Chinese electric car company Nio is now up and running in Norway, where its unusual business model is being put to the test
Exactly five months ago Chinese electric car maker Nio announced its intention to enter Norway, and last Friday it opened the doors the Nio House Oslo, its first showroom in Europe. It plans to enter Germany next year, and is counting on export markets for expansion as China becomes increasingly saturated with EV (electric vehicle) makers.
Along the way, Nio seems determined to set itself apart from the traditional way carmakers do things.
The usual practice for a car company is to design and build its products, then appoint dealers and let them do the work of finding customers and taking care of them. But Nio’s approach in Norway has been to foster an unusually close relationship with its end users.
Like Tesla, Nio has a direct-to-customer sales approach. What’s different is how much it has let customers determine the way it does things.
In Norway, the seven year old company set up a User Advisory Board made up of potential buyers. It chose 200 advisors out of more than 650 applicants, and they became the first in line for the ES8, its flagship, 534 horsepower sport utility vehicle.
The User Advisory Board members met with Nio’s team several times, and their advice and suggestions helped shape Nio Norway’s operations, services and plans, the carmaker says.
Some of the results, like a car pick-up and delivery service or a showroom with an attached cafe and a homely lounge area (above), sound like what you would expect buyers of a premium car to want — the very cheapest way to get into a Nio ES8 in Norway costs 51,000 Euros (just over S$80,000, which would get you a Porsche Macan S in Germany).
But Nio is also trying out a battery-as-a-service scheme (BaaS). The ES8 was designed with 75kWh or 100kWh batteries than can be swapped out in three minutes, giving drivers between 375 and 500 kilometres of range each time.
Drivers get up to six battery swaps a month at a Nio facility designed specifically for the purpose. Norway’s government has approved one such Power Swap station 30km south of Oslo, the nation’s capital. Nio aims to have 30 of them in the country by the end of 2022.
Interestingly, opting for BaaS lowers the purchase cost for the customer. Without battery subscription, the 75kWh versions of the Nio ES8 are 9,000 Euros more expensive. The 100kWh versions cost 16,000 Euros more.
Instead of paying full price for the cars, drivers can opt for BaaS at 141 Euros a month (for the 75kWh battery) or 201 Euros (100kWh).
According to Nio, doing it this way is also beneficial to the batteries themselves. “Offering battery swap is an efficient way of extending the battery lifetime and thereby the lifecycle of electric vehicles,” says Marius Hayler, the general manager of Nio Norway. “The technology facilitates both sustainability and convenience for our users.”
Nio is doing other things differently. While it has one service and delivery centre in Oslo, it has also appointed authorised service partners in four other larger cities. It says the third-party centres all score highly on customer satisfaction, and will offer “the same complete suite of services that Nio provides from its own service and delivery centre.”
The company is also bundling data plans with its cars and will give owners 8GB a month for the first six years of ownership. It is throwing in free roadside recovery, but for an astounding six years.
The message here seems to be, buy a Nio ES8, and then let us take care of everything, from your battery needs to your data connection to taking the car for servicing. All without the help of a dealer.
Whether Nio’s business model is workable in Norway and other developed car markets has yet to be proven, but the company has at least shown that it can work quickly when it makes up its mind to enter a market. It opened its first outlet in just “147 hectic days”, says general manager Hayler.
But that speed might well be a function of Nio’s small size. Tesla is still considered an upstart even though it is on track to sell one million cars a year, yet by production volume Nio is only one-tenth the size. Perhaps it can afford to do things its own way because it is still tiny.
Like any relatively young EV firm, however, it hopes to eventually to sell millions of cars a year. It is one thing to be close to a few hundred or even a few thousand Nio drivers in a country, but quite another to maintain close relationships when those numbers grow.
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