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Niu Technologies (NIU) Q4 2020 Earnings Call Transcript

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NIU earnings call for the period ending December 31, 2020.

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Niu Technologies (NIU 5.58%)
Q4 2020 Earnings Call
Mar 8, 2021, 8:00 a.m. ET


  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:


Good day, ladies and gentlemen. Thank you for standing by and welcome to Niu Technologies Fourth Quarter 2020 Earnings Conference Call. [Operator Instructions] As a reminder, we are recording today's call. If you have any objections, you may disconnect at this time.

Now, I will turn the call over to Mr. Jason Yang, Investor Relations Manager of Niu Technologies. Mr. Yang, please go ahead.

Jason Yang -- Investor Relations Manager

Thank you, operator. Hello, everyone. Welcome to today's conference call to discuss Niu Technologies results for the fourth quarter 2020. The earnings press release, corporate presentation, and financial spreadsheet have been posted on NIU's Investor Relations website. This call is being webcast from Company's IR website and a replay of the call will be available soon.

Please note, today's discussion will contain forward-looking statements made under the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements involve risks, uncertainties, assumptions and other factors. The Company actual results may be materially different from those expressed today. Further information regarding the risk factors is included in the Company's public filings with the Securities and Exchange Commission. The Company does not assume any obligation to update any forward-looking statements, except as required by law.

Our earnings press release and this call include discussions of certain non-GAAP financial measures. The press release contains a definition of non-GAAP financial measures and the reconciliation of GAAP to non-GAAP financial results.

On the call with me today are our CEO, Dr. Yan Li; and our CFO, Mr. Hardy Zhang.

Now, let me turn the call over to Yan.

Yan Li -- Chief Executive Officer

Thanks, Jason, and thanks everyone for joining us on this call today. So, in Q4, we saw a strong growth of domestic China market and a strong signal for the overseas market recovery from the COVID-19. We have had a substantial growth in Q4 with total sales volume reaching 150,000 units, a 41.6% year-over-year increase. The sales volume in the China market reached 137,000, a 35% year-over-year increase, whereas the volume in the international market rose by nearly 3x to more than 12,000 units, a 197.1% year-over-year increase.

Despite the challenges that COVID-19 had on the macroeconomic conditions globally, our 2020 and New Year sales volume surpassed 600,000 units, an increase of 42.8% compared to 2019. The sales volume in the China market eclipsed 570,000 units, a 45.8% year-over-year increase, whereas the volume in the international market reached over 29,000 units, slightly increased from 2019 despite the challenges that COVID-19 lockdown had on key markets around the world. Despite the initial impact of COVID-19 in Q1 2020, we have realized a rapid growth last year. This resulted well in line with our aggressive growth strategy makes NIU 2.0 set for 2020 and beyond.

Under our NIU 2.0 strategy, we're rapidly expanding our product portfolio to meet the specific needs of different market segments of the urban commuter customer by leveraging our unique design and advanced technology. In addition to expanding our product range, we're committed to expanding the reach of the retail sales network. This will mean expansion to more cities, while simultaneously creating a more dense sales network in existing cities. The year 2020 was the first year we put our NIU 2.0 strategy into play and we have achieved significant results in both product portfolio and sales network expansion.

In 2020, we introduced four new products to the China electric bicycle market segment, the M2, the MS, G2 and G0, all affordably priced between RMB2,499 to RMB5,799, approximately, $375 to $900 at today's exchange rate. These four new electric bicycle products have been ahead in each of their respective target markets accounting for 41.2% of our 2020 sales. These four products cover the two major design style of simple native e-bicycle and a fully covered e-bicycle with the riding from 40 kilometers to 90 kilometers on single charge, reaching multiple consumer segments' mobility needs at an affordable price.

Now, for the electric motorcycle market, we have expanded up on our signature NQi and MQi+ products. So, a G3 series in 2020 for the new markets, especially in China, while introducing the NQi GT for our international customers. The upgraded G3 is bigger in size with faster speed reaching from 40 kilometers to 60 kilometers per hour and the price range from RMB4,599 to RMB6,799, a good complement to our electric motorcycle offerings. For the Europe and Americas market, we've launched a new product called MQi GT inherited design style of our award-winning M series and combined with our GT powertrain technology. MQi GT is a dual battery electric moped with top speed up to 70 kilometers per hour and the range of 110 kilometers on a single charge, priced at a EUR3,399.

Besides scooter and motorcycle products, we continue to enrich our accessory portfolios. In 2020, we expanded our accessory lines by over 150 new products, with more than 1.6 million customers globally, we had a strong customer base to sell into. The 47.6% growth in accessory and spare parts sales in 2020 for the China market last year is an indicator that we are on the right track to further tap into this revenue stream.

