On Nio’s Q2 2024 earnings call, Founder & CEO William Li said he expects NEV (New Energy Vehicle) penetration to reach 80% in China over the next 2-3 years, citing Norway as an example.

He also shared general thoughts on the Chinese auto market. The comments in English were provided by a translator on the earnings call.

William Li, Nio CEO (Via translator):

Thank you for the question. If you look at the overall passenger vehicle market, in the first half of this year, it has increased by around 3.6%. For the longer term, actually, if you look at the total PV population in China, it is as big as 20 million to 30 million units. So it’s already a very significant amount.

 

Definitely, it will keep growing, but probably not a very — not at a very significant growth rate. And it’s even normal for the PV segment or PV market to suffer a slight decrease. But even with that, the Chinese market will still be the largest passenger vehicle market in the world. In terms of the penetration rate of the new energy vehicle, it has already surpassed 50%.

 

And I think that it will continue to increase and at an even faster manner because for the replacement of the ICE cost speeds by BEVs or PHEVs, it will be much faster once it has surpassed this 50% keeping point. We can take Norway as a reference for example. It actually grew at 50% penetration rate at first, and then it has quickly increased to 80% and 90%. So similarly for China, I believe that in two to three years, the penetration rate of new energy vehicles among new vehicle sales will surpass 80%.

 

If we look at the ICE cars in China, actually they have entered into an unsustainable cycle or a vicious cycle because many ICE brands have to cut their prices to keep their market share, be it premium brands or mass market brands, be it brands from China or from other countries. Many of these ICE costs are having a price flushed for the sake of market share. But as they cut prices, it also hurts the profit and interest of their dealers, hurt the image of the brand, as well as the residual value of their products. With that, it is even more difficult for them to keep a very strong market share in your segment.

 

So their — the decline of their market share is even faster than it should be. For the recent years, we have already witnessed the significant decline of the market shares of the Korean brands like Hyundai, Kia, including Ford and General Motors. And for the recent years, Japanese brands like Toyota, Honda and Nissan are also entering the same space. So in general, we believe that the ICE costs from these joint venture brands will face quite difficulties in the future competition.

 

And when they lose some market share, they normally lose market shares to other new energy vehicle brands, including brands from China and Europe. So in that regard, I believe that the penetration rate of the new energy vehicle will grow will grow at a pretty quick pace even faster than we expected. [Foreign language] And regarding your second question, yes, we are going to deliver the product from Firefly from 2025. We are in smooth progress with our product preparation.