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NIO ET5 Touring pricing ‘a pleasant surprise,’ says Morgan Stanley
While touring cars might be relatively niche compared to sedans, some comparable offerings in the market can still deliver monthly sales of about 10,000 units on a consistent basis, Tim Hsiao's team said.
(Image credit: CnEVPost)
NIO (NYSE: NIO) officially launched the ET5 Touring yesterday, and its pricing looks competitive to analysts.
"Pricing of ET5 Touring is more competitive than we thought -- on par with the incumbent ET5 sedan at Rmb 298k+," Morgan Stanley analyst Tim Hsiao's team said in a research note sent to investors yesterday.
While the segment could be relatively niche, NIO management believes the ET5 Touring is likely to outsell its sedan version, the team noted.
In China, the available versions and pricing of the ET5 Touring are identical to those of the regular ET5 sedan.
Including the battery, the 75-kWh version starts at RMB 298,000 ($41,890) and the 100-kWh version at RMB 356,000.
Chinese consumers who choose to purchase the model using the BaaS (battery as a service) service will see the prices start at RMB 228,000 for both versions, with monthly battery rental costs of RMB 980 and RMB 1,680 respectively.
Compared to the regular ET5, the ET5 Touring has more rear-seat headroom, and more vertical space in the trunk, while it also has a lower driving position, and the option for electrochromic sunroofs, Hsiao's team noted.
"Such retrofits will help increase the TAM of the ET5 family by attracting users who attach greater value to the in-car space," the team said.
It's worth noting that in China, derivatives of sedans are a niche market.
However, the unexpected success of the Zeekr 001, the first model of Geely's Zeekr brand, has made such models increasingly popular.
For the full year 2022, Zeekr delivered 71,941 Zeekr 001s, reaching its goal of delivering 70,000 vehicles for the year.
While touring cars might be relatively niche compared to sedans, some comparable products in the market still manage to deliver monthly sales of about 10,000 units on a consistent basis, according to Hsiao's team.
In China, the competitive landscape in the touring market is relatively benign, with the main comparables coming mainly from foreign brands such as the Audi S4, Mercedes-Benz CLA and Volvo V60, according to the team.
Whether NIO can successfully ramp up sales of the ET5 Touring in the coming months to meet its goal of reaching 20,000 units per month in the second half of the year remains to be seen, the team said, adding that the company's management expects the ET5 family to contribute about 30 percent of sales.
The ET5 sedan, ET5 Touring and the new ES6 will dominate NIO's sales, Hsiao's team said.
NIO launched the new ES6, the most important model in its history, in China on May 24, with deliveries starting on launch night.
As with the new ES6, NIO produced some ET5 Touring vehicles in advance based on a combination of designer-recommended configurations, and its deliveries officially began today.
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NIO launches ET5 Touring in China with same pricing as regular ET5
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NIO’s urgency to capture volume and cut expenses finally here, says Deutsche Bank
With NIO's broad price cuts and the rapid rollout of new NT 2.0 models, it could see a considerabe sales rebound in the second half of the year, according to Edison Yu's team.
NIO (NYSE: NIO) management expressed a rare cautious approach to future spending during last week's earnings call, and this week let the purchase threshold for the entire lineup drop. To Deutsche Bank, this series of moves suggests that NIO is finally starting to show real urgency.
"Our main takeaway following 1Q earnings and hosting NIO management (CFO in person in NYC this week) is that the urgency to capture volume and cut back spending is finally here," analyst Edison Yu's team said in a research note sent to investors today.
With NIO's broad price cut and the rapid rollout of the new NT 2.0 model, its sales can rebound considerably in the second half of the year, paving the way for 20,000 units per month, the team said.
In addition, as NIO reduces spending on non-core initiatives, its operating expenses and capital expenditures should be much more controlled, the team added.
NIO reported weaker-than-expected first-quarter results on June 9, with gross margins falling to just 1.5 percent due to promotional activities.
The company's management said during the earnings call that NIO will manage its cash flow carefully, postpone some of its fixed asset investments and focus on the countries it has already entered in Europe.
NIO is confident that it will see sales of more than 20,000 units per month in the second half of the year, William Li, the company's founder, chairman and CEO, said at the time.
On June 12, NIO lowered the starting prices of its entire new model lineup by RMB 30,000 yuan ($4,200), but the previously free battery swap service several times a month became a paid option.
Yu's team said in the research note today that they applaud the move as demand for NIO's existing models, particularly sedans, has been struggling in recent months.