Now, supported by the new product launches in the first three quarters in 2020, will accelerate our sales network expansion in Q4. In Q4, we added 350 branded stores and reached a total count of 1,616 stores in China, setting the quarterly record in store expansion. For the entire year, we added 566 stores, much more than the last two years despite the COVID-19 impact in the first two quarters. Not only we were able to add more stores, we also strengthened our footprint in more lower-tier cities around China. We now have 66 cities in China that has five or more new branded stores, a 30% plus jump from 2019.

Now, for international market in 2020, we have increased our market coverage to 46 countries from 38 in 2019. We added additional 90 flagship stores and the premium stores across the globe. Outside China, we now have 116 flagship and premium stores as compared to 26 at the end of 2019 despite the COVID-19 situation. Keep in mind that we continue to sell our products through a network of more than 1,000 dealers outside China. The expansion of our new flagship and premium overseas stores will be of a great benefit to future retail growth as we expand the product range to meet mobility needs and trends of those regions.

Now, in addition to the channel expansion in international market, we also made significant strides in our B2B division, especially sales to support the scooter-sharing operators, most notably is a contract we signed with Linde [Phonetic] in Q4 2020, the largest mobility sharing operator globally. We're now Linde's sole-solution provider for the multi-sharing. Globally, now we support 19 share operators in Europe and Americas, with our total number of vehicles is therefore doubling in 2020. In many market share scooters play a key role introducing electric mobility to a wider range of customers, a key first step in helping us redefine urban mobility globally.

To support our NIU 2.0 growth strategy of aggressively entering urban mobility market, we also expanded our branding and marketing activities. Starting in 2020 we invested in advertising in mainstream online TV series and popular shows in China, which accumulated over 2.5 billion views online/off-line during the airing of those programs. We continue to invest our efforts in new social media channels like Douyin and Kuaishou, while with our Douyin and Kuaishou quarterly views reaching 50 million and 20 million, respectively. This represents the 10x increase over 2019.

In overseas market in Q4 specifically we have upped our effort in social media with close to 1.3 million interactions on Instagram and Facebook. Particularly, Bella Hadid, the top American supermodel was spotted riding a NIU scooter in New York City with friends in September 2020, which was featured in Vogue and other media as well. We also continue to invest in co-branding and marketing activities. In Q4, we launched an MS electric bicycle, Gundam limited edition. For your reference, Gundam is a incredibly popular Japanese cartoon series. In a few short days after the launch of the project, we were mapped more than 50 million unique views across a variety of social channels.

Now, our app for the users have also created many interesting stories in 2020. We had a new fan from Shanghai who spend a 261 days riding along the entire border of China, and mapping more than 30,000 kilometers. In the US, we have one of our overseas unique users making a video of skydiving right out of back of a plane on the NIU moped. And the customers value decided to modify our traffic panels with traditional [Indecipherable] crafted U panels, highlighting how easy an ecology can promote sustainable mobility. And a quick fun fact for you, as of this morning, our users around China have now mapped more than 7.8 billion kilometers of riding distance. Now, each of those kilometers is a testament to the important role we play in a daily life of our users who depend on us to get to work to work and go out for a casual cruise.

Both branding and marketing efforts has significantly increased our brand awareness. NIU has been voted as the Most Valuable Brand in Urban Mobility in China by Manager, a leading financial magazine in China.

As we wrapped up a successful year in 2020, we are very optimistic for 2021. Our addressable market in China, the lithium-ion-based electric bicycle and motorcycle market will continue enjoying rapid growth that can been directly attributed to a handful of key factors and events. First of all, the overall electric two wheeler market expected to grow by double-digit simply because the old lead-acid battery scooters will need to be retired due to the expiration of the temporary licenses directed back in 2018 and 2019. Starting this year, this will create additional demand of more than 10 million units every year over the next three or four years.

Secondly, the downward pressure on the cost of lithium-ion batteries will help to further increase the penetration of the lithium-ion battery-powered e-bikes and e-motorcycles. Just in the last past two years, we have observed this trend. In 2019, the lithium battery-powered e-bikes and e-motorcycles accounted for less than 10% of the total market in China and by end of 2020 it's already in its high-teens.

So, in summary, we see the rising tide of market for the lithium battery-powered e-bicycles and e-motorcycles, fueled by the regulatory compliance, combined with the lower cost of the lithium battery software has an incredible opportunity in China that we, at NIU, are poised to capture significant growth from.

Now, excited with this market potential, we launched the year of new campaign during the Chinese New Year this year, which happened to be the Year of Ox or the Year of NIU in Chinese. Our multiple platforms and we generated more than 300 million views. Both efforts in branding and marketing have acted as a catalyst in driving our Q1 sales in 2021.

For the international market, the COVID-19 situation has accelerated the individual urban mobility demands despite the short-term impact on the retail operation in 2020. Besides electric motorcycles, we observed significant market growth in many individual urban mobility sectors like power-assisted bicycles, kick scooters and other form factors. As part of our NIU 2.0 growth strategy, we have diversified our product portfolios into those fast-growing markets with our first power-assisted bicycles the EUB-01 will be shipped in the first half of this year, and we have developed more products in those categories for immediate release to capture the market growth across all segments.

