh = 1000 kWh, and 1 euro is valued at 7.25 RMB, which means that the long-term cost of German electricity is below 0.36 RMB/kWh.

This is the trading price. To promote renewable energy development, high additional fees and taxes need to be added to the ordinary household electricity bill in Germany. Therefore, the cost of household electricity in Germany is not expensive, but the taxes are high.

However, since last year, affected by the rising prices of oil and natural gas, the cost has doubled directly to 100 euros per MWh, and this year it has exceeded 200 euros per MWh. If the taxes are not lowered, the cost will be transmitted to the electricity price, and an inevitable price surge will occur.

Here’s another chart:

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This is an electricity bill for an ordinary family in 2020 and 2022. The energy cost, circled in red, used to account for only 1/4 of the electricity price, while the grid fee accounted for another 1/4, and the rest were surcharges and taxes, especially the EEG surcharge circled in green.

Since 2021, Germany started to reduce and will completely terminate the EEG renewable energy surcharge in July 2022. In the past, it accounted for 1/5 of the electricity price. After the EEG surcharge is completely cancelled in 2022, the energy cost has surged to nearly 50%, while the grid fee still accounts for 1/4.

The reason why German electricity bills have not surged significantly is circled in purple.

The government proactively cancelled taxes to alleviate price increases.

After the cancellation of the EEG surcharge, the era of negative electricity prices may also come to an end. The existence of negative electricity prices was because of subsidies from surcharges. After surcharges disappear, how to reduce wind and solar curtailment has become a new task.

VPP (Virtual Power Plant) is one of the solutions.

Ancillary Services

While promoting renewable energy in Europe, the European Union recognizes the harm of the renewable energy instability to power systems, and thus launched the EU-SysFlex project.

The goal of this project is to identify and integrate issues and solutions related to large-scale renewable energy, formulate plans, and provide practical help to ENTSO-E.

Renewable energy poses the following challenges to power systems:

• Lack of frequency control
• Lack of voltage control
• Unstable rotor angle
• Grid congestion
• Decreased system resilience and recovery ability

Frequency control has important generality in auxiliary services, and is the core of auxiliary services. Therefore, products targeting frequency control have the highest proportion in auxiliary services.

Auxiliary services mainly deal with the capacity problem of the power system, while the power market mainly provides electricity.

After the day-ahead market is closed, the TSO purchases balancing services in the balancing electricity market to solve real-time supply-demand imbalance and frequency deviation of the system, which are divided into primary frequency control, secondary frequency control, and tertiary frequency control.

• Primary frequency control only has capacity prices.
• Secondary and tertiary frequency controls require separate positive/negative reserve pricing.

The provider charges for the actual capacity used and the balancing electricity, and the cost is paid by the balancing responsibility party that causes the reserve to start.

The capacity price has been included in the implicit auction in the intraday market transactions.

According to the German Energy Industry Act and Renewable Energy Act, when the power grid is blocked, the TSO can request redispatch, which means reducing the grid connection of generation in one place while increasing it in another.

Redispatch is to address the inconsistency between power trading and physical transmission faced by the power wholesale market. Participants can get corresponding economic compensation for participating in redispatch to offset the costs incurred for this purpose.

If redispatch still cannot meet system requirements, the TSO can take measures to restrict grid connection to reduce the grid integration of renewable energy and further adjust power supply.

On October 1, 2021, the revised Grid Expansion Acceleration Act took effect, and the qualification for participating in redispatch was lowered from the original 10 MW to 100 kW, making it easier for VPPs to participate.

Profit Prospects of VPPs

Taking Europe’s well-known VPP operator Next Kraftwerke as an example, it aggregated 9000 MW and achieved a total revenue of 595 million euros in 2020.

Let’s take Next Kraftwerke’s auxiliary service bid in Germany as an example:

With the accumulation of data and the advancement of forecasting technology, the power market has not only promoted technological progress, but also saved money, from the need for a large amount of secondary and tertiary frequency modulation at the beginning to a trend of stability now.

The bidding cost of primary frequency modulation also shows this trend:

It can be seen that from 2017 to 2020, the bidding cost of Germany, code-named DE, has been continuously decreasing, reaching its lowest point in 2020, and then rapidly rising in 2021 due to the sharp increase in oil and natural gas prices. In 2022, due to the impact of the war, the supply of natural gas in Europe has decreased, causing the cost of gas-fired frequency modulation to soar, and increasing investment in renewable energy. The instability of renewable energy requires a strengthening of frequency modulation capabilities.

The combination of these two factors is expected to lead to a long-term bull market in the European ancillary service market.

This is exactly the right time for NIO to enter the market.

The recent outbreak of the energy storage market in Europe is not without reason. The cost of LFP energy storage per kWh is around 0.6-0.8 yuan, which is around 0.1 euros in terms of cost, and is sufficient to cover costs and generate profits compared to the high electricity prices in Europe.

Moreover, many of NIO’s practices in China can be directly applied to Europe.- In China, reverse battery swapping is an act of kindness and giving back to society by car owners, while in Europe, it is a profitable activity.