"In our view, pricing is an issue for getting incremental buyers considering premium BEVs in general have sold poorly this year," the team wrote.
Despite the ongoing platform changeover for NIO's three first-generation SUVs, combined sales of the Avatr 11, IM LS7 and XPeng G9 averaged only about 4,500 units per month this year, about half of what the Audi Q5 sells locally in China, the team noted.
NIO's pricing is the highest among the upstart brands. In addition to price adjustments, the company must effectively compete with internal combustion engine vehicle makers, and extended-range electric vehicle (EREV) makers, and enhance its brand appeal, Yu's team said.
The electrification of China's premium car market appears to be proceeding more slowly, which may be counterintuitive to those outside of China, the team said.
They explained further:
Based on our analysis of the premium SUV market (>300k RMB), the BEV mix is only 12% YTD, compared with PHEV (includes EREV) at 18%, leaving 70% for ICE.
This compares with the overall market that is 21% BEV and 10% PHEV, showing customer preferences are quite different depending on the sub-segment.
The team's interpretation of this is that the EREV value proposition is resonating with a broader audience than expected, and Li Auto has done a very effective job at maximizing.
In addition, Yu's team believes that NIO's brand appeal has hit a wall of sorts as it struggles to gain momentum outside of Shanghai and surrounding provinces and outside of financial and tech social circles.
The performance of NIO's best-selling ET5 is a case in point. Nearly 40 percent of the model's sales come from Shanghai and surrounding provinces, and while the ET5 theoretically has the broadest appeal among NIO's offerings, sales in the south have been quite poor, the team said.
"Moreover, based on our channel checks, affluent older customers simply are not buying into the brand (yet) and still prefer traditional BBA cars (i.e., greater loyalty)," the team said.
For investors, they are shifting to a less negative view as NIO's sales and cash burn trajectory appears to be reversing, the team said.
Depending on how the second half of the year plays out, NIO's stock price could remain volatile until there is a clear upward trajectory in sales, according to the team.
($1 = RMB 7.1236)
BREAKING: NIO cuts starting prices by $4,200 for all models and makes battery swap benefits optional
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Li Auto files for Li L9 variant without LiDAR
The price of the Li L9 without LiDAR could be at least RMB 40,000 less than the Li L9 Max at RMB 459,800.
(Image credit: CnEVPost)
When Li Auto (NASDAQ: LI) launched its flagship SUV, the Li L9, a year ago, it was only offered in the Max variant. Now, a lower-priced version may not be far off from release.
China's Ministry of Industry and Information Technology announced on June 15 the latest batch of models that will soon be allowed to be sold, as well as details on configuration changes to some existing models, with a Li Auto model included in the latter.
The public can submit feedback between June 16 and June 25.
The model number for the Li Auto vehicle is LXA6520SHEVX4, which is the same as the model number in the previous filing for the Li L9.
In the model's latest filing, LiDAR becomes optional, while other information remains the same.
Li Auto's naming of its models is similar to Apple's naming of the iPhone, using Max, Pro, and Air to distinguish different versions of the same model.
On June 21, 2022, Li Auto launched the Li L9, the company's second model after the Li ONE SUV.
Li Auto founder, chairman and CEO Li Xiang mentioned the model name Li L9 Max at the end of the launch event at the time when announcing the price, implying that the company could launch other variants based on it in the future, a report by CnEVPost at the time noted.
The other two Li Auto models currently on sale are the Li L8 and Li L7, both offered in Max, Pro and Air versions, with only the Max version equipped with a roof-mounted LiDAR supplied by Hesai Technology.
Both the Max version of the Li L8 and Li L7 cost RMB 40,000 ($5,620) more than the Pro version, while the Pro version is RMB 20,000 more expensive than both Air versions.
This means that the Li L9 without LiDAR, which may be launched in the future, will cost at least RMB 40,000 less than the Max version at RMB 459,800.
The current Max version of Li Auto vehicles use two Qualcomm Snapdragon 8155 chips as the cockpit chip, while its assisted driving system is based on two Nvidia Orin X chips, with a total computing power of 508 TOPS.
The Li L8 Pro's cockpit uses two Qualcomm Snapdragon 8155 chips and uses one Horizon Robotics Journey 5 chip in the assisted driving system.
The cockpits of the Li L8 Air, Li L7 Pro, and Li L7 Air all use one Qualcomm Snapdragon 8155 chip for the cockpit and one Journey 5 chip for the assisted driving system.
Li Auto says confident it will outsell German luxury brands in China in 2024
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