In addition, we also observed a return of growth in shared mobility market starting from the second half of 2020, again driven by the demand for individual mobility. We are well positioned to capture the growth in this market in 2021 with more offerings for our sharing operators.

Now, on overall product development we have tens of new products in R&D pipeline for the domestic China market, Europe, America market and Asian market. This product will cover a wide range of urban mobility categories from Micro-mobility to urban mobility. In a few short weeks from now, in April, we will post our spring global product launch event, where we will debut a handful of new products that will be ready for purchase in the first half of 2021 for both the China and overseas markets. Overall, we expect our total sales volume for the annual year of 2021 to surpass 1 million units.

Aided by the suitable product offerings, our sales network expansion will also be accelerated. In April this year, we expect to celebrate our opening of our 2,000 branded new stores in China, and we target to further accelerate the opening of our stores throughout the rest of 2021. International market, with the ease of COVID-19 situation, we also expect to accelerate our flagship and premium store openings.

Now, with this, let me turn to Hardy to talk about financials.

Hardy Peng Zhang -- Chief Financial Officer

Thank you, Yan, and hello, everyone. Our press release contains all the figures and comparisons you need. We have also uploaded Excel formatted figures to our IR website for your easy reference. As I review our financial performance, we are referring to the fourth quarter figures, unless I say otherwise, and that all monetary figures are in RMB, unless otherwise noted.

Our Q4 sales volume reached 150,000 units, increased by 42% year-over-year. China sales volume increased by 35% as a result of retail sales network expansion, new product launched in Q2, Q3, and also strong online sales. In the fourth quarter, our online sales volume increased by 3 times compared with Q4 2019, driven by the successful sales during the Double 11 and Double 12 Shopping Festival. Our 35% growth rate in China is higher than the general market growth. According to MIIT, the China electric bicycle market grew by around 17% in the fourth quarter. We delivered a higher growth.

For the international markets, our Q4 sales volume was 13,000 units, a significant increase compared with the 4,000 units in Q4 2019. The sales volume is higher than our initial expectation, mainly due to additional orders we managed to get from sharing operators in overseas market.

With regards to product mix, N series accounted for 20% of total sales volume due to strong overseas sales. M series accounted for 25% due to M2 and MS new product launch. U series accounted for 25%, and Gova series accounted for 30%. On the 30% from Gova series, 20% is from the mid-end product G0 model. The high percentage of G0 sales volume strengthened our ASP when comparing with Q4 2019. However, when comparing with Q3, the percentage of volume from G0 decreased by 7%. And as a result, our ASP for China scooter sales improved by 11%.

Total revenues increased by 25% to RMB672 million, above the guidance we provided earlier, mainly due to the higher overseas sales to sharing operators as I mentioned above. Our revenue increase was driven by sales volume growth of 42%, partially offset by decreased revenue per scooter or ASP of 11.5%. There are few reasons for the ASP decrease. First, the sales of low-priced model, G0, reduced our ASP. As a result, the China scooter ASP decreased by 16%. Second, the lower spare parts sales to overseas market led to the decrease of ASP for accessories, spare parts, and services by 23%. Third, the high proportion of scooter revenue from overseas market, partially offset the two negative factors mentioned above. In total, the ASP decreased by 11.5% in the fourth quarter. On a quarter-over-quarter basis, our ASP however improved by 25%, mainly due to change in product mix.

Gross margin was 25.2%, 0.9 percentage points lower than this time last year, but 4.3 percentage points higher than Q3. The lower gross margin compared with last year was mainly caused by sales volume rebate to distributors in China. In the fourth quarter 2019, China sales volume grew by only 16% and mainly China distributors did not meet the sales volume target. Therefore, we gave low percentage rebates to the distributors. In Q4 2020, most of the China distributors met the sales target and received regular rebates.

When compared with Q3 2020, our gross margin improved by 4.3 percentage points, mainly due to two reasons. First, favorable change in revenue mix, being the higher percentage of revenue from overseas market and also higher percentage of revenue from accessories, spare parts and services, where our gross margins are higher than average. Second, improved gross margin from China into the sales as a result of continued cost savings. Despite the sales of low-margin G0 model, our China e-scooter sales gross margin has improved to a higher percentage than that of 2019 when there were no sales of G0 models.

Our total operating expense, excluding share-based compensation, were RMB110 million, increased by RMB23 million, or 27% year-over-year. The increase was mainly caused by higher sales and marketing spend of RMB10 million for retail sales network expansion and the way of risk branding and the marketing activities.

As a percentage of revenue, our sales and marketing expense, excluding share-based compensation was 8.6% lower than 8.8% in Q4 2019.

