Since last year, the mid-sized pure electric SUV market has continued to see new entrants, and they all seem to have chosen to benchmark themselves against Tesla's Model Y, which easily sells over 40,000 units per month. However, none of them have managed to make much of a splash.

In summary, these new vehicles have generally attracted users by offering lower prices and richer configurations than the Model Y, but shaking Tesla's influence will take time. It wasn't until the launch of Letao L60, which leveraged its unique battery swapping technology, that it managed to secure over 30,000 orders within three days of its release. While it's difficult to evaluate whether Letao L60 has enough staying power, it has added a different dimension to this market segment.

Source: Electric Vehicle News

Notably, NIO President Qin Lihong announced that NIO's third brand, Firefly, will be officially launched at this year's NIO Day and will share NIO's service and battery swapping system with Letao. Prior to this, NIO Founder Li Bin revealed on the Q2 earnings call that Firefly's first product would be delivered next year.

Source: NIO

It is evident that the Firefly brand will follow a similar path as Letao, leveraging battery swapping technology to enter the premium compact car market. During Tesla's "We, ROBOT" event, the long-anticipated Model 2 failed to make an appearance. With about a month left until the Firefly brand is unveiled, can low pricing and battery swapping become NIO's trump card in the premium compact car market?

Truly affordable NIO cars starting at less than 140,000 yuan?

The newly launched Letao L60 is positioned as a mid-sized SUV, while Firefly's first product, based on previously leaked spy shots, is significantly smaller, likely falling into the compact category. Its body style resembles that of the electric MINI Cooper, smart fortwo #1, and Geely Zeekr X, all of which have starting prices around 200,000 yuan, with higher-end versions even approaching 300,000 yuan.

Let's first guess the price of Firefly's first product. With a starting price of 209,900 yuan, Letao L60 sets the benchmark. As an entry-level sub-brand model, Firefly's first car can almost certainly be priced below 200,000 yuan.

Given this, Firefly's first car will undoubtedly have a price advantage, but it won't break the pricing floor in this market segment.

Source: Motores

The lowest entry barrier for domestic compact pure electric SUVs is around 100,000 yuan, exemplified by models like Nezha X, Wuling Starlight S, and AION Y. These vehicles prioritize practicality, with configurations, range, and performance that are just adequate. However, Li Bin once revealed an important piece of information: Firefly's first product will follow a "premium and refined" route.

In other words, Firefly's first car will not be lacking in configuration, but the only way to bring down the price is to introduce more entry-level compact and micro-cars. Electric Vehicle News boldly predicts that Firefly's first car may have a starting price of around 180,000 yuan, but this is not its limit.

Like Letao L60, Firefly's first car will be equipped with battery swapping technology. While battery swapping can alleviate range anxiety for EV owners, it's worth noting that NIO has also introduced the BaaS battery leasing service solution, which further reduces the starting price. For Letao L60, this brings the starting price down from 206,900 yuan to 149,900 yuan.

Therefore, for a Firefly model with a potential starting price of 180,000 yuan, the battery leasing service solution could bring the starting price down to the range of 130,000-140,000 yuan.

Observant netizens may have noticed that while the price of Letao L60 can be reduced by nearly 60,000 yuan through battery leasing, Firefly is only expected to see a maximum reduction of 50,000 yuan.

Considering NIO's current battery pack capacities, the smallest is Letao L60's 60kWh LFP battery, but due to vehicle size constraints, a 60kWh battery pack may already be the limit for Firefly models. For NIO's 75kWh battery pack, the starting price drops by 70,000 yuan with the BaaS solution, resulting in a buyout cost of 933 yuan per kWh. Similarly, the buyout cost for Letao L60's battery is 950 yuan per kWh.

Looking at the battery capacities of similarly positioned models like smart fortwo #1 and the entry-level electric MINI Cooper, they are roughly around 50kWh. Based on this benchmark, we can estimate that the starting price of a Firefly model could potentially drop by an additional 47,500 yuan.

Source: NIO

Of course, offering a premium pure electric compact car for less than 140,000 yuan is more of a gimmick. In the long run, buying the entire car is more economical, as evidenced by the fact that most consumers opt for the full purchase of Letao L60. It is likely that Firefly's first car will enter the market as an 180,000-yuan-level compact pure electric SUV, competing with models like the AION V Brontosaurus with intelligent driving capabilities, the cost-effective Kia EV5, and the upcoming Lynk & Co Z20.

