In Shanghai, aerospace executive Lu Hao didn’t just buy a sleek electric SUV from Nio (NIO.N), China’s answer to Tesla . He bought Nio’s whole vision of a future where social media, e-commerce and the daily commute converge in one lifestyle app.
In the morning, the 31-year-old eats cereal bought from the automaker’s Nio Life online store while chatting on its app with other Nio owners. He wears Nio gear for the drive to and from work, and in the evenings relaxes at home with a glass of Nio wine and more chat with Nio owners about how to get the best out of their cars.
“Buying Nio stuff has been a part of my daily life,” said Lu, “the prices are good and it is a habit to wear Nio clothes to events.” Over the past two years he has spent over 220,000 yuan ($34,000) on Nio Life products, on top of the 470,000 yuan he forked out to buy his ES8 SUV to replace a Ford (F.N) Mondeo gasoline sedan.
Automakers around the world have long sought to tap into brand loyalties with goods like branded t-shirts or caps. But Shanghai-based Nio’s ambitions are much grander: a startup now valued at $70 billion according to its New York stock listing, it operates its own digital currency with tradeable credits that clients can gain from buying a car, attending events or even simply posting their stories on the Nio app.
“Communities tend to lean towards loyalty … that’s exactly what Nio is tapping into,” said Tu Le, analyst at China-based research firm Sino Auto Insights, referring to an app that Nio executives say now has around 150,000 daily users.
“If Nio can continue to build the community, launch great products, and not have any major quality spills they are well-positioned to be a major player in China.”
However, Le cautioned, “Nio still hasn’t figured out to convert more of the Nio community that haven’t purchased a Nio vehicle into Nio (car) buyers, which is concerning.”
THE NIO LIFE
Backed by Chinese tech giant Tencent Holdings Ltd (0700.HK) as well as global investors betting on an electric car boom in the world’s biggest auto market, Nio’s huge market value – just above that of Germany’s BMW (BMWG.DE) – provides a stark contrast with thus-far tiny sales.
It sold just under 44,000 cars last year in China, a fraction of BMW’s 2 million-plus global sales, and remained firmly in the red though it narrowed net losses significantly to $860 million.
Shanghai’s Lu might be among the more enthusiastic Nio owners, but he is far from alone. More than 80% of Nio customers participate in online or real-life Nio community activities, using Nio credits, apps and showrooms, according to executives who said Nio has sold over 3 million Nio Life products so far.
“Deep and close contacts with customers help us adjust to the changes of auto industry more quickly,” Nio’s co-founder and president Qin Lihong said in a recent interview. Qin said Nio will build a user community in foreign markets when it does branch out overseas – Europe being a likely market at some stage – but will adjust to local environments.
The same community message has been picked up by others.
Geely, China’s biggest private automaker, launched a new electric Zeekr brand with a similar strategy of city centre showrooms and lifestyle product lines. Meanwhile BMW, which has a long-time lifestyle product line, launched its car-owner app in China in last September.
Nio designed its app, which make its credits different from hotel’s points or airline’s miles, in such a way as to try to attract customers to interact more with the company, Nio’s user relations executive Calvin Shen said.
“Buying a car is a less frequent activity than taking a flight or shopping at supermarket, so we need to create more everyday activities to keep customers in touch,” Shen said.
Buyers like Shanghai’s Lu are on board with that, using some of his Nio credits to secure tickets for this year’s edition of company’s annual ‘Nio Day’ celebration. The Chengdu event, livestreamed on the app, saw the unveiling of the company’s first sedan, the ET7 – now set to join Lu’s collection of Nio goods.
($1 = 6.4879 Chinese yuan renminbi)