R&D expenses increased by RMB10 million mainly for staff cost and design spend, because we have more products in the R&D pipeline, many of which will be launched in the second quarter of this year.

Our share-based compensation expense were RMB10.4 million, similar to the amount in Q3. Compared with Q4 last year, it has increased RMB2.6 million due to the new grants to employees.

Our income tax expense was around RMB14 million, RMB13 million higher than the same period last year. The higher income tax had a significant impact on our net income. Some of our subsidiaries have used accumulated loss and therefore, begin to pay corporate income tax. Our long-term income tax rate is estimated to be around 20%. Full-year 2021, our average tax rate is estimated to be around 15%, because we can still use the accumulated loss from one of our entities in China.

Our GAAP net income were RMB58 million and adjusted net income were RMB69 million, slightly higher than Q4 2019. The adjusted net income margin was 10.2%, 2.6 percentage points lower than Q4 2019, mainly because of lower gross margin of 0.9% at a higher income tax expense. The income tax expense as a percent of revenue was 2%, 1.9% higher than this time last year. If you compare the adjusted net income before tax between Q4 2019 and 2020, it increased from RMB69 million to RMB82 million, a year-over-year growth of 19%.

Turning to our balance sheet and cash flow. We ended the quarter with RMB1.1 billion in cash, term deposits and short-term investments. Our operating cash flow was negative RMB163 million, mainly due to reduction in payables of RMB119 million as a result of seasonality. On a full-year basis, our operating cash flow was a positive RMB416 [Phonetic] million.

Our Q4 capital expenditure was around RMB41 million, mainly related to capacity expansion of RMB21 million, new store building of RMB13 million and R&D spending of RMB7 million. On a full-year basis, our capital expenditure was around RMB150 million.

Now, let's turn to guidance. We expect the first quarter revenues to be in the range of RMB420 million to RMB478 million, a increase of 80% to 105% year-over-year.

With that, let's now open the call for any questions that you may have for us. Operator, please go ahead.

Questions and Answers:


Thank you. [Operator Instructions] Your first question comes from the line of Vincent Yu from Needham & Company. Please ask your question.

Vincent Yu -- Needham & Company -- Analyst

Thank you, management, for taking my question and congrats on the strong year. I have three questions. First question is, can management share with us NIU's plan for off-line store opening this year, 2021, how has the store opening process gone so far given strong consumer and distributor interest?

My second question is about the unit sharing operators. Can we -- can you talk about how many unit sharing operators contributed in 2020? And how big opportunity this mobility sharing platforms customer represents in terms of annual unit sales in 2021?

My third question is about gross margin outlook. Can management shed some lights on the gross margin outlook for 2021? How much cost savings can we expect to be generated from BOM and the battery pack, respectively? Thank you.

Yan Li -- Chief Executive Officer

All right. So, thanks, Vincent, for the question. So, let me quickly -- basically cover the first question store openings. So, we actually we -- I think with our diversified product portfolio, really starting of Q4 last year and even starting Q1 this year, we do see an acceleration of new store openings. And as I mentioned, in Q4 last year, we're able to open more than 300 stores. So, actually in Q1 this year, if you recall that, by end of Q4 last year, we have about 1,615 stores. Now, we expect to have our 2,000 store open basically early April. That means despite the Chinese New Year break, we're able to open another close, not 400, but 380-something stores within the three-month. So that's actually a tremendous growth. And we actually, we don't expect to slowdown. I think with more products coming out, especially with new products coming out in April, we expect to open more stores in Q2, Q3 and Q4 this year. So, I think right now we have about 1,600 -- well, by the end of last year we had 1,600 stores. I think there is minimum we can add a 1,000 or even more than 1,000, 1,200 to 1,300 stores this year.

Hardy Peng Zhang -- Chief Financial Officer

And for your second question about how many units we sold to sharing operators during 2020? In -- during 2020 we sold around 8,500 units to sharing operators, that's close to 30% of our total sales in overseas market. And normally, the contribution from sharing operators account for 20% to 30% of our total overseas sales volume. We also expect a similar percentage in year 2021.

For your third question about gross margin outlook. First of all, what we can share with you is, during 2020 the cost savings contributes to 4% to 5% of the margin expansion during 2020. However, during 2020 because we launched the low marketing G0 model that had a negative impact on our gross margin. But we are able to offset that with cost savings in most of our scooters. During 2021, we expect a similar percentage of cost savings in all the part, also lithium batteries. And because of that we expect the gross margin will be more or less stable, similar to what we see during 2020.

For the product mix, as already mentioned by Yan, in 2021, we may launch further products, new products in the price ranges similar to what we have for G0. Therefore, that product launch will have a negative impact on the overall margins. But we are also confident that we can use the cost savings to offset all the negative impacts and to keep our margins stable. So this is answer to your second and third question.

