Digital Disruptors: NIO

We know there are companies shifting toward digital change, but what about those companies that are truly disrupting their markets? Our Digital Disruptors series profile these companies that are heating up the volcano that is the digital transformation industry. This month, Chinese luxury electric vehicle (EV) manufacturer, NIO is competing for the industry spotlight.

Sometimes dubbed the Chinese Tesla, luxury electric vehicle (EV) manufacturer, NIO, is co-leading the most competitive EV market with, with BYD Auto. How did it go from near insolvency at the start of the Covid pandemic to doubling deliveries?

What’s the Big Deal?

Founded in 2014, NIO’s growth was stagnant during the first several years. At the start of the COVID-19 pandemic, the company came very close to insolvency with vehicle sales dropping, government cutting subsidies, and rigorous competition booming.

Yet from 2017 on, NIO proved to be resilient and doubled its deliveries of vehicles in 2019 with 20,565 cars. Its revenue surpassed US$ 1 billion in 2019, showing a %58.0 increase from the previous year. The success was attributed to NIO’s ambition, “to be the first and leading “user enterprise” as an autonomous and EV manufacturer.” This aspect of NIO was a key factor that enabled its survival in pandemic market conditions.

The Core Disruption

When it comes to electric, some companies bet on energy density, some on fuel cell batteries, and some on building the biggest charging network. However, NIO took a unique approach, and chose battery-swap as a solution. NIO has more 1,200 patents on their swappable battery pack and has successfully swapped 500,000 batteries for their customers in China.

On top of its battery-swap technology, NIO created an end-to-end holistic charging solution bundle called NIO BaaS (Battery as a Service) including  power-swap stations, an all-inclusive charging network, and a cloud-based one-click charge scheduling system.

Moreover, this NIO Power solutions bundle functions as a subscription model. The customer does not have to own a battery. Such a bundle strengthens NIO’s claim of “battery swap in 3 mins” and “power is always 3 kms away”. On top of it, NIO owners have Lifetime free quality assurance and road-side assistance.

To heavily invest in their battery-swap technologies and software, NIO subsidised manufacturing with a $1.5 billion joint venture with JAC Motors. While NIO must address their supply chain bottlenecks to achieve economies of scale in the future, this decision created time for NIO to focus on their solution bundle. Management expressed their intentions to build their own battery lab and manufacturing facilities by 2030.

NIO’s customer centricity does not end with the vehicle. Its lifestyle approach aims to interact with the customer more than the time spent on the road. For that, NIO created its own proprietary lifestyle brand called NIO Life and has an exclusive network of clubhouses for its users. “NIO House” is designed to be NIO drivers’ home away from home, wherever they take their cars.

What are NIO’s digital superpowers?

Design: NIO’s holistic battery solutions system is carefully designed to be all-inclusive and to address all the needs of an EV owner. A scheduled charging by NIO employees, a NIO Van to charge on the road, and a battery subscription model all work together to eliminate the range worry of EVs.

Connectivity: Through its Power Cloud and GRID smart route planning solutions, NIO monitors all charging and swap stations with a virtual model. The model connects not only NIO’s chargers and swappers but over %80 of the charging resources in the market to optimize routing according to the users’ needs.

Intelligence: World’s first in-vehicle AI, NOMI, aims to create an emotional bond between the vehicle and the owner. NOMI not only learns user preferences over time, but also analyses the daily routine and travel patterns of the user to suggest who to call, how to re-arrange meetings according to traffic, and more.

Speed: The NIO Cloud collects real time vehicle data and battery health to suggest predictive maintenance, or schedule maintenance when the user does not need his vehicle; redefining car ownership by minimizing time spent on maintenance.

Lessons Learned

NIO disrupts both the EV market with its unique approach and the traditional owner-vehicle relationship with its user-centered offers that tailor the brand to many aspects of the user’s life.

NIO chooses to focus on their technology and their customers, while partnering with other companies to fill other needs. That has enabled the company to create a new standard in car ownership in a very short period of time.

It is undeniable that NIO has room for improvement when it comes to its operations. However, NIO offers a “user enterprise” to capture the customer both on and off the road.