Over the past decade, NIO has embarked on a continuous journey of exploration and progress.

While competitors rush to introduce new models, NIO focuses on launching new brands. On December 18, NIO unveiled its new sub-brand, Firefly, marking the second sub-brand launch this year, bringing NIO's total automotive brands to three, firmly positioning it at the forefront among new force automakers.

Reflecting on the past year, NIO has been relatively quiet in terms of new product introductions, with the exception of the Ledo L60, which debuted alongside its second brand. In contrast, competitors like XPeng have released two new models in just six months, regaining momentum in sales.

Facing a sales bottleneck, NIO desperately needs a breakthrough. Rather than engaging in a price war, NIO's CEO, Li Bin, opts to lower the entry threshold by introducing sub-brands to boost sales.

Particularly after the Ledo failed to achieve the anticipated sales surge, the third brand, Firefly, was swiftly added to the launch schedule. Amidst operational pressure, Li Bin must swiftly prove with sales that NIO can remain a formidable player.

No Blue Ocean Here

Unlike NIO and Ledo, the Firefly brand, according to NIO officials, targets MINI-like vehicles, specifically A0-class models.

This market segment has been exceptionally hot this year. In terms of penetration, the new energy penetration rate for A0-class vehicles surpassed 50% in 2023, reaching 59%. Entering 2024, competition in the A0-class new energy market intensified, with the penetration rate soaring to 74% in November, a nearly 50% increase from the previous year.

Specifically, the rapid growth in the penetration rate of A0-class new energy vehicles began in the third quarter, jumping from around 60% to 75%, making it the fastest-growing segment of the new energy market this year.

Behind this growth lies the concerted effort of multiple automakers. The A0-class sales rankings reveal that, apart from the MG3, Kia K2, and Baojun 310, the top ten are all pure electric new energy vehicles. Models such as the BYD Seagull, Dolphin, Wuling Bingguo, and Geely Xingyuan, in particular, have achieved monthly sales exceeding 20,000 units.

It is often said that the survival threshold for sales in the new force automotive market is 10,000 units per month. However, in the A0-class market, new energy vehicles can easily surpass this benchmark.

Particularly in this segment, domestic brands have achieved a comprehensive lead. Classic models like the Honda Fit now sell only a few hundred units per month, with the same fate befalling the Volkswagen Polo. It can be argued that with the widespread adoption of new energy vehicles, fuel vehicles have lost any advantage in the mid-to-low-end market.

For instance, the Geely Xingyuan, officially launched on October 9, delivered 36,000 units in just two months, emerging as a dark horse in the A0-class market.

Certainly, the strength of this dark horse is formidable. With a starting price of 69,800 yuan, it boasts a 14.6-inch center console screen and the Yuntu Flyme Auto intelligent cockpit system, shattering the stereotype of cheap A0-class models. Its compact size and superior interior space fully demonstrate the advantages of pure electric vehicles.

Following the Geely Xingyuan, a plethora of new models are lined up for release. On December 16, the iCAR V23 was launched, and Aion plans to unveil the UT early next year. Spy shots of the Wuling Hongguang MINI four-door version have also surfaced, indicating that every automaker aims to carve out a piece of the A0-class market pie.

However, success in this market is not guaranteed. As a classic model, the MINI launched an electric version in China this year but officially reduced its price by 40,000 yuan within three months due to poor sales, resorting to a volume-driven pricing strategy.

It can be said that although the A0-class new energy market is booming, it is far from a blue ocean. Competition is fierce, especially given the overall low price point. Cost-effectiveness has become the primary competitive factor in this segment, overshadowing factors like design and sentimentality.

Low Prices: Not a Panacea for Sales

Battery swapping has always been NIO's defining feature. To some extent, the construction of swapping stations may be more crucial than the products themselves. Only with a sufficient number of swapping stations can NIO differentiate itself from other pure electric vehicles.

While creating a differentiated refueling experience, battery swapping also imposes certain limitations on products. Regarding this, Li Bin has repeatedly stated that all NIO models will be based on a dual-motor, four-wheel-drive design. Due to the size constraints of the battery pack, NIO cannot achieve universal battery packs, compromising on cost and making it difficult to maximize space utilization.

At the same time, the significant infrastructure costs are constantly draining NIO's cash flow. Therefore, it is particularly important for NIO to achieve self-sufficiency in swapping stations.

Lowering product thresholds, expanding sales, and thereby increasing the utilization rate of swapping stations form a critical loop for survival.

The Ledo L60, launched this year, switched from a dual-motor to a single-motor setup and removed the LiDAR configuration, lowering the entry-level price to 206,900 yuan. If battery leasing is selected, the bare vehicle price can even reach 149,900 yuan.

It's worth noting that the newly launched Firefly brand can only use the fourth-generation swapping stations, creating a dilemma for NIO as it needs to balance the interests of new and existing customers after downgrading services for lower-priced models.

Unable to enjoy the full range of NIO services, users may feel inferior in their driving experience.

However, to boost sales, NIO must continue to explore lower price points. Pure electric vehicles priced above 300,000 yuan account for only 5% of the market, while the larger market lies in the 100,000-200,000 yuan range, which is roughly seven times the size of the market above 300,000 yuan.

In NIO's latest sales plan, to achieve its goal of doubling sales by 2025, the NIO brand alone cannot support such high growth. Ledo and Firefly will become the main drivers of sales.

However, as prices continue to drop, the advantages brought by battery swapping are becoming less distinct from ordinary pure electric vehicles. Consumers are reluctant to pay more for services they rarely use. Especially under the influence of the concept of replacement consumption, continuously dropping prices for pure electric vehicles have become an alternative to battery swapping, appearing more cost-effective.

Particularly since Firefly is positioned to compete with MINI models, it remains to be seen how much Li Bin can learn from the pricing failure of the electric MINI. If the high-end route failed for the electric MINI, it will be challenging for NIO to succeed with battery swapping alone.

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