ONVO and MONA are competing to be young brand.

From 2023 to 2024, there was a change in the ranking of China's new generation of electric vehicle makers like NIO, Xpeng, and Li Auto. 'Nio, Xpeng, Li Auto' has now changed to “Li Auto, Nio, Xpeng”, as Li Auto's sales of their L7, L8, and L9 models have pushed them from lower level to the top.

In addition to maintaining strong profitability, financial condition and market performance, both NIO and Xpeng are currently facing a common challenge - the inability to exceed their sales limit resulting in long-term losses. They have also introduced sub-brand strategies in 2024 to improve sales.

NIO recently launched its second brand "ONVO," targeting the mainstream market with prices below 300,000 yuan. The first model L60 debuted at a starting pre-sale price of 219,900 yuan. Xpeng is partnering with Didi to launch their new sub-brand MONA in June, catering to both the B and C segments.

Compared to the original brand, new players' second brands are targeting lower market segments. These brands' models have been referred to as 'youth versions', inspired by how digital products are classified. However, this strategy places the new products directly in highly competitive niche markets. Model Y sold 456,000 units in China last year and became the top-selling individual model within the price range of 200,000-300,000 yuan. Xiaomi SU7 and ZEEKR 007 also enjoy high popularity.

Investment to liquidity

NIO founder Li Bin emphasized the necessity of launching new brands to realize all investments. Currently, NIO has invested over 43 billion yuan in research and development, with a total of 2,413 battery swap stations. The financial report for 2023 shows a net loss scale of 20.72 billion yuan, representing a 43.5% increase compared to the previous year. 

The use of sub-brands effectively maintains the original brand positioning, especially for NIO in the high-end market. Existing car owners won't perceive a decline in brand value. On the other hand, Xpeng's sub-brand focuses on AI and intelligent driving, leveraging its top-tier XNGP technology among new players in this field. Therefore, Xpeng claims their first car under this sub-brand is "the first AI-driven car for young people". The industry also compares it to Xiaomi's SU7 electric vehicle and pays attention to its ability to incorporate XNGP technology within a price range of tens of thousands of yuan.

NIO and Xpeng are launching their second brand to "seek volume." NIO positions itself as a high-end brand, with most models priced over 300,000 yuan. Despite leading in China's luxury pure electric vehicle segment, NIO has experienced stagnant overall sales of around 10,000 units per month. To achieve growth and overcome long-term losses, NIO needs to enter the mainstream market at a price level of 200,000 yuan. Xpeng exhibits similar performance in the overall market.

Whether it will hold the market?

The newly released NIO L60, positioned slightly lower, offers rich features like swappable batteries and a comprehensive 900V high-voltage architecture. With a pre-sale price of 219,900 yuan, both the product and market performance are highly anticipated.

The first Xpeng MONA product is an A-class intelligent electric vehicle priced at around 150,000 yuan, targeting both the C-end and B-end markets. Additionally, Xpeng Motors has integrated Didi's car-making technology foundation into the MONA project and incorporated its own self-developed intelligent software capabilities like XNGP and a smart cabin.

However, whether in the 100,000-150,000 yuan or 200,000-250,000 yuan price range, competition is fierce. The former belongs to BYD's plug-in hybrid models territory while the latter includes Tesla and other emerging companies' products.

Both NIO and Xpeng's sub-brands are enhancing their product power through technological empowerment. The ONVO L60 is built on the latest NT3.0 platform, equipped with an Orin-X chip and a vision-based intelligent driving system while adopting a 900V architecture. The battery pack is thinner, supports battery swapping, and shares third and fourth-generation battery swap stations with NIO, making it a brand new generation of products. The co-founder of NIO even stated that "when a brand releases its first car, there are already one thousand battery swap stations waiting for it." Additionally, NIO has a hidden third brand codenamed 'Firefly', positioned as an entry-level option targeting the 100,000 yuan market segment and likely priced below 100,000 yuan.

Since the beginning of this year, new players like NIO, Li Auto, and Xpeng have successively launched entry-level products or brands. Alongside Xiaomi's market entry and Huawei's network expansion, competition has intensified. The emergence of ONVO and MONA signifies a 'price reduction' strategy by NIO and Xpeng, aiming to boost their sales beyond the previous monthly average of around 10,000 units.

Whether it's the recently released ONVO or the upcoming MONA, both benefit from being latecomers. However, considering the current market, the overall situation is not optimistic as popular brands like BYD, AITO, Xiaomi, Tesla, Li Auto, and ZEEKR already have a strong presence. In the price range of 200k-250k yuan ($30k-$38k), new energy vehicles have a penetration rate of about 41.7%, while in the range of 250k-300k yuan ($38k-$46k), it has already reached close to 61%. The real "battle" for brand success lies in capturing the market with lower costs and competitive parameters and configurations. 

Translator：Wei Xiong