Vincent Yu -- Needham & Company -- Analyst

Thank you. Thank you very much.


Thank you. Your next question comes from Alex Potter from Piper Sandler. Please go ahead.

Alexander Potter -- Piper Sandler -- Analyst

Excellent. Thanks very much. So my first question is regarding guidance. The full-year scooter delivery guidance of around 1 million units, that was good, that looks around what we had expected. But the Q1 revenue guidance is a little bit weaker than what we've thought. So it implies sort of a pocket and I know there's seasonality to consider here, but it seems like the Q1 sequential downtick in revenue versus Q4 is a little bit bigger than we had expected. So, is there anything to call out there or is this just normal seasonality?

Hardy Peng Zhang -- Chief Financial Officer

I think the first reason is normal seasonality because normally in Q1, the Chinese New Year -- during Chinese New Year, the factory will be shut down, and also the logistics companies will not provide any further facilities. This year during Chinese New Year there is also some control from the local government because of COVID-19. Therefore, there is small impact from the -- from that. Other than that we also want to give the guidance, we also relatively conservative on the overseas sales volume, mainly because we see the continued challenge for us to book containers to shift to the overseas market. If we take out all this impact, if we're purely looking for the order book, we see a very strong sales volume growth for the first quarter. So, in summary, it's more because of seasonality, but we tried to be prudent considering the short-term impact on COVID-19 or some challenges for the overseas shaping [Phonetic].

Alexander Potter -- Piper Sandler -- Analyst

Okay. That makes sense. Thanks very much. I also had a question on, I guess, the prices for international scooters. I can appreciate the gross margin in the quarter was really good. There was some mix underlying there, good cost control. But if you just look at the price of the scooter that you sell in the international markets versus Q4, the price has come down. Is there anything specific driving that?

Hardy Peng Zhang -- Chief Financial Officer

No, not really, not really. Again, purely because of the two things. I think one thing is because in the overseas market we are selling N models, also M models. So, it really depends on how much model in different segment our distributor order from us. In Q4 last year, we have some of the orders for M series. The M series is slightly lower due to price compared with N series, that explain the reason. Secondly, some of this -- our sharing operators, when they book -- place orders, they only order the body part of the scooter instead of order the entire scooter and they place separate orders for the spare parts, etc., for the battery, that also lowered our ASP. Therefore, it's all quite normal. So this is the first reason.

The second reason is because of the depreciation of US dollar against RMB, because in the overseas market we price our products in US dollars. With the weakening of US dollar against RMB, we do see some impact on the average ASP. But that's -- this is the two reasons for slightly lower ASP for international market.

Alexander Potter -- Piper Sandler -- Analyst

Okay, great. That's super helpful. Then maybe the last question I had was on supply chain. There has been, obviously, a lot of commentary around semiconductor impact on various supply chains, but also in the electric passenger vehicle market there has been a lot of commentary regarding bottlenecks in the battery supply chain, potential delays, production delays that are impacting people's ability to ramp production. Have you seen any of those supply chain impacts either with regard to semiconductors or with regard to batteries?

Yan Li -- Chief Executive Officer

I think that's a good question. Actually, in the last few weeks, we actually observed a little bit -- more stringent supply chain in terms -- actually in both situation in semiconductor, in the chipset. So there are some chipsets that we're using in our central controllers so that has impacted us a little bit, and -- as well as we see a temporary shortage in the batteries. For us, it's -- we have secured some supply chains at the beginning of the year so that helps us to really to cope with the situation and basically, we observed a temporary glitch about one week or no longer than two weeks of glitch. But that has -- we were able to actually able to handle the situation so far.

Alexander Potter -- Piper Sandler -- Analyst


Yan Li -- Chief Executive Officer

But, yeah, [Speech Overlap].

Alexander Potter -- Piper Sandler -- Analyst

Okay. I appreciate it. Good quarter, guys.


Thank you. Your next question comes from Jing Chang from CICC. Please ask your question.

Jing Chang -- CICC -- Analyst

Hi. So, congrats on your bidding [Phonetic] guidance of fourth quarter results. So I have three questions. So first is, so can you give us more color on the new products to be launched in April and such as the price range? And how to distinguish them with all the product series?

And second one is -- so news or rumors that we are producing or prepared to produce new energy vehicles. So, how do we think about our business expansion, such as go to the NIU's [Phonetic] part or other products?

And also, my last question is referred to -- you're talking about Gova and same price, mid-end models. So as we open more stores, and maybe more exposure to lower-tier cities and more customers, will we consider to separate Gova and NIU brands to different channels? That's my three questions.

