Nio approached a leading local dealer group in the first half of this year to do some explorations for introducing a dealer model for its sub-brand Alps, according to local media.

(Image credit: CnEVPost)

Nio's (NYSE: NIO) mass-market-focused sub-brand Alps may partner with dealerships to achieve greater sales with a lighter sales model, a new report says.

Nio approached a leading local dealer group in the first half of this year to do some experimenting with introducing a dealer model for the sub-brand codenamed Alps, LatePost said in a report today.

The electric vehicle (EV) maker plans to hand over Alps' after-sales service, delivery centers to national dealer group, but the sub-brand's stores in malls will remain directly managed, the report said, citing a person familiar with the matter.

Nio has been a firm supporter of the direct-sales model and maintained it even as it entered the European market, hoping to bring the entire service system overseas.

As of August 31, Nio had 134 Nio Houses worldwide, including six in Europe. It also has 286 Nio Spaces globally, eight in Europe.

The positioning for the mass market and the quest for sales scale has led the Alps brand to think about adopting a lighter sales model -- embracing distributors, the report said.

The Nio main brand briefly experimented with a model in which owners acted as franchisees, launching a partner program to save money when it faced funding pressures in late 2019, the LatePost report noted.

At that point, owners could fund the construction of Nio Spaces, while Nio assigned staff to run them on their behalf. In one year, owners helped Nio build more than 100 Nio Spaces, according to the report.

This hybrid sales model allowed Nio to quickly ramp up the number of stores, but it also posed some management challenges. In late 2020, Nio re-established the dominance of the direct-sales model, with all new Nio Spaces opened using the direct model, and the owner-invested stores taken back, according to the report.

Alps, a Nio sub-brand for the market priced at around RMB 200,000 ($27,470), now has a team of more than 800 people, with the first vehicle scheduled to be mass-produced and deliveries scheduled to begin in the second half of 2024, the report said.

Alps' model development is well underway, with the first pilot test vehicle off the line and a second model already in development, William Li, Nio's founder, chairman, and CEO, said in an August 29 earnings call.

Alps' model development is based on a different philosophy than the Nio brand and will be more focused on the family use scenario, Li said, adding that the brand won't have a large number of models, and will be more focused on the sales of each vehicle.

The sub-brand's first vehicle is an all-electric sedan, based on the NT 3.0 platform that supports battery swap and high-voltage fast-charging technology, according to LatePost.

Alps' models will be built at Nio's F3 plant, which is in Hefei Xinqiao, adjacent to the F2 plant and part of NeoPark, the report said, citing a person familiar with the matter.

Nio confirmed in August 2021 that the company will enter the mass market through a new brand and has already established a core team.

On July 25, 36kr reported that Nio was adding single-motor model options to the Alps' first model.

Alps will be Nio's main entry into the mass market, and the addition of a single-motor model will significantly improve the brand's strategic flexibility, the report said.

All of the Nio brand's current EVs on sale are dual-motor models.

($1 = RMB 7.2799)

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