r/nio
NIO Making Smart Moves in Europe
NIO's retrenchment in Europe is a smart move to stop wasting resources and refocus on China.
- Management is adapting by retrenching in Europe, stopping the waste of capital.
- Refocusing resources on the Chinese market will better secure NIO's future.
For a long time now, I've felt that the EU is not a good market for NIO to expend resources in for many reasons.
NIO is a luxury product and luxury buyers don't buy based on actual quality but more so are motivated by prestige and what a brand signals to the public. The average EU BBW buyer simply will not pay a premium for NIO when NIO does not have the same history and status in EU markets, despite NIO having a superior product.
One of NIO's strongest selling points is its customer service and NIO Houses that foster community. It's nearly impossible for NIO to replicate in EU because the customer service culture is so different and to find people in EU of the same caliber as in China, the salaries would be enormous. Retail space leasing is also far more expensive in EU cities than in China.
Lastly, NIO's moat, battery swap stations, face byzantine EU regulations that are unwelcoming to new technology and especially Chinese companies. The cost of building, installing and maintaining battery swap stations in the EU is minimum 3 times higher than in China, without ROI. Furthermore, given the current political climate, the EU has shown they are willing to illegally and arbitrarily seize assets of Chinese companies like Nexperia, so it would be incredibly stupid for NIO to invest billions in NIO Houses, battery swap stations or factories in the EU that could be seized at any time.
What I love about NIO management is they have shown flexibility and willingness to adapt when poor decisions are made. Not enough market research was done before NIO entered the EU, and a lot of resources have been wasted.
NIO is not BYD or Xpeng that are selling low priced, mid priced vehicles that don't need special infrastructure or high expertise sales teams. While pulling out completely is not an option, the retrenchment by NIO is incredibly good news because every dollar spent in the EU is practically flushed in a toilet whereas every dollar spent in China helps secure NIO's future as the leading pure EV company in China.
We are from Germany and have 3 NIOs in our family. While I support the current hold on any invest in Europe to stabilize the company through focus in the home market, I have to say it is annoying as a customer and surely not supporting the image of NIO here. We are basically at a point in which there is not enough employees to even fulfill the few orders that are coming in. Service is really terrible at the moment for existing customers. I love our cars and I hope NIO will gain the resources needed to start a second, more efficient attempt on our market. Everyone I talk to is amazed by the cars.
Thanks for bringing the perspective of a user from Germany. I think too that NIO should consolidate the balance sheet before further investing in EU. I think that anyway, the second wave to EU is inevitable… it is just a matter of time
Thax for taking one for the team
Tariffs are the biggest barrier nowadays in Europe. NIO will have to strategise how to avoid those tariffs that are making cars out of price, either local manufacturing or partnerships with another car manufacturer. Europe is definitely a market for NIO premium vehicles but prices need to be aligned with Mercedes and BMW
They are cheaper than BMW and Mercedes compared by sales price. However, the models available are lacking in charging speed due to batteries being mostly A-Type, high BaaS fees and lack of price reductions for company leasing purposes. This is how most high class vehicles are sold in EU. You can get German cars dead cheap in company leasing
They just changed to this approach in Denmark, operating through a local dealer (who also sells BYD and Hyundai). It's is still a very limited portfolio of cars though. Only the ET5T, the EL6 and Firefly are available afaik.
The NIOs just got cut around 35% which is a huge price reduction, furthermore BaaS will not be available, and you can only buy them including the battery. Still the NT 2.0 platform though. Let's see if they can manage to sell some cars with that strategy here.
NT3 vehicles currently available are not suitable for European roads and cities due to their immense size, I think. I would appreciate NT2.5 ET5s and ES6s but I understand that they will not bring the 2.5 models with possible 3.0 versions of their line up of smaller cars on the horizon with the high regulatory effort of homologization
They just stated in a user meeting that there is no timeline for expansion of PSS in europe, and we don't have a single PSS in Denmark, thus they discontinued it. So they wouldnt be able to sell it with BaaS. Also, no one in Denmark believe in that system, as Denmark tried it back in the days (2014 i believe). It failed hard du to lack of support and immature technology. And if the Danes cant do it, then noone can, danish "jantelov" at it's finest, not saying it's rational, but it's just how Danes are.
The "the cars are too big" which they stated are not due to the roads, it's due to market analysis that shows European just dont buy a lot of cars in that segment. Pretty much only in the Nordic countries. The base size on NT 2.0 to NT 3.0 is the same when you compare them model to model. They just dont want to import the ET7, ET9, ES8 and ES9 due to their shear size and lack of demand, in an already saturated market.
I think you're absolutely right. Speaking as a NIO supporter based in China, establishing a strong foothold in Europe is the ultimate dream. However, looking at the practical side, NIO has only recently stabilized and achieved profitability in the domestic market. The 5566(ET5 ET5T ES6 EC6) series is scheduled to upgrade to the NT3.0 platform next year, and I firmly believe next year will be a breakout year for them. If everything goes smoothly, 2028 will see NIO re-entering the European market in full force, backed by a far more competitive and mature product lineup.
I wonder if there is any potential partnership to be had with a European or North American auto maker that would limit the effect of tariffs on Nio and help with brand adoption/funding for infrastructure build out for swap stations?