• In Europe, the carbon trading price is higher than in China, as seen in the Blue Spot Plan.
• Photovoltaic and battery swapping co-construction has become the energy storage pool for community micro-grids.
• Even with V2G, electric cars should be mobile energy storage devices according to Shen Fei’s concept. They can be like sponges for the power grid, able to charge and discharge without worrying about battery life since they only have the right to use the car.
• Qin Lihong mentioned the ripple effect in brand operation. In the new era, user participation is not enough; ownership is also necessary. NIO invests a lot of effort into creating a sense of ownership for its users. Many users consider NIO to be their creation and part of their identity, providing them with emotions, hope, and accompanying their growth in life. The purpose of marketing is to generate emotional connections with users, so they feel that NIO is a vital part of their lives and growth.
• European car owners who participate in NIO’s activities can not only respond to environmentally friendly concepts but also receive tangible rewards. This will make them feel recognized and contribute to NIO’s energy dream.
• Therefore, it is not surprising that NIO’s first factory overseas is not car-related but rather NIO Power’s battery swapping stations and charging services. NIO does not only intend to sell cars in Europe, but also participate in energy system construction and services, on the basis of new energy vehicles.
• However, it is essential to acknowledge the potential risks alongside the dreams. If NIO’s fantastic vision comes true, it will change the automobile and energy industries. But, it does not mean that everything will go smoothly.
• The main potential risks include financial risks because both battery swapping stations and subscription models are high-capital business models. Thus, finding sustainable funding is key to success.Although Li Bin mentioned that NIO has reached cooperation intentions with several leasing companies and third-party funds in Europe, in the context of rising interest rates, it is unknown how much of these cooperation intentions can be turned into actual investment.

Especially now that Europe is experiencing high inflation, which erodes purchasing power, consumers may tend to hoard cash for emergencies. If the turnover rate of the cars fails to meet expectations, will the interest on loans become a funding gap?

Overall, uncertainty is extremely high.

Geopolitical Risks

This is the biggest uncertainty, and NIO can’t do much except to place some heavy assets in Hungary, which is friendly to China. For others, all NIO can do is to do its best and leave the rest to fate.

However, this uncertainty may affect NIO’s entire plan in Europe.

NIO Subscription

After reading the section “About Energy” above, we can see that everything can be achieved with the premise of “a large number of cars”. This leads to NIO’s sales model in Europe.

NIO Subscription is a subscription model that NIO introduced overseas. It is essentially a variation of the common Leasing model in Europe and America. Therefore, to understand NIO Subscription, we must first understand what Leasing is.

Leasing is a long-term rental model where you lease a car from a car dealer, pay an initial fee, and then pay rent monthly. The lease term is usually several months to several years.

At the end of the lease term, you can choose to return the car to the dealer or buy the car at the remaining value. However, buyers often do not choose to buy the car because the remaining price is still expensive and is not cost-effective.

Advantages of Leasing

Choosing Leasing has the following advantages:

1. Relieving financial pressure.## Leasing vs Buying: which is better for you?

Leasing a car has become a popular alternative to buying a new or a used car. It allows the lessee to enjoy the benefits of driving a car without actually owning it. However, there are some downsides to leasing that you should consider.

Advantages of leasing a car

1. Lower monthly payments.

Leasing a car typically results in lower monthly payments compared to buying a car because you’re only paying for the use of the car for a set period of time.

2. No hassle of selling or maintaining the car.

When the lease is up, you simply return the car to the dealer without worrying about the resale value or maintenance costs. You can also trade your car in for a new one every few years.

3. Tax benefits for businesses.

If you lease a car for business purposes, you may be able to deduct lease payments from your business taxes.

Disadvantages of leasing a car

1. No ownership.

You don’t own the car when you lease it, so you can’t sell it or modify it as you please. You also have to return the car when the lease is up.

2. Mileage limits and additional fees.

Leasing contracts typically come with mileage limits. If you go over the limit, you may have to pay additional fees. Leasing can also be expensive if you want to add extra features or insurance.

3. Higher costs in the long run.

Leasing a car usually costs more in the long run than buying a car because you’re always making payments, and you don’t have anything to show for it at the end of the lease term.

Who should consider leasing a car?

Leasing a car is a good idea for people who want to drive a new car every few years and don’t want to worry about selling or maintaining it. It’s also a good option for businesses that need cars for their employees and want to take advantage of tax benefits. However, if you want to own a car and keep it for a long time, buying a car may be a better option for you.- Cash-strapped individuals

This is the basic customer group for leasing.

Comparison between NIO Subscription and Leasing

NIO Subscription merges NIO’s services into standard configuration and is an option for leasing customers.

NIO Subscription’s mileage is limited to 1,250 kilometers per month and 15,000 kilometers per year, and unused mileage can be accumulated. Exceeding the limit incurs different fees depending on the model, ranging from 0.22 to 0.3 euros per kilometer.

This is similar to leasing, with NIO offering a higher mileage limit.

Worry-free Service

Insurance is included in the rental fee for NIO Subscription and winter tire service is provided without extra charge as “worry-free service”.

