(Yicai) April 24 -- The performance of its Onvo sub-brand is critical to Nio’s profitability, according to the president of the Chinese electric vehicle startup.

“If Onvo doesn't do well, then the entire company's profitability is out of the question,” Qin Lihong said in an interview with Yicai yesterday.

Nio’s profitability has long been under scrutiny, as the Shanghai-based company has been in the red for a decade. It aims to turn a profit in the fourth quarter of this year, founder and Chairman William Lin has said a number of times since March.

The Onvo brand, which launched its first model last September, must excel in sales, service, new products, and supply chain management, Qin said, adding that he hopes Nio and Onvo can become brands of comparable scale by the end of this year.

Nio launched Onvo, a family car brand, almost a year ago. The first model, the L60, was designed to rival Tesla's Model Y, the world’s best-selling EV. The mid-sized sport utility vehicle had a pre-sale price of CNY219,900 (USD30,170), compared with CNY249,900 for a Model Y in China.

The carmaker set monthly sales targets for the L60 of 10,000 by last December, doubling to 20,000 by this March, but they have fallen far short. According to data released on April 1, Nio delivered 15,000 new vehicles in March, of which only 4,820 were from the Onvo brand. In the first quarter, Nio delivered a total of 42,100 vehicles, with Onvo accounting for just 14,800.

The disappointing sales led to personnel changes, with Onvo President Ai Tiecheng announcing his departure on April 2. In his farewell message, he acknowledged shortcomings in the marketing of the L60, stating that strong product capabilities had not translated into corresponding sales.

After Ai's departure, Shen Fei, former head of Nio’s energy business, was appointed president of Onvo, taking full responsibility for sales and regional company management and reporting directly to Qin.

Qin said there is still a lot to be done. The main goal is to achieve sales growth, but it is also important to improve profit margins, he said, while building quality vehicles and providing excellent services. The company is also conducting numerous internal measures focused on cost management, Qin said.

Li said he will focus more of the firm's resources on Onvo and he will be more deeply involved in research and development for the brand, while Qin will also engage more closely with sales to enhance Onvo's competitiveness.

Nio’s shares [NYSE: NIO; HKG: 9866] slumped last month, after the company said its new loss widened 8.1 percent to CNY22.4 billion (USD3.1 billion) in the 12 months ended Dec. 31, as deliveries and gross margin both fell short of target.

Editor: Tom Litting