Will NIO Phone, with a starting price higher than Apple's, ultimately become a "car-selling phone giveaway"?

On Thursday, at the NIO IN 2023 NIO Innovation Technology Day, the NIOPhone by NIO was officially unveiled with a starting price of 6,499 yuan, surpassing that of Huawei and Apple.

As for why NIO insisted on making a phone, the market has generally been skeptical and even mocking, and the attitude towards how much revenue the phone can contribute is relatively pessimistic.

NIOPhone by NIO

Li Bin stated that the NIOPhone by NIO is positioned as a flagship phone, equipped with the leading version of Qualcomm Snapdragon 8Gen2, with a maximum memory combination of 16GB+1T. It features a 6.81-inch screen with a variable refresh rate of 1-120Hz and a rear triple camera setup consisting of a 50-megapixel wide-angle lens, an ultra-wide-angle lens, and a periscope telephoto lens.

Moreover, judging from its appearance, configuration, and pricing, the NIOPhone is unlikely to be sought after by the market and may ultimately become a means to promote NIO cars.

Of course, Li Bin is optimistic. He stated that even if one is not a NIO car owner, there are many reasons to purchase the phone, as the pricing is very reasonable and the current sales situation has exceeded expectations.

According to CNBC, when asked who would buy the NIOPhone, Li Bin stated that this phone is suitable for all Chinese consumers, not just those who own NIO cars. Among NIO car customers, more than half use iPhones, while the other half use flagship Android phones from Huawei and other brands. He expects that at least half of NIO car customers will purchase this smartphone.

Why Make a Phone?

Regarding why they made such a large investment in making a phone, Li Bin stated that it is not because phone companies are all making cars, nor is it because NIO, as a car manufacturer, is not profitable and needs to make money from phones. It is because NIO users need a phone that seamlessly connects with NIO cars.

Li Bin revealed that the NIO phone business team currently has around 600 members.

Li Bin said, "We are not turning the phone into our main business, but rather making a phone that enhances the user's car experience. We even declined offers from e-commerce platforms for an exclusive launch. NIO's core is still smart electric vehicles."

Although NIO's official statement is positive, when compared to their in-car system, the phone seems more like a redundant effort. Some comments have criticized NIO's in-car system as being poor, and others have expressed the opinion that "this seems more like an attempt to compensate for the shortcomings of the in-car system with a phone."

The NIOPhone is unlikely to boost the stock price of NIO.Despite the increasing variety of NIO's products, the market is pessimistic about its profitability, and it is difficult for NIO's mobile phone business to boost investor confidence.

Recently, NIO's stock price has plummeted, basically giving back the rebound since July. NIO's stock price plummeted more than 32% in August and has fallen over 14% since September. Today's press conference also reflects the pessimistic sentiment of investors.

After NIO released its mobile phone, the stock price took a short-term dive and briefly turned negative. The market may think that although NIO appears to have a complete product lineup, it may just have added a loss-making business.

On September 19th, NIO announced its plan to issue $500 million in principal amount of convertible senior notes due 2029 (2029 Notes) and $500 million in principal amount of convertible senior notes due 2030 (2030 Notes).

The market's interpretation is generally that NIO's "burn rate" is increasing rapidly, and its cash flow is relatively tight.

In addition, NIO's overseas sales are not satisfactory. There are rumors in the market that NIO sold 832 vehicles in Europe in the first half of the year. NIO's CEO, Li Hongqin, stated that this data is not particularly accurate, and the actual operating results are three to four times this number. However, NIO is indeed dissatisfied that its overseas sales have not met expectations.

Of course, the competition in the electric vehicle market is becoming increasingly fierce. The release of Xiaopeng's new G9, with its unexpectedly low price, may bring greater competitive pressure to NIO.