NIO announces a price reduction of 30000 yuan across the entire range! Announcement | Price | NIO
Red Star Capital Bureau reported on June 12th that NIO Motors announced today that starting from June 12th, 2023, the starting price of all new NIO models will be reduced by 30000 yuan.
According to NIO's announcement, starting from June 12, 2023, a deposit will be paid to purchase all new NIO models. The first owner's vehicle rights will be adjusted to a 6-year or 150000 kilometer warranty for the entire vehicle, and a 10-year unlimited mileage warranty for the three electric system. At the same time, the free battery swapping service will no longer be considered as a basic vehicle benefit, and users can choose to pay a single fee for battery swapping. NIO will launch a flexible charging and swapping service package in the future.
According to the official official account of Weilai
After the announcement of NIO's price reduction, it has caused a lot of discussion. Some voices in the industry believe that the latest financial report shows NIO is in a loss making state. Will the price reduction at this time further reduce the gross profit margin, making the loss more severe?
The Red Star Capital Bureau has noticed that the NIO has reduced its entire lineup by 30000 yuan, which is different from Tesla's previous simple price reduction. It is a reduction of approximately 30000 yuan in benefits for the new car, including lifetime free battery swapping, vehicle warranty period, and other benefits. NIO's move has unbound the battery swapping rights from vehicle prices, resulting in lower vehicle purchase prices.
![NIO announces a price reduction of 30000 yuan across the entire range! Announcement | Price | NIO](https://a5qu.com/upload/images/7d1c505c0827a74d974a2c3fe03b62c4.jpg)
For the vast majority of car buyers, exchanging the lifetime free battery swapping rights four times a month for a cash discount of 30000 yuan is a cost-effective deal. A NIO user has stated that they have been driving a NIO car equipped with a 75 degree battery for a year now, and after each battery change, they have driven about 400 kilometers. The monthly cost of battery change is about 400 yuan, and a discount of 30000 yuan is basically equivalent to 6 years of battery change cost. For users who have the conditions to install household charging stations, they can cover almost all charging needs with low electricity prices, and this 30000 yuan is directly saved in cash.
From a financial perspective, users have previously paid off their lifetime free battery swapping and other benefits in full, but NIO cannot immediately recognize this amount as income and can only amortize it over several years. In the financial report, this portion of income and gross profit cannot be visually displayed. Previously, NIO users had 4 free battery swapping privileges per month. After August 1st, NIO will charge new users for battery swapping, with an average cost of about 80-100 yuan per session, which will undoubtedly increase NIO's revenue in battery swapping. After excluding car owners who have owned cars for a long time and have changed batteries many times, overall, there is a possibility of an increase in NIO's gross profit.
Li Bin, founder, chairman, and CEO of NIO, once said, "With the delivery of higher priced products in the second and third quarters of this year, the average transaction price and gross profit margin of bicycles will also recover. NIO is confident that it will achieve double-digit gross profit margins in the third quarter of this year and exceed 15% in the fourth quarter. At the same time, benefiting from the cost advantage brought by technology self-development and innovative supply chains, the gross profit target for second-generation technology platform models is still maintained at 20%."
Red Star Capital Bureau has noticed that in response to the price reduction news, Li Bin responded on the NIO APP, stating that there has been a long internal discussion on this adjustment and some users have also listened to their opinions and suggestions. There are too many aspects to consider, and as of three o'clock today, we are still pondering over and over again. Now is the most suitable time to release, there must be some areas where we didn't consider carefully, and we can't satisfy everyone.
Screenshot from NIO APP
![NIO announces a price reduction of 30000 yuan across the entire range! Announcement | Price | NIO](https://a5qu.com/upload/images/b442c57bb183a9fd2f749e4f253c926e.jpg)
On the evening of June 9th, NIO released its financial report for the first quarter of 2023. The total revenue was 10.6765 billion yuan, a year-on-year increase of 7.7% and a month on month decrease of 33.5%. The net loss was 4.7395 billion yuan, an increase of 165.9% year-on-year and a decrease of 18.1% month on month.
As of the time of publication, NIO SW was reported at HKD 63.8 per share, up 5.8%, with a market value of HKD 106.5 billion.