NIO on Thursday announced its foray into the Chinese ultra-competitive mainstream vehicle segment with the launch of the first model under its family-oriented lineup Onvo, featuring class-leading utility at nearly half the price of Tesla’s Model Y by leveraging its unique battery leasing program.

The cheapest Onvo L60 crossover costs only RMB 149,500 ($21,154) under the NIO’s Battery-as-a-Service (BaaS) leasing program, which allows customers to buy the EV without ownership of the battery pack, versus RMB 206,900 including the pack. Priced at RMB 100,400 cheaper than a China-made Tesla Model Y, the car aims to be a meaningful competitor not only to the world’s top-selling model, but also to popular gas-powered vehicles such as Volkswagen’s Tiguan L and the Toyota RAV4.

The management is witnessing “a surge” in order intake following the launch, as dozens of millions of Chinese netizens watched the livestream, William Li, founder, chairman, and chief executive, told reporters in the eastern Chinese city of Hefei on Friday (our translation). More than 60% of the customers choosing the Onvo L60 consider battery-swapping technology, part of NIO’s broader BaaS strategy, as the most desirable attribute, according to Li.

BaaS becomes the key

Boasting significant ownership cost savings and fast battery swapping, the Onvo L60 is the first serious contender from NIO to challenge the Tesla Model Y, and could be different from the previous Chinese SUVs trying to win over families from the global EV crown.

Stuffed with an autonomous driving stack of 30 sensors, Qualcomm’s latest processor for infotainment applications, and attractive extras such as a huge, 52-liter car refrigerator, the affordable, functional compact sports utility vehicle offers more than RMB 100,000 worth of specifications than the Model Y. That’s according to Ai Tiecheng, president of the Onvo brand, speaking at the launch event on Thursday.

Moreover, the management expects NIO’s battery swap service, with each time taking around three minutes from an ever-expanding power infrastructure network, to mitigate the range anxiety from Chinese consumers and even remove the real obstacle of insufficient chargers away from EV driving. Onvo owners can replace their empty battery packs for a charged one in over 1,000 NIO battery swap stations nationwide by December, and more than 2,500 such facilities will be available by the end of next year, said Ai.

The standard range version of the L60 went on sale on Thursday with the impressive starting price plus a leasing fee of RMB 599 per month for the use of a 60 kilowatt-hour (kWh) battery pack that offers a 555 kilometer (345 miles) driving range. The long-range version costs the same amount with a monthly rental fee of RMB 899, claiming a driving range of 730 km with an 85 kWh battery pack, versus RMB 235,900 including the pack. A typical Onvo owner would pay an additional RMB 100-200 each month in electricity costs, according to Ai’s estimates.

“Overall it costs you roughly a tank of gas per month,” Ai added (our translation). NIO said the total energy consumption of the car is 12.1 kWh per 100 km, compared with the 12.5 kWh achieved by the Model Y.

A turning point

The success of the L60 is of vital importance to whether or not 10-year-old, loss-making NIO would become a stronger and profitable player in a bruising battle where even some of the bigger rivals are already feeling the heat. Global auto giants from Detroit’s big three to Japan’s leaders have been hurt in China, and NIO is joining an expanding group of local players in bringing their better-equipped EVs at relatively affordable prices into the market.

Against the backdrop of a slowing economy, Onvo’s first model was precisely developed to meet the real demands of Chinese families who take space, safety, comfort, and affordability in the first place, rather than performance features like extra torque or horsepower, according to NIO.

NIO said the five-seater crossover could comfortably accommodate passengers in a carefully designed cabin, providing larger headroom and legroom across both rows than the Tesla Model Y. Owners could also access popular high-tech features such as an AI voice assistant from an in-house developed operating system, as well as perform autonomous driving functions in more than 700 Chinese cities and 2,700 counties, powered by advanced chips and AI algorithms.

Li said the company is now ready for a production ramp-up with parts suppliers, with a timeline of October to make 5,000 units of the car and increase the monthly output to 16,000 in January. Another 20,000-unit milestone could follow next March, Li added, again promising a “decent” gross margin for the model. NIO’s CEO earlier this month had briefed investors about the outlook of delivering 20,000 Onvo EVs sometime next year and setting a 15% margin goal for the Onvo brand in the long term. 

Having not had a distinct hit product in recent years, NIO and peer Xpeng Motors are showing signs of making a turnaround with their multi-brand strategies.

READ MORE: NIO CEO details thinking on first Onvo EV, battery swap alliance