(Yicai) Sept. 19 -- Nio is poised to launch the first model produced under the Chinese electric vehicle startup’s second brand Onvo, throwing down the gauntlet to Tesla's Model Y, the world’s best-selling EV.

The Onvo L60, a smart electric mid-size family sport utility vehicle, will debut at a launch event in Beijing at 7.30 p.m. today. It has a pre-sale price of CNY219,900 (USD30,400), compared with CNY249,900 for a Model Y in China.

It will be priced slightly lower at launch than at pre-sale, William Li, Nio’s founder, chairman, and chief executive, said on the Shanghai-based carmaker’s second-quarter earnings conference call on Sept. 5.

The L60 is "a premium, larger Model Y with battery swap capability, but with 10 percent lower production costs," Ai Tiecheng, senior vice president and president of Onvo Auto, told Yicai recently. 

“The CNY150,000 to CNY200,000 price range is the last stronghold for joint venture fuel vehicles, including popular models like Toyota Motor's Camry and RAV4 and Volkswagen Group's Passat,” Ai noted.

“While EVs now account for over half of the overall market, traditional combustion engines still dominate this segment,” he said, adding that the L60 will enter this competitive segment with a battery leasing option.

The Onvo brand targets the mainstream market with prices ranging from USD30,000 to USD50,000, and has plans for three to four more vehicles in the pipeline, according to Nio. The L60, which began pre-sales on May 15, has exceeded order expectations, it added.

Onvo can maintain profitability while undercutting Tesla's Model Y thanks to technological advancements over the past five years since the latter’s debut, Ai noted. “New technologies have helped us reduce costs,” he said.

When asked on the earnings call whether Nio would be more aggressive on its pricing in light of the cut-throat competition in China’s auto market, Li said: “We’ll try to strike a balance between the vehicle margin and the price point of the product to find the sweet spot. In general, we will not be very aggressive as we needed to realize a reasonable margin for the project.”

“While Nio focuses on the high-end business market, Onvo targets families,” Ai noted. “We're bringing some of Nio's advanced technologies to the CNY200,000 price range and aim to spread R&D costs through economies of scale.”

The L60 shares production lines with some Nio models, allowing for cost reduction through supply chain expansion and improved capacity utilization. Onvo will also leverage Nio's existing service infrastructure.

Vehicles like the Onvo L60 could potentially overtake the Model Y as global sales leaders, according to Ai, who expressed confidence in the growing competitiveness of Chinese EVs.

“About 39 percent of clients who pre-ordered the Onvo have considered Tesla,” Ai said, adding that the challenge for the brand is to build awareness among fuel-powered car owners and compete for new customers in the CNY150,000 to CNY200,000 price bracket.

Nio expects to deliver 20,000 units of the L60 this year, with monthly deliveries reaching 10,000 by December and 20,000 next year, according to Li. Nio will unveil its third brand, Firefly, in the first half of next year, he also said.

Editors: Tang Shihua, Martin Kadiev