• Tesla and NIO pursue different strategies
• Tesla relies on battery charging infrastructure, NIO on battery replacement
• Sensors in autonomous driving also differ
The Chinese electric car manufacturer NIO is often called the Tesla hunter from China. Both companies share a similar vision, but approach it in different ways. A look at the business strategy of Tesla and NIO reveals how similar both groups are – and at the same time how they pursue completely different problem-solving strategies.
Long-established group vs. newcomer
Tesla has a longer corporate history – the company was founded in California in 2003. NIO has only been operating since 2014 – and is far inferior to its US competitor in terms of experience. In its almost 20-year corporate history, Tesla has already mastered numerous challenges – including a near bankruptcy during the production ramp-up of the Model 3.
NIO has also narrowly avoided bankruptcy in its relatively young corporate history. The reason for this was the corona pandemic, which temporarily brought business life in China and many parts of the world to a standstill. The Chinese city of Hefei spent four billion US dollars to prevent the electric car manufacturer from going bankrupt.
The philosophies differ
Both companies want to make electromobility the standard in the automotive industry and are concentrating on the digitalization of the vehicles. However, they are pursuing different paths in two elementary business areas.
Battery charging vs. battery replacement
When it comes to one of the most important issues, the battery, both companies have different approaches. Tesla relies on lithium-ion batteries, which offer the highest capacity based on their weight. In its Model 3, the electric car manufacturer uses LFP batteries, which, however, offer a shorter range. Tesla drivers have to charge their vehicles’ batteries regularly, for which the company provides a network of charging stations, so-called superchargers.
If you drive a NIO, you also have to ensure that the battery has enough power, but NIO relies on battery replacement instead of charging. If you drive a NIO, you can drive to a battery exchange station and have your old battery exchanged for a charged model within a very short time. The exchange should take place fully automatically, so drivers are spared long waiting times at the charging stations. This battery replacement system has already established itself on the Chinese market, but the corresponding infrastructure is still scarce on the European market.
Vehicle environment and object recognition
And Tesla and NIO are also taking different paths in a second elementary business segment: in the implementation of autonomous driving functions.
Just a few years ago, Tesla used a wide variety of sensors and cameras in its vehicles in order to be able to comprehensively record the vehicle environment and enable reliable environment and object recognition. However, Tesla boss Musk declared radar sensors to be superfluous in 2021 and accelerated the transition to the camera-based autopilot system Tesla Vision. Previously, the company director had also classified so-called lidar sensors as overpriced and dispensable, “anyone who relies on lidar is doomed,” said Musk as part of “Autonomy Day” in 2019.
NIO, on the other hand, relies on the lidar system and has installed a wide variety of sensors in its vehicles – including the radar sensors that Tesla recently declared superfluous. Experts see this as a great advantage for the Chinese, who should be ahead of the curve when it comes to Tesla’s core, the autonomous driving functions.
Sales figures still speak for Tesla
If you look at the operational success of both companies, Tesla is now clearly in the lead again. In the third quarter of the current year, the Americans more than doubled their profits to 3.29 billion dollars, at the same time a new record was reached with 344,000 vehicles delivered.
For its part, NIO sold 31,607 vehicles in the past quarter and thus increased its number of deliveries by 29.3 percent. Although the company is particularly successful in the Chinese home market, Tesla scores significantly higher internationally than its Chinese competitor.
Nevertheless, the prospects for NIO are quite good: The innovative approach of the Chinese to the subject of battery replacement could convince electric car buyers as well as the advanced sensor technology, where experts already see the Chinese company ahead. Especially when autonomous driving functions become more and more important and serve as a purchase argument, the issue of safety should play a major role in the decision for an electric car brand.
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