Whether Firefly has what it takes remains to be seen until more information is revealed.

Is Firefly primarily targeting the European market? Not necessarily.

With the launch of Firefly, NIO's three brands will cover the domestic pure electric vehicle market ranging from 100,000 to 600,000 yuan. The compact pure electric SUV segment where Firefly's first model will reside faces fiercer competition than NIO and Letao, with both affordable compact pure electric SUVs and larger SUVs at similar price points.

Qin Lihong once revealed that the initial plan for the Firefly brand was to enter the European market in the first half of next year, leading to speculation that Europe would be Firefly's primary market.

However, Electric Vehicle News disagrees with this view. When a brand plans to expand into overseas markets, the primary goal is often to increase its influence rather than focus exclusively on those markets. This is similar to Geely's Geometry A, which was listed in Singapore but has always sold primarily in the domestic market.

Ultimately, the Chinese market is the largest new energy vehicle market globally and the only major market with a monthly penetration rate of new energy vehicles exceeding 50%. While competition in the mainstream market is intense, the domestic market pays much more attention to new energy vehicles than overseas regions. As a new brand, Firefly needs this attention, which is likely why NIO chose to launch Firefly in China first.

Admittedly, premium pure electric compact cars have not performed well in the domestic market, with the smart brand selling around 3,000 units per month and Geely Zeekr X selling just over 1,000 units. However, Electric Vehicle News believes that the root cause of these poor sales is their high prices, not a lack of consumer desire for a good travel experience.

Source: Electric Vehicle News

Compared to the smart brand and MINI electric vehicles, Firefly models now have a price advantage. The crucial question is how to capture market share from mainstream compact pure electric SUVs. Models like BYD Yuan PLUS, AION Y, and Geely Geometry E5 have lower starting prices, so Firefly needs to consider how to convince consumers of the value of its premium pricing.

Expanding into overseas markets is not a problem, but Electric Vehicle News sees it as a last resort. Look at new energy vehicle brands that have made overseas markets their primary focus, such as Aiyeshi and WM Motor, and see where they are now.

That being said, NIO does place great emphasis on the European market, having built charging and battery swapping stations in multiple European countries. Moreover, the European market's demand for new energy vehicles is gradually increasing, with a strong preference for compact and small premium pure electric vehicles that is on par with the domestic market.

Electric Vehicle News believes that Firefly will be an entry-level pure electric brand primarily targeting the Chinese market, with overseas markets serving as a supplement. If it can successfully achieve high sales in multiple regions, Firefly has the potential to achieve sales success.

One year, two babies: NIO's relentless spending spree

Among the new energy vehicle players, only NIO seems to be launching two sub-brands in one year. At this stage, NIO indeed needs Firefly.

According to NIO's Q2 earnings report, the company's quarterly revenue hit a new high, but its net loss still reached 5.046 billion yuan. Among the established new energy vehicle players, only NIO continues to burn money relentlessly. Electric Vehicle News believes there are two main reasons for this. First, NIO's automotive revenue growth is difficult to achieve at a high rate. Before the launch of Letao, NIO's volume drivers were entry-level models like the NIO ET5 and NIO ES6, with the brand's total monthly sales hovering around 20,000 units.

Second, the aggressive expansion of the energy replenishment system. According to plans, NIO aims to achieve "county-level charging coverage" (i.e., every county equipped with a NIO charging station) by the first half of next year and "county-level battery swapping coverage" (i.e., every county equipped with a NIO battery swapping station) by the end of the year. This means that NIO's infrastructure investments will only continue to grow.

Source: NIO

Without the second reason, Electric Vehicle News believes that the launch of the Letao brand could have solved NIO's loss problem. However, to compensate for the financial drain caused by the expansion of its energy replenishment system, NIO has launched the Charging Partner Program and sought to expand its revenue capabilities, with Firefly playing a crucial role.

Therefore, while Firefly appears to have the support of its "elders" Letao and NIO, it is not without pressure. The key question is how to attract mainstream consumers to choose Firefly, as failure to do so could trigger a chain reaction of problems.

Source: Leitech