(Yicai) Sept. 26 -- Nio’s second car brand, Onvo, targets the mainstream mass-market segment, complementing rather than competing with Nio’s main brand, which focuses on the premium end, according to the chief executive officer of the Chinese electric vehicle startup.

While the Nio marque targets the high-end market, catering more to business use and consumers with personalized needs, Onvo is aimed at families, with models priced between USD30,000 and USD50,000, William Li, who also founded the carmaker, said in a recent interview with Yicai.

Facing competition from Tesla and domestic rivals such as BYD, Shanghai-based Nio is diversifying its brand portfolio with the Onvo, targeting a more affordable price range to compete in the mainstream market. 

The first Onvo model, the L60, competes directly with Tesla’s Model Y, the world's best-selling EV. The L60 was launched on Sept. 19, with deliveries to start on Sept. 28. The smart electric mid-size sport utility vehicle is priced from CNY206,900 (USD29,480), making it Nio's cheapest model, while it can also be bought from CNY149,900 with a battery rental option.

"In the auto industry, luxury and mass-market brands from the same company often complement each other," Li noted. During the Onvo pre-sales period, the brand's sales team helped sell nearly 1,000 Nio models, he added.

Onvo and Nio's upcoming third brand, Firefly, which will be unveiled in the first half of next year, will play crucial roles in the carmaker's overseas expansion due to their focus on the mass market, Li pointed out.

The L60's price allows for a "decent" gross profit margin, Li noted. Nio expects to deliver 20,000 units this year, with monthly deliveries reaching 10,000 by December and 20,000 next year, he said, adding that shipping 20,000 units a month would ensure solid profitability.

Previously, Li had pointed out that the L60's gross profit margin could reach 15 percent, providing a buffer against any potential price war. 

A synergy with the Nio brand is key to Onvo hitting its margin targets, Ai Tiecheng, senior vice president of Nio and president of Onvo, told Yicai. The L60 shares production lines with some Nio models, allowing for cost reduction through supply chain expansion and improved capacity utilization, while Onvo will also leverage Nio's existing service infrastructure, Ai added.

The L60 is Nio's first model with features strictly tailored to its target market, Li pointed out. "Nio will stick to pure electric vehicles and our chargeable, swappable, and upgradable battery system is a more efficient range extender." 

Its strategy to avoid hybrid models contrasts with other automakers, highlighting Nio’s focus on fully electric solutions in a market where hybrids often serve as a transitional technology.

The L60 is one of the three new Chinese autos recently launched to directly challenge Tesla's Model Y. The other two are the Luxeed R7, released by Huawei Technologies and carmaker Chery Automobile, and Geely Automobile Holdings' Zeekr 7X.

Editors: Tang Shihua, Martin Kadiev