Nio (NIO 8.72%) has been a polarizing Chinese electric vehicle (EV) company, to say the least. After soaring roughly 800% toward the end of 2020 and beginning of 2021, it's been a steady decline in the years since.
With questions surrounding Nio, as well as red flags, are the company's two recent moves following in Tesla's (TSLA -1.11%) footsteps to regain momentum -- or just another red flag?
What happened?
Beginning in the middle of June, Nio cut prices for all models in China by 30,000 yuan, or roughly $4,200, even on its revamped ES6 and ES8 models. That essentially chops 6% to 9% off the price tag for consumers.
Nio is far from alone in making EV price cuts, although it's a complete reversal from Nio claiming it wouldn't join the price war in April. Tesla has led the charge in adjusting prices frequently as CEO Elon Musk admitted a willingness to trade some profitability for sales growth, and Nio's price cuts are evidence of the pressure its putting on the industry.
In fact, Tesla is currently making a quarter-end push in the U.S. to move inventory by offering discounts as high as $7,500 on high-end Model S sedans and Model X crossovers. Tesla has also upped the ante by including friendly lease deals on certain models, as well as offering discounts on Model 3 inventory if buyers are willing to take delivery before June 30.
Further -- and here's where Nio and Tesla take separate strategies, even if in different markets. -- Tesla also threw in free Supercharging network access for three years to the Model S and Model X in April, and last week added three months of free Supercharging for Model 3.
It's a decent incentive to help Tesla push sales at the end of the second quarter, and the free year of free Supercharging for qualifying buyers is probably worth around a few thousand dollars, per Automotive News.
Where did Nio potentially go wrong?
As you can see from Tesla's willingness to push incentives to regain momentum, Nio was willing to slash costs. But Nio took the opposite approach when it comes to incentives. In the middle of June, Nio decided that it would no longer provide free battery-swapping services to buyers.
Even though Nio has considered this for some time, it also seems to realize this isn't a great move for its consumers. Previously Nio had offered the free battery swapping at least four times monthly for its owners.
"The adjustments had been discussed internally for quite a while and we took advice and suggestions from some users," said Nio CEO William Li, on the EV maker's social media, "It is the best timing to publish it ... but we cannot make everyone happy," he continued.
The big picture
This development might be larger that investors realize. It's not just that Nio pulled back on incentives at a time when the industry leader is pushing them, it's that investors have long questioned the unprofitable EV maker's plan to build an additional 1,000 battery swapping stations in China in 2023, bringing the total to roughly 2,300.
Already, investors have some ammunition as the company's first-quarter net loss reached 4.7 billion yuan, a massive increase from the prior year's 1.8 billion yuan loss.
Nio's decisions, both small and large, make it clear it's not following Tesla's footsteps in the ways that matter. However, for a company that seemed to have such large potential years ago, it needs to better follow Tesla's footsteps if it's to become a valuable investment again.