However, there is a difference from China as NIO does not provide free pick-up/delivery and paint maintenance. These need to be purchased additionally and there are no value-added coupons available.

For 2022, NIO is offering early subscribers free access to these services as trial benefits.

Additionally, while NIO is responsible for vehicle repairs, the car owner still needs to pay for it. The maximum fee limit is 500 euros. The car owner needs to pay in full if repair is below 500 euros.

NIO Power

Due to battery property rights issues, BAAS users in Europe cannot use swapping stations, which equates to NIO Subscription privileges. Customers can enjoy swapping station services.Free installation service for 11 kW home charging piles is provided.

NIO Europe App has been launched and has access to 380,000 charging piles in Europe, which can be directly accessed by NIO NFC cards.

Therefore, NIO’s subscription pricing is not cheap. It not only includes car rental but also worry-free services and NIO Power monetization.

Compared with leasing, NIO’s subscription model does not have complex options and no need for bargaining. NIO adheres to the philosophy of direct sales, which can face users directly. To become a global user company, NIO must insist on direct sales.

Adapting to local conditions, the labor cost in Europe is high, and the awareness of paying for services is stronger. Some free services in China must be charged in Europe. NIO cannot lose money to gain popularity.

Qin Lihong said:

“It is reasonable for us to have a similar price to some Porsche and Mercedes-Benz models. This is the level of NIO’s product strength and value that should be.

The subscription price contains a lot of services. It cannot be directly compared with the price of a car. Other brands add many surcharges on top of the car price to win a comparative advantage based on the starting price.”

Why does NIO promote the subscription model in Europe?

The underlying logic of NIO’s subscription model

“Ripple, when we drop a water droplet on the surface of a pond, the ripples spread out in circles, and this is the marketing model that NIO hopes for. We first influence the people around us and let them influence more people.

In this era, every person is a medium, and the dissemination environment presents a decentralized way. A brand or a single media cannot rely on its authoritative and large-scale voice to influence the whole society. Such a scenario no longer exists.”>We must rely on the ripple model, using a drop of water to fall into a pond, so that each drop of water can produce more layers, with intersections between layers, in order to influence the consumer’s purchasing mindset.

The traditional emphasis of car sales is on pre-purchase dissemination, through pre-sale services, to let consumers understand the brand and generate favor, and then ultimately purchase. NIO, on the other hand, focuses its energy on the post-purchase process.

The core goal of NIO’s marketing is to “improve the satisfaction of existing users, let them have a deep emotional connection to the brand, and use old users to bring new users into NIO’s circle of friends”. This is how Qin Lihong introduced NIO’s ripple model.

In order for NIO’s ripple to work, a continuous and uninterrupted supply of water drops is essential, which is why defining user profiles is important.

Li Bin mentioned at the media communication session after the press conference, why NIO Europe focuses on the subscription model:

“In most European countries, the mainstream model for high-end cars is ‘public transit for private use’.

Companies either buy or rent, providing a certain level of staff with company cars for business or welfare purposes, and employees must pay the “company car tax” for this benefit.

Companies that purchase new energy vehicles can not only enjoy a variety of tax and fee discounts, but also create a green image, and employees can save a large amount of company car tax.

In Europe, over 50.2% of pure electric car registrations come from businesses.”

The European high-end car market is less than 2 million vehicles per year, compared to China’s over 4 million vehicles per year. The market itself is small, and the high-end pure electric market is even smaller.

But because it is small, this segmented market is still a virgin territory. Whoever can first capture the users’ mindset will dominate the future high-end pure electric market.

The NIO subscription model is more suitable for corporate leasing. In the European pure electric high-end car market, corporate clients account for a significant share, and they have tax and environmental image needs.

It is not difficult to understand why Li Bin talked about global warming, NIO Clean Park, and NIO’s cooperation with the World Wildlife Fund and the Danish Nature Preservation Association at the beginning of the European press conference.He wants to convey that NIO is more than just a technology company, but also an automaker committed to environmental protection and sustainable future.

Many people believe that such intangible values are useless, but in addition to the vehicle itself, conveying values is even more important for high-end customers, especially in the European market. How can customers establish emotional connections with a Chinese company like NIO?

Environmental protection is a common ground for NIO and Europe, especially for corporate users who place a high emphasis on image.

On the other hand, the iteration of smart cars is getting faster and more like smartphones. The performance flagship that used to dominate the market soon becomes an ordinary product.

However, cars are high-priced consumer goods and cannot be replaced as easily as smartphones unless they are rented for experience.

Isn’t this exactly the profile of leasing customers who frequently change cars and those with corporate tax requirements?

Since customers value usage experience more and don’t insist on ownership as much, NIO’s subscription model has emerged.

NIO does not have time to slowly promote itself in China. Instead, it uses a ripple model, which is very trendy, and has successfully become a trendsetter in a market full of doubts.

Things are different now, and everyone is learning from each other. NIO has little time left and needs to speed up the ripple effect.

The subscription model aligns with the European car usage habits and, by increasing the turnover rate of rental vehicles, can allow more people to experience and know about NIO, accelerating the process from 0 to 1.

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.