After Nio's president said last month that European sales had fallen short of expectations, the company has begun evaluating dealers in key European markets, according to Reuters.

(Image credit: CnEVPost)

Nio (NYSE: NIO) is reportedly considering a dealer network in Europe, which if true would signal a departure from the company's previous insistence on moving its direct sales model overseas.

Nio is considering building a dealer network in Europe to speed up sales growth, Reuters said in a report today, citing three people familiar with the matter.

The Chinese electric vehicle (EV) maker has begun assessing dealers in key European markets after its president Qin Lihong said last month that European sales had missed expectations, two of the people said.

Nio found Europe had its "peculiarities", one person said, without elaborating, and the company was planning to expand into more European countries, the report said.

A third source said Nio is considering establishing dealerships for Nio's main brand of cars sold in Europe as well as the Firefly sub-brand, a more affordable brand that the company plans to export to Europe starting in 2025.

Another reason for utilizing dealerships is to ease cash pressures on Nio, which is prioritizing spending on research and battery swap stations in China, the source said, according to the report.

Nio said there have been no changes to the marketing and sales methods of its brand in Europe and it was committed to building a direct sales network, according to the report.

"We will choose the model that best suits the local market and the brand's development needs," the report quoted Nio as saying in an e-mailed statement.

Nio's first stop in Europe was Norway, where it launched the ES8 on September 30, 2021. 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.

Unlike its direct vehicle sales in Norway, Nio initially offered a service it called Nio Subscription in Germany, the Netherlands, Denmark, and Sweden, which only allowed local consumers to lease vehicles, rather than buy them.

After much controversy over the business model, Nio began offering the option to buy vehicles in those countries on October 21, 2022.

Earlier this year, rumors surfaced that Nio sold only 832 vehicles in Europe in the first half of the year.

In an interview with local media after the Nio IN 2023 innovation day event on September 21, Qin said reports of the company's sales figures in Europe were inaccurate.

According to Qin, the real operational results are three to four times that number.

Although the figure is only a partial achievement, Qin is not satisfied with it, saying that overseas sales have not met expectations.

Nio's products are more expensive in Europe than in China, due to a number of factors. However, the company still has room for improvement in places including the building of its operational system, he said.

Nio's current sales model in China is similar to Tesla's (NASDAQ: TSLA) direct model.

Nio's local counterpart BYD (OTCMKTS: BYDDY) has partnered with a large number of dealerships in overseas markets, and Xpeng also entered overseas largely through dealerships and has begun to shift to a more dealer-dependent model in China.

Nio's management first confirmed in August 2021 that the company would enter the lower-priced mass market through a sub-brand, and in subsequent communications referred to the sub-brand's internal codename as Alps.

In a face-to-face communication event with owners on January 26 this year, Qin said that in addition to Alps, another Nio sub-brand, codenamed Firefly, was in the planning stages and would deliver vehicles to European consumers first.

On July 21, local media outlet AutoPix reported that the first model of the Firefly saw a design freeze in late June, relieving some employees of previous fears that the project might be canceled.

Nio has positioned itself as a user enterprise, with a direct model that enables direct contact with owners a key cornerstone. However, there may be more flexibility in this for lower-priced, mass-market-oriented sub-brands.

Nio approached a leading local dealer group in the first half of this year to do some experimentation with introducing a dealer model for Alps, LatePost reported in a September 14 story.

The EV maker plans to hand over Alps' after-sales service and delivery centers to the 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 president says rumored European sales figures inaccurate, far below actual results