Nio's Firefly models will still be competitive in Europe even with extra tariffs

Nio founder, chairman, and CEO William Li expressed his opposition to the additional tariffs imposed by the European Union on Chinese electric vehicles (EVs), while noting that even so, the company's upcoming models under its third brand, codenamed Firefly, will still be competitive in Europe.

"The EU originally imposed a 10% tariff on Chinese EVs, and now an additional 21% has been added, raising it to 31%, which is definitely not right," Li said at a user communication event in Tianjin on Jun 19, according to a video seen by CnEVPost.

Europe is a global role model for clean energy and sustainability, but now imposing additional tariffs on Chinese EVs is a conflict of logic, he said.

Li also noted that the additional tariffs are not yet decisive and a final decision will be announced by Oct or Nov.

The European Commission announced on Jun 12 that it would impose additional provisional tariffs on EVs imported from China starting next month, varying by carmaker and reaching up to 38.1%.

Nio and a number of other Chinese battery electric vehicle (BEV) makers that cooperated with the investigation but were not sampled will pay an additional 21% weighted average tariff.

On the day the decision was announced, Nio said it strongly opposed the additional European tariffs and emphasized that its commitment to Europe remained unchanged.

The additional tariffs will inevitably hit Chinese carmakers' incentives to export EVs to Europe, and for Nio, its Firefly sub-brand, which it had planned to launch in Europe first, will need to make new weighing.

"We certainly don't want to end up with so many additional tariffs, but if that's what's ultimately decided, then for Firefly, even with these additional tariffs, it will still be competitive in Europe," Li said in the user communication.

"Even if we are going to be hit with so many tariffs, we still have a chance, we are still competitive, but of course it will affect some sales and profits," he said.

Li noted that in the long run, the internationalization of car companies will need to rely on localized operations.

"The initial volume may not be enough to support (localized operations), which would not be cost-effective, but if a certain volume is reached, say 100,000 units, local production should be carried out," he said.

After reaching a certain local volume, Nio will actively consider local plans, "It's something that has to be done to go global," Li said.

It's like companies in Europe and the US that would build factories in China if they thought the Chinese market was big enough, he added.

In Jan 2023, Nio co-founder and president Qin Lihong confirmed the existence of the new brand Firefly at a user event and said the brand was aimed at the small car as well as micro car market.

Firefly models will be priced in the range of RMB 100,000 (USD13,780) to RMB 200,000, and are expected to debut in the European market in the third quarter of 2024, Qin said at the time.

In an interview with local media earlier this year in May, Qin said the third brand's products were ready, but the launch of the new brand would be delayed until the second quarter of 2025, given the overall brand sequence.

Nio had originally planned to launch the Firefly brand first in Europe, but has now changed its strategy and will speed up the launch of the new brand and launch it first in China, according to a Jun 6 report by local media outlet 21jingji.

Firefly's first model will make its debut in China, likely at the end of this year, before launching in Europe in the first half of next year, the report said, citing multiple sources.

The sub-brand's mobile app is expected to go live in Dec, according to the report.