China-based EV maker NIO(NYSE:NIO) has commenced the development of a mass-market model at its Hefei manufacturing base in China’s Anhui province according to Benzinga. The model will be positioned at a tier below its existing SUV models and the sedan models, such as the ET5, scheduled to be available later this year. NIO is reportedly targeting an annual production capacity of 60,000 units.
Why it matters
While NIO’s initial focus on the higher-end segment of the market gave the company a head start, since higher-end consumers in China were indeed among the earliest adopters of EVs, it is critical for the company to launch mass-market offerings in the next two years.
News Timeline
During NIO’s post-earnings call in Aug last year, CEO William Li confirmed that the company would launch a sub-brand, marking its entry into the mass market.
Li hinted at changing the different brand name mainly because NIO has made a name for itself as a maker of premium vehicles and it may not wanted to dilute the NIO brand’s positioning.
He noted that the relationship between the NIO brand and the new brand would be similar to that between Lexus and Toyota, and Audi and Volkswagen.
Last year, there were a lot of rumors about the NIO sub-brand, especially when JAC started a tender for the construction of a production line for JAC-NIO’s 60,000-unit-per-year model codenamed “Gemini” at the end of April, and the topic was hotly discussed.
See Also: Barclays has an ‘Overweight’ rating on NIO.
Barclays analyst Jiong Shao said concerns about NIO’s growth “should now be alleviated” as the company will double the capacity of all its current factories in March. He has a target price of US$34 on NIO stock.
While NIO’s initial focus on the higher-end segment of the market gave the company a head start, since higher-end consumers in China were indeed among the earliest adopters of EVs, it is critical for the company to launch mass-market offerings in the next two years.
