Written by Cláudio Afonso | LinkedIn | X
William Li, founder and CEO of the Nio Group, admitted on Friday that sales of the Onvo brand — which was launched in September 2024 — are not meeting the company’s expectations in 2025.
Onvo delivered over 10,000 vehicles in December but saw deliveries drop to 5,912 in January and 4,049 in February. For March, insurance data shows 2,370 units sold between March 3 and 16, substantially below the target communicated of reaching 20,000 units in March.
In a long answer, the chief executive named four main reasons for the miss starting by admitting that Onvo’s “sales performance starting this year didn’t meet our expectations” adding that the team has “also reviewed the comprehensive reasons and causes for its performance.”
Reason 1: Brand Awareness
“The first reason is because of the brand awareness and the exposure. As almost a new brand in terms of its brand awareness and awareness, it is actually far below its competitors,” Li stated without naming any rival brand. Amid the launch last year, Onvo said it was targeting Tesla (especially the Model Y) with its debut model L60.
“We have also done some studies and research on the influence of the brand awareness of Onvo. And in terms of brand awareness, it is only one-third of that of Nio,” the executive detailed.
As reported earlier this week, the sub-brand cleared its entire order backlog shortly after the Chinese New Year in February, leaving new orders as the only source of deliveries, according to its brand chief Alan Ai.
Commenting on the topic, William Li confirmed that Onvo “consumed all the existing order backlogs,” adding that the brand is “facing larger pressures regarding the fresh orders.”
“Starting this year, especially during and up to the spring festival holidays, we have also taken a series of actions to help strengthen and improve brand awareness and exposure We have rolled out some offline advertisements in the train stations and also in the elevators of the apartment buildings,” the chief executive stated.
“We have also doubled down on the social media campaigns to help improve the exposure, and we are seeing some good effects in helping be more famous and well known,” Li added.
Reason 2: Sales Network
As the second reason, the Nio Group chief said it is related to “the coverage of the points of sales.”
“We have been ramping up the South store coverage of the Onvo brand,” Li stated before describing the sales network ramp-up. “Last year, when we just launched the brand, we had around 105 stores in China. And by the end of last year, we had opened up another 100 stores. And so far, we have more than 400 stores in China.
However, Li noted that most store employees are quite new in the company.
“Yet most of the stores are still quite new in terms of their efficiencies and the productivities are not yet to a mature level. So it will take some time for these new stores to start to yield real results,” he stated.
“We have also done a comparison between a mature store being in operation for more than three months in comparison to a newly established store, the productivity can be different can be as different as three times. As this new store is getting more mature and skillful, we believe that they will also start to play a bigger role,” Li added.
Despite the difficulties, the Nio Group chief reiterated the hope of achieving the targets following the service investments done since last year’s final quarter.
“So as you can see, we have made some investments in ourselves and the service in Q4 last year and also Q1 this year, and we’ve been under pressure for this investment and expenses,” Li said. “Yet we also believe that these stores and the network will soon start to yield results and kick with effects.”
Reason 3: Sales Team
“The third reason is also relevant to the maturity regarding the maturity level of our sales force,” the CEO said before commenting on the recently joined store fellows.
“For the fellow teams of the Onvo brand, 60% of them have been in the company for less than three months and it will take some time to train the team and for the sales teams to polish their soft skills to be able to yield good results and make deals,” he stated.
“As the team is getting more mature day by day, we also see that more and more fellows are now able to make deals. And we also encourage these fellows to do more proactive outreach by going out of the stores to reach out to the potential users and help expand the funnels, and this will also help us to improve the order performance,” he added.
Without revealing any order figures, Li states that — when looking month over the monthly trend — they have been “increasing steadily.”
Regarding test drives, the Nio Group chief said the brand is breaking the record on the number of test drives done and requested. “We believe that these fresh orders and the tested drives will also soon be converted into orders and sales volume,” he said.
Reason 4: Battery Swap Supply
“The fourth reason is regarding the power swap stations availability for the onboard users. As in the past several months, we’ve been making more progressive modifications to the power [battery] swap stations to make sure that they’re compatible with the Onvo product and also providing more batteries for the swap stations,” Li stated.
“[As of ] now, more than 1,500 power swap stations in China are available for onboard users,” he added.
The company’s chief said that, “at the early stage of the product launch, we had a short supply of batteries,” referring to the lack of batteries supplied by BYD’s battery division which forced the brand to add a new supplier.
“In that case, there was only one battery for the available power swap stations, not enough onboard users to experience the full power swap service,” he stated. “But now we are supplying more batteries for the power swap. In that case, the experience for the power swap among onboard users is also improving, also enhancing better word-of-mouth for the brand.”
Li believes that higher availability of batteries for Onvo vehicles will help increase the user experience and the market share of the brand in the lower-tier cities.
“Also, in many regions where we see more power swap stations available for our users, we also see actually more self-volume for the Onvo products. Together with our PowerUp County initiative [announced by Nio last year], we believe that more power swap stations available in the lower-tier cities will also help improve the penetration rate of Onvo in those lower-tier cities,” he stated.
“And a very interesting number to share with you is that in actually in 12 regions in China, the sales volume of Onvo has already outnumbered the volume of Nio. This is also a good effect result of our dual brand synergy and strategy,” Li revealed.
The CEO said negative public opinions on the brand and organized PR attacks have impacted sales volume “by around 30 to 40%.”
“And also another compound factor is that our resin source volume is majorly affected by the competition as well as the negative public opinions on the brand and also PR attacks. That has our volume by around 30 to 40%. But still, even against this difficult environment, still see a very high user satisfaction on the product L60,” he stated.
Li revealed that the L60 SUV “has the highest product user satisfaction among all the products launched by the Nio company” adding that also the referral rate has been “pretty good” which “gives us confidence in the product.”
Overall, Li said that following the improvements and adjustments, the company “believes that the sales volume of L60 will pick up and also fulfill our expectation.”
“Going forward, as we pick up speed with our orders and also test the drives, as we further enhance the brand awareness, expanding our sales and service network, growing our team and their maturity level, and also enhance the coverage and availability of the power swap stations for the onboard users we believe that the sales volume of L60 will pick up and also fulfill our expectation,” he stated.
The chief executive concluded his answer reminding the recently launched incentives for the Onvo brand aiming to boost sales.
“Recently, we have also had some pilot programs where we have the incentives and the policies to encourage the sales team to also sell the product from the other brand,” he stated. “We already have seen some good results by rolling out the pilot program.”
Asked earlier this month how he will improve Onvo’s situation, the brand’s chief Alan Ai said earlier this month that “results are the only answer” guaranteeing he will “keep focusing on product and service improvements and ensure Onvo continues on an upward trajectory.”
As of the time of writing, Nio shares are trading 5% lower at $4.50 as the company holds the earnings call with the Wall Street analysts.