BEIJING, September 21 (TMTPost)— Chinese electric vehicle (EV) manufacturer Nio Inc. is seeking to boost business with its first smartphone amid the increasing competition at EV sector.

Credit：TMTPost

Nio launched an Android –based smartphone Nio Phone during its 2023 Innovation Day on Thursday.  The first model includes three versions—Performance, Flagship and EPedtion, priced at RMB6,499 (US$889), RMB6,899 and RMB7,499, respectively. With 16GB RAM and 1TB storage, Nio Phone is empowered by Qualcomm SnapDragon 8 Gen2 chip.The phone, with triple-camera setup, has a 6.81-inch display with 120Hz of refresh rate. One of the highlights Nio stressed is that the phone doesn’t have any advertising.  Based on SKY UI, the phone has no pre-installed applications either.  

Nio said the phone can be ordered from Thursday and delivery would start on September 28.  The phone debut doesn’t mean Nio will turn smartphone into its main business, Nio Chairman and CEO Li Bin, or William Li, said at the event, adding that his company will make the mobile that deliver better user experience. Li labeled the phone as a phone born for Nio users. Nio users need a mobile that connects seamlessly connected to Nio vehicles, and it is unnecessary for the company to make money from mobile business, Li noted. Li deemed the new device as an opportunity to earn more from users. He said Nio pays more attention to the value that each user brings to its entire brand, and it is more convenient to connect users. What the company pursuing is the car experience and the emotional experience it can offer to users, Li said.

Nio develops the phone mainly for new users, especially owners of vehicles built on its NT2.0 platform, the second generation of the in-house electric driving system, so the phone itself is developed essentially on the vehicles, but with better mobility and connectivity experience, Li Bin told analysts at an earnings conference in August. Nio believes the phone can help the company improve the competitiveness of its vehicles because the phone business is not to compete with phone makers, but to act as a carrier to provide the best experience for vehicle owners, according to Li.

Nio is still struggling for profitability as it has never turned around since establishment in 2014. The EV maker just posted worse -than-expected financial results in August. Total revenue that quarter fell 14.8% year-over-year (YoY) to RMB8.77 billion (US$1.21 billion) in t he quarter ended June 30, missing the analysts’ estimated RMB9.25 billion. The non-GAAP adjusted net loss per share was RMB3.28, compared with the expected RMB2.45. The net loss per share in the June quarter more than doubled the loss in the same period a year ago.

Decline in revenue came as vehicle delivery materially slowed down.  Nio delivered 23,520 EVs the second quarter, decreasing 6.2% YoY. Vehicle sales that quarter slumped 24.9% YoY to RMB7.19 billion. Gross margin in the June quarter plunged 12 percentage points YoY to 1.0%, and vehicle margin was 6.2%, compared 16.7% a year earlier.

However, Nio predicted a turnaround in the third quarter. It expected delivery to be between 55,000 and 57,000 vehicles, representing an increase of about 74% to 80.3% YoY. Total revenue this quarter was expected to grow 45.3% to 50.1% YoY to a range of RMB18.9 billion and RMB19.52 billion. Both the delivery and the revenue are set to hit quarterly record.

Nio said in the beginning of this month that its delivery in August climbed 81% YoY to 19,329 vehicles, just shy of the monthly record the company made a month earlier. It delivered 20,462 vehicles in July, up 103.6% YoY. Given the recent guidance between 55,000 and 57,000 vehicles for the current quarterly, Nio could deliver around 15,000 to 17,000 units in September.

Nio aims to keep monthly delivery more than 20,000, and is preparing for a sales capacity of 30,000 units per month, CEO Li Bin said an earnings call last month. Through its effort of building sales team, Nio will have that initial capability of sales ready by the end of September, then the real effect will kick in from October, Li said.

At a separate briefing Thursday evening, Li expected Nio gross margin should return to double digits in the third quarter and then improve further. Nio aims to achieve 20% in the long run, which will be buoyed by the falling lithium prices, Li said.