In the first half of this year, NIO proactively contacted a leading domestic dealer group and conducted some “experiments” on opening up the dealership model for its subsidiary brand, Alps. Insiders revealed that NIO plans to have the after-sales service and delivery centers of Alps taken over by a nationwide dealer group, while company-owned stores will remain as direct sales.
NIO has always been a staunch supporter of the direct sales model. Even when expanding into overseas markets last year, opening 5 NIO Houses and 7 NIO Spaces in five European countries, they were all directly operated stores. During the press conference announcing NIO‘s entry into the Norwegian market, William Li once again emphasized that “NIO is a user enterprise, and direct connection with users is crucial and fundamental to our entire operation.”
As of the end of August this year, NIO has established 134 NIO Houses, 286 NIO Spaces, 304 NIO Service Centers, and 58 NIO Delivery Centers worldwide. Both NIO Houses and NIO Spaces are offline experience stores mainly for sales and brand display purposes, with larger investment and higher positioning for the former. The Service Centers and Delivery Centers are responsible for after-sales service and vehicle delivery respectively. Among all offline locations, only after-sales services adopt a mixed model of direct operation and authorization, while the rest are directly operated by NIO.
The NIO brand once briefly experimented with a model where car owners served as franchisees. At the end of 2019, facing financial pressure, NIO launched the Co-Creation Partnership Program to save costs. Car owners could contribute funds to build NIO Spaces, which would be operated by NIO personnel. A car owner who participated in store construction revealed, “At that time, the annual capital turnover was around five to six hundred thousand yuan (＄69-83 thousand).” Within a year, car owners helped build over 100 NIO Spaces for NIO.
The hybrid model has allowed NIO to rapidly increase the number of stores, but it has also brought some management challenges. By the end of 2020, NIO reestablished the dominance of its direct sales model. All newly opened NIO Spaces are operated directly by the company, and stores that were invested in by owners have been taken back by NIO and converted into direct sales.
Alps is a sub-brand launched by NIO for the 200,000-level market, led by Ai Tiecheng, Senior Vice President of NIO. Prior to joining NIO, Ai Tiecheng served as the General Manager of WeWork China. Currently, the Alps team has exceeded 800 people.
The first car from Alps’ plan is scheduled to be mass-produced and delivered in the second half of 2024. During the financial report meeting in the second quarter of this year, William Li revealed that the development of the brand’s first model has been progressing smoothly. The first TT model (production line validation vehicle) has already rolled off, and the development of the second product is currently underway.
The first car from Alps is a battery electric sedan, built on the NT3.0 platform, and it supports both battery swapping and high-voltage fast charging technologies. An insider revealed that Alps plans to produce it at the NIO F3 factory. The F3 factory is located in Hefei Xinqiao, adjacent to the F2 factory. It is part of NeoPark Xinqiao Intelligent Electric Vehicle Industrial Park Phase II and key core component supporting project. As of writing this, NIO has not officially confirmed this news.
According to previous media reports, the first car from Alps will adopt NIO‘s self-developed intelligent driving chip. NIO‘s self-developed lithium iron phosphate battery and 4680 battery will also be supplied to both NIO and Alps brands.
In 2024, the NIO brand will not deliver new products. William Li stated that the current eight models have already covered 80% of the high-end market users’ needs, and the next step is to comprehensively improve sales performance. The highlight of NIO‘s new car next year will be the Alps.
In the second quarter of 2021 earnings conference call, William Li mentioned that he hopes the Alpine brand can offer lower prices than Tesla and provide better products and services. During a communication meeting with investors this year, William Li stated that the number of Alpine brand models is approximately half of NIO‘s brand, and the sales target for its main model is 50,000 units per month.
The product is aimed at the general public, pursuing sales volume, which has led the Alps brand to start considering adopting a lighter sales model – embracing distributors.