Nio is committed to a direct sales network in Europe, and the Firefly project is evaluating multiple channel models in Europe, including direct and dealer models, it said.

(Image credit: CnEVPost)

Nio (NYSE: NIO) said its main brand remains committed to a direct sales model in Europe, while a sub-brand codenamed Firefly will have more flexibility, after a report that it was considering a distributor network in Europe generated buzz.

"There are no changes to the way the Nio brand is marketed and vehicles are sold in Europe," the EV company said in a response shared with CnEVPost.

Nio is currently working on its direct sales network, energy network and after-sales service network in Europe, and is ramping up the user experience in terms of model intelligence to improve user satisfaction, it said.

The company's Firefly project is evaluating channel models in Europe, including direct, distributor and dealer models, Nio said.

"We will choose the model that best suits the local market and the brand's development needs," Nio said.

Earlier today, Reuters cited three people familiar with the matter as saying Nio was considering setting up a dealer network in Europe to accelerate sales growth.

The Chinese EV maker has begun evaluating dealerships in key European markets after its president Qin Lihong said last month that European sales had not met expectations, two of the people said.

Another reason for using dealers is to ease cash pressure on Nio, which is prioritizing spending on research and battery swap stations in China, said a third person familiar with the matter cited in the report.

Nio launched the ES8 in Norway on September 30, 2021, marking the official start of its efforts to enter overseas markets.

On October 7, 2022, Nio announced its entry into Germany, the Netherlands, Denmark and Sweden and introduced the ET7, EL7 and ET5 to consumers in those countries.

In external communications, Nio management has repeatedly said that the company's goal is to move its full suite of service models in China overseas, including a direct sales model and signature battery swap stations.

Nio management first confirmed in August 2021 that the company would enter the lower-priced mass market through a sub-brand, which it referred to in subsequent communications as internally codenamed Alps.

On January 26 of this year, Qin said that in addition to Alps, another Nio sub-brand, codenamed Firefly, was in the planning stages and would be delivered to European consumers first.

Prior to Qin's first mention of the Firefly project, local media outlet 36kr reported on August 1, 2022, that the EV company was planning to launch a third car brand in addition to Nio and Alps to cover the lower-middle-end of the market, which is under RMB 200,000 yuan ($27,350).

The direct sales model is seen as costly in that it requires the EV maker to lease its own stores as well as pay the salaries of its sales staff.

As of now, most of the major new car makers in China using the direct model have vehicles priced at around 300,000 yuan. Models exceeding 300,000 yuan are considered high-end.

For Nio, Alps is seen to be targeting the RMB 200,000-300,000 market, while Firefly is set to target the sub-RMB 200,000 market.

Nio will need to weigh the additional costs associated with using a direct sales model for these two lower-priced sub-brands.

In fact, local media reported last month that the Alps sub-brand might partner with dealers to sell cars.

Nio approached a leading local dealer group in the first half of this year to do some trials of introducing a dealership model for the Alps sub-brand, LatePost said in a September 14 report.

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

As of September 30, Nio had 137 Nio Houses -- its flagship showrooms -- around the world, including 131 in China and six in Europe, according to data it released on October 1.

Nio has 304 Nio Spaces -- its smaller showrooms worldwide, including 295 in China and nine in Europe.

($1 = RMB 7.3114)

Nio considering dealer network in Europe to boost sales, report says