Yan Li -- Chief Executive Officer

All right. So, thanks for the questions. I'll address them and I'll have Hardy to complement as well. So, firstly, on the new product launch in April, we are very happy to actually invite all of you to actually to attend the launch event, so you actually can see the product in person than actually see the product, actually experience the product well. So, we actually have multiple products to be launched in April covering actually multiple categories. The categories are high-end electric bicycles, high-end -- and also the -- well, let me call the mid-end electric bicycle market in China, as well as covering the electric motorcycles in China, as well as some of the new categories like the power-assisted bicycles, and -- in the overseas market. So, it's actually a wider range of products that we're going to launch in -- during, we call a global spring new product launch, which is going to happen in our -- in Changzhou and -- that's where -- actually, by that time our -- we have a Phase 2 of the factories. We have completed -- with our new factory -- we completed Phase 1, the Phase 2 of the factory will be almost ready in April, not complete ready, but we see the gist of it, and that help to increase production capacity as well. So I think that was on the new product launch in April.

In terms of the rumors on the car side, I think you're talking about, recently, there were I think -- I know -- there are news reporting -- not news reporting, like from social media, it's actually one of our new users. Actually, I think he is an industrial designer and he did a concept design of his new design [Phonetic] to electric car, it wasn't electric car, it's more electric car to look like. So he posted on his own social blogs and then got picked up. We actually -- we thought he was talented. So, to be honest, our industrial -- our IT team actually tried to reach out to the users and tried to -- tried to see what his talent is. Whether we can use his talent on our two-wheeler device? We didn't really -- but he is blogging -- people use our logo, so there is a little bit, what we call, probably a brand of [Phonetic] patent infringement, but we thought we would let it go. But we cleared off on our own Weibo saying, hey, this is -- it's a -- it's purely out of passion of our -- one of our users.

Now, the last piece on the Gova series. I think on this note, even though I think we have multiple products under the Gova series. But having said that, I think the Gova series still represent the -- each month [Phonetic] design -- industrial design, in terms of product quality, it's basically as good as either N series or M series and the U series. So, I think in the mid-term we still put it -- we still like to have our Gova series under the new brand, because I think actually it represents what new brand representing which is technology freedom and style. So, there will be -- we're coming out with more products under the Gova series as well this year and that will help us to actually bring our product to more -- a wider range of consumer segments.

Hardy Peng Zhang -- Chief Financial Officer

Just to supplement on the new product launch. For the -- in terms of price range, the new products we launched will have a product in the similar price range like G0. But we're also going to launch premium products with a sales price similar to M2, MS. So we will have quite a few offering to our customers. And also, for the new product launch, we're also going to target different customer segment. For example, one of our products -- new products will be more targeted toward female. With that, it will help us to further expand our customer base and also help us to increase our sales volume in 2021. So that's the answer to you -- to the three questions.

Jing Chang -- CICC -- Analyst

Thank you. And a quick follow-up question. So, I know that Mr. Yi'nan, our large shareholder, he has his own company to produce NIU Energy [Phonetic]. So, is there any potential opportunity for us to -- like potential cooperation between NIU and his own brand?

Yan Li -- Chief Executive Officer

Yeah. I think nothing I'm aware of. I think in terms of NIU, I think, our mission was redefine [Phonetic] urban mobility and make price better. So, we're purely focused on urban mobility. I think mainly the two areas. We have a product, which compete, which is not launched yet, but that's the three wheeler product under the motorcycle market. I think this is what we are good at in terms of, I would call it, individual urban mobilities.

Jing Chang -- CICC -- Analyst

Okay. Thank you. That's all my questions.


Thank you. Our next question comes from Alice Ma [Phonetic] from UBS. Please ask your question.

Alice Ma -- UBS -- Analyst

Hi, management. Thanks for taking my questions. I have three questions. The first one is that, could you give us more elaboration on -- due to the new regulation in China, how do you think the segmentation between the e-motorcycle and e-bike after the three years of transition period? As you have just mentioned, I think most of your incoming products in China are mainly e-bike segment. So, can we understand that in the future, after the transition period, your focus in Chinese market will mostly be the e-bike market while in the overseas market will mainly be the e-motorcycle?

Yan Li -- Chief Executive Officer

Okay. Yeah. I think -- thanks for the question. So, I think, first of all, I think the -- from the new regulation there is a clear separation on the e-bike versus e-motorcycle. Basically, the e-bike -- under the e-bike regulation were, for example, total weight has been less than 55 kilos. There is restriction on the size of the bike, as well as the speed. I think according to some data, basically last year roughly about 22 million or 23 million units were e-bike, where the rest of 10-plus million units were, what you call, the e-motorcycles or light e-motorcycles. So, I think that -- as we are seeing that, whether that percentage will increase? It really -- I think it really depends on the city by city regulations on motorcycles because some places where when they actually put a restriction on motorcycles then you're going to see the e-bike percentage will increase.

