NIO is shaking things up by announcing a series of changes that affect its user benefits and pricing for all its models, including the ES6 and ES8 SUVs. The company is slashing prices by a cool $4,200 USD across the board and bidding farewell to its free battery swapping program. The new vehicle warranty will now last for 6 years or 150,000 kilometers, with a 10-year unlimited mileage warranty for the battery system. While users will still benefit from lifetime free roadside assistance and 6 years of free in-car connectivity, the lifetime free battery swap benefit has been given the boot.
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The move comes soon after NIO’s Q1 2023 financial report that showed a gross margin of 1.5% and a net loss of $657 million USD, compared to a net loss of $251 million USD in Q1 2022. NIO’s decision to lower prices may well be a strategic move to compete with Tesla, who’s been putting the squeeze on all car manufacturers.
For new vehicle owners, the warranty period has been shortened to 6 years or 150,000 kilometers for the entire vehicle, with a 10-year unlimited mileage warranty for the battery system. Users will now have to pay for battery swapping or recharge at home or at charging stations. However, NIO plans to roll out flexible charging and swapping service packages shortly.
Existing users who have already received their vehicles will maintain their original user benefits, including lifetime free battery swapping. However, users can opt to transfer their user benefits to a new NIO vehicle or forego their benefits for a discount of 30,000 to 50,000 RMB on the purchase price. NIO has over 330,000 existing users and will be doling out over 10 billion RMB on subsidies for this policy.
William Li, NIO’s founder, chairman, and CEO, commented on the company’s community forum in response to the announcement, stating that the adjustment had been deliberated internally for a while and had taken into account user feedback. He acknowledged that there were numerous factors to consider and that pleasing everyone wasn’t feasible.
In May of this year, NIO delivered 6,155 new vehicles, a dip from the previous month and year. From January to May 2023, the company delivered 43,854 new vehicles, a year-on-year increase of 15.8%. As of the end of May, NIO had delivered a total of 333,410 new vehicles.
It’s worth noting that NIO Power and Tesla’s Supercharger network are comparable products that offer high-quality, widespread, and costly battery swapping services. However, the demand for such services tends to dwindle as the product line becomes more affordable. By examining Tesla’s user base, it’s plausible to infer that NIO’s target audience for the NIO ET5, ET5 Travel, ES6, and EC6 models may not require the robust product offerings of NIO Power.