NIO differentiates itself through its industry-leading battery swap technology. Credit: Andy Feng on Shutterstock.

Chinese electric vehicle (EV) manufacturer NIO, which aims to redefine premium service through innovative products and evolve the car ownership experience, can develop as a leading player in the industry.

As of 31 May 2021, NIO has cumulatively sold 109,514 vehicles in China, with May 2021 deliveries of 6,711 vehicles constituting a 95.3% increase y-o-y.

NIO stands to benefit from growing EV market

The EV market in China is exploding in size. According to MarketLine analysis, the Chinese hybrid and electric cars market grew by 5.1% in 2020, with a value of $22,202.6m. This market is forecast to increase by 343.8% by 2025, reaching a value of $98525.5m.

Similarly, the volume of vehicles is forecast to increase 324.7% by 2025, from 1,211,962 units in 2020 to 5,147,397 units in 2025.

This huge opportunity for growth in the Chinese EV industry places NIO in a unique position to grow and increase its share in the market, due to not only positioning itself as a lifestyle brand as well as a carmaker, but releasing its first sedan model, the ET7. Other Chinese EV makers have seen strong demand for sedans, a promising sign.

Innovative battery as a service model differentiates NIO

NIO has plenty of potential for growth and much of this is due to technological innovations. NIO differentiates itself through its industry-leading battery swap technology, Battery as a Service (BaaS), a subscription model where the vehicle and battery are separated. Rather than charging the battery, it can be changed at one of NIO’s battery swap stations spanning China.

The key advantages of this are that it only takes three minutes to change the battery rather than waiting hours to charge to full and the price discount of CNY70,000 ($10,000) off the car price. This gives NIO the potential to expand its market share in the industry, which, as of December 2020, stands at 3.1%.

Semiconductor shortage threatens growth

The principal challenge NIO has faced recently is the semiconductor chip shortage. The demand for semiconductors has surged beyond the supply capacity, which has impacted carmakers.

It is estimated that sector-wide losses relating to the semiconductor chip shortage stand at over $110bn, with four million fewer cars being produced than planned and leading some manufacturers to temporarily shut down factories. For NIO specifically, it has placed a bottleneck on vehicle production, and thus company growth has been temporarily stunted.

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