Now, from our point of view, from NIU point of view, we actually have product in both markets. On e-bike market, we have our multiple products from our M2, MS, U+, U1, US and our Gova, G2, G1, G0. So, I think it's like eight product lines in e-bikes. And for the e-motorcycle as well, we have our N1, N+, G3 and we have more products coming out for the motorcycle market. So, I don't think we are -- it's not like we're going to focus on one versus the other. I think for both markets, I think we have advantage in terms of design. We have advantage in terms of technology that I think we actually able to gain market share in both markets.

The good thing on the trend of both markets is the trend of from lead-acid to lithium-ion batteries. You actually see that client both [Phonetic] on the e-bike is very obvious because for the e-bike to be less than 55 kilos, most likely you would need to use the lithium-ion battery-powered scooters. So, we're seeing a lithium-ion batteries started percentage in terms of penetration.

Now, for e-motorcycles, traditionally, it's mostly lead-acid, we're the first one doing the lithium-ion batteries. And people are actually start to enjoy these portable lithium-ion batteries because it's easier to charge, you can take the battery out. So, we're actually seeing a -- also seeing a basically increase in terms of lithium-ion battery penetration in the e-motorcycle market. So -- and the NIU being the sort of the first smart electric lithium-ion battery scooters both on the e-bike and e-motorcycles. I think we have advantage in terms of capturing the market growth on the lithium-ion-based e-bike and e-motorcycle market.

Alice Ma -- UBS -- Analyst

Okay. Thank you. Very clear. And my second question is about the market segmentation among the need for high-end scooters vs the lower end market. What do you think is the respective presentation market share?

Yan Li -- Chief Executive Officer

I think it's difficult to talk about sort of percentage. I don't have the sort of the percentage on hand. But I can give you a rough price range basically in terms of retail price, we're seeing anywhere, the cheapest ones can go as low as RMB1,500 to the expensive one which we own most of market shares up to like RMB8,000-ish. So, I think that sort of the -- give you a sense. But now if you look at the market average price, I think, Hardy -- maybe I think market average price, probably retail as far as RMB2,500-ish? Right. So the market average price is about RMB2,500, RMB2,500 to RMB2,600-ish, less than RMB3,000. In fact, RMB2,500 to RMB2,700-ish. So, I think that's where the market average price.

Now, the interesting thing is, actually our -- if you look at our product offerings, our cheapest ones actually had a RMB2,200 -- RMB2,300-ish. So, it means our cheapest one is just right below the market average. So most of our product offerings are sort of in the mid -- starting at the mid-end of the market, where the traditional -- other competitors or players, they have a more cheaper products.

Hardy Peng Zhang -- Chief Financial Officer

And just to supplement that, even though there is no official data about different -- what's the multi-type and the different segment. The other way I think about it is that, the sales volume in Tier 1, Tier 2 cities. The people in Tier 1, Tier 2 cities have high disposable income, higher volume you used to pay, they tend to buy more expensive, more premium products. In China, in the Tier 1, Tier 2 cities, the sales volume this year is around 6 million to 7 million account for 22% to 25% of the total market. So that's kind of a proxy you can think about how are the premium segment is for the overall market.

Alice Ma -- UBS -- Analyst

Okay. Very clear. Thanks a lot. And my last question is about, could you elaborate more like how you leverage the data you have gathered already from the ECUs, like do you use that to support opening new stores? Or do you use that to more like design the products or so on? Thank you.

Yan Li -- Chief Executive Officer

So, we actually use the data in three dimensions. Well, first of all, all the data -- even though we collect the data, but all the data has been used anonymously in the sense that we use data as collectively as a group. Now, we do observe the data is to calculate, to analyze user behaviors that help us to, one, either design new products or provide a upgrade for the existing products. Most of our scooters actually support the over-the-air upgrades, or the OTA, where basically every three months or six months, there is actually new software can be -- actually download the upgrade to your scooters that actually will make you driving experience little bit better in terms of acceleration, smoother, all that stuff. So a lot of those actually those are being -- those upgrades are being done by observing the user behaviors, understand how we can actually fine-tune the controllers, fine-tune the software such that will improve the product experience. So that's on the existing product.

On the new product, obviously, we look at how -- for example, interestingly, we observe that less than 30% of our users actually drive more than 20 kilometers a day, so that help us to understanding that -- help us to understand what the typical battery -- basically the battery capacity we need to provide for our users, such that, on one hand, it can provide the ease of he or she can drive three days or four days without doing a charge. At the same time, we don't want to overload the user with a huge heavy batteries which will add up the cost, as well as make the battery heavier. So those are the consumer insights we can use to for a product -- new product development.

Second part is actually what we have is called a heat map because we have that -- we have the users' journey [Phonetic] information. So we know where the user driver scooters, where the user park the scooters, so we actually have a heat map of what we see and that actually help us to open -- to find a store location, to open stores because most of our retail stores are not just for retail they are also for after-sales services. So, you can easily think that there will be areas where we observe, there are tens of users but without a single store. So that means we need to open a couple of stores in those regions that will actually provide the adequate customer service to the users, so that -- we do that as well. So those are sort of the more interesting things we use with the data.

So, I think the more interesting fact is actually -- those data has been accumulated, so far we have about 7.8 billion kilometers riding distance and then on daily basis there is more and more knowledge being accumulated into our data servers than -- such that it -- let me put this way, it analyze, basically the more you look at it, the more you analyze then you -- there is more interesting fact we can find out. So analyzing data actually provides a better service and better products to our users.

Alice Ma -- UBS -- Analyst

Okay. Thank you.


Thank you. Our next question comes from Soojin Lee from CITIC [Phonetic]. Please ask your question.

Soojin Lee -- CITIC Securities -- Analyst

Good evening, management. I'm Soojin Lee from CITIC. Congratulations and prosperity New Year. And my first question is, what's the main innovation direction of our follow-up new offerings, considering that their competition becomes more and more fierce, especially in the high-end market?

Yan Li -- Chief Executive Officer

Sorry, Soojin. Can you repeat the question? So I didn't catch -- you're talking our competitors and the advantage of our new product offerings?

Soojin Lee -- CITIC Securities -- Analyst

Yeah. And I mean, what is our -- the most highlight of our follow-up NIU offerings compared to other competitors?

Yan Li -- Chief Executive Officer

I see. I guess, how do I describe? I guess, you have to see the product, to be honest. It's very difficult to describe what's in those highlights because every year we do those new product launches. We keep it very secret and when people actually observe a new product, they also involve factors saying, wow, this is actually really cool. So you actually have to see the product. But let me just give you sort of a very vague answer will be, so we have multiple products coming out in April and the product design to address different customer segments because I think more and more we are in this industry we understood that different customer segments actually -- different consumers and different customer segments actually have different needs for this urban mobility. Some of them actually would require longer driving distance and some of them actually wouldn't require bigger space in terms of -- especially even they need to take their kids to school.

And also male, female may have a different view in terms of what's being called a beautiful scooter. So, I think in the past when we started NIU, it always start N1, M1 basically sort of one form factor for entire market. But as we are starting to actually covering a wider range of consumer base, we actually utilize that we need to design multiple products and different products to actually attune for the multiple customers' segments taste. I think that's probably sort of the main highlight.

Besides there is NIU, what we call, a smart functionality in upgrade scooters, there are also new powertrain technologies in scooters that will make the scooter drive faster, longer mileage based on the same battery, those are sort of the technology upgrade. But if you take one highlight, you're going to see a multiple device styles, multiple form factors that actually attuned for different customer needs.

Soojin Lee -- CITIC Securities -- Analyst

I see. Very helpful. Thank you. And my last question is that, how do we utilize our tremendous user data? And may we have any way to explore new functions in futures by utilizing our new user data?

Yan Li -- Chief Executive Officer

So I think as I mentioned earlier, so basically -- currently we're using data on three ways, right? We're using data to analyze customer behaviors to help us to design better product, basically new product definition, new product design to better suit our customer needs. That's one. Second, we're actually using data to fine-tune our software and software in our controllers, in our ECUs, such that for the existing customers will not buy a new product based on upgrading software over-the-air, they actually kind of experience -- they have -- they will have a upgraded or improved driving experience. And lastly, we're also using data to -- in terms of retail expansions, open stores, as well as sales and after sales service stores in locations where, what we call, the white spot, where we have users, but we do have service stations.

And one more thing to add is, actually the data will also use for -- sometimes for targeted advertising, because really analyzing what our users profile, analyzing what our users behavior, we have a better understanding of our potential users and that will help us to do a targeted advertising. So, those are sort of the four areas we use really just driving our main business.

Now, in terms of monetizing on the existing data, we haven't done that. I think the only part we are seeing is actually for the users to continue enjoying this, what we call, smart connectivities, there is annual fee of, I think it was like RMB30 or RMB50 annual fee we charge, I mean, these are mainly to support on the sort of on the data reconnectivities.

Soojin Lee -- CITIC Securities -- Analyst

Yeah. I see, it sounds very promising. Thank you. Thank you, Yan.


All right. Thank you. Seeing no more questions in the queue. Let me turn the call back to Mr. Li for closing remarks.

Yan Li -- Chief Executive Officer

All right. Thank you, operator, and thank you all for participating in today's call and for your support. We appreciate your interest and look forward to reporting you again next quarter on our progress. Thank you.


[Operator Closing Remarks]

Duration: 58 minutes

Call participants:

Jason Yang -- Investor Relations Manager

Yan Li -- Chief Executive Officer

Hardy Peng Zhang -- Chief Financial Officer

Vincent Yu -- Needham & Company -- Analyst

Alexander Potter -- Piper Sandler -- Analyst

Jing Chang -- CICC -- Analyst

Alice Ma -- UBS -- Analyst

Soojin Lee -- CITIC Securities -- Analyst

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