NIO’s first mobile phone debut, why does an automaker personally come forward to create a phone?

'Why does an automaker like NIO personally create a phone for its debut?'

【phoneauto】The cross-border collaboration between car manufacturers and mobile phone companies is nothing new, but in the past, it was mostly the mobile phone manufacturers eyeing the new energy vehicle market. But what if it’s the other way around? It can be said that it is quite rare for car manufacturers to venture into making phones.

On September 21st, at the NIO IN 2023 NIO Innovation and Technology Day, NIO officially released its highly anticipated first phone – NIO Phone.

According to NIO CEO Li Bin, NIO Phone is positioned as a flagship phone, equipped with the leading Qualcomm Snapdragon 8 Gen2 mobile platform, with a maximum of 16GB+1TB memory combination optional, equipped with a 6.81-inch screen, supporting a variable refresh rate of 1Hz-120Hz, and a rear camera setup consisting of a 50-megapixel wide-angle lens, a 50-megapixel ultra-wide-angle lens, and a 50-megapixel periscope telephoto lens.

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Compared with other Android phones, NIO Phone announced that it does not have ads, achieving “0 system ads, 0 commercial pre-installed apps”. Li Bin said: “In today’s Android system ecosystem, for various reasons, internet revenue is a very important source of income for them. But this thing definitely requires more phone resources, system resources, we don’t have this burden, our team doesn’t have the idea of making money from ads.”

At the press conference, when some audience members shouted “far ahead”, Li Bin responded with a smile: “Not far ahead, but very user-friendly.”

Overall, in terms of design and hardware configuration, NIO Phone is worthy of its flagship positioning. For NIO car owners, NIO Phone is a good car key and car infotainment hub, but it may not be suitable as the main device. On the other hand, even with other brand phones, many can also achieve car key functions, and if the car infotainment requirements are not too demanding, some commonly used functions can still be satisfied.

When it comes to crossing boundaries and making phones, looking at the entire industry, no one has really succeeded in doing so over the years, and no one has been able to achieve a leading position. Even the internet companies Tencent and Baidu have dabbled in smartphones, but quickly disappeared from the market. The air conditioning giant Gree Electric Appliances once had high hopes for its smartphone business, but everyone knows the current situation of Gree phones.

Many people have their own opinions on why NIO wants to make phones, some believe that NIO wants to enter the mobile phone battlefield. As an emerging car manufacturer, NIO faces great competition in the market, so it needs to seek new growth points to expand its business.

In the first half of this year, NIO’s net loss reached a staggering 10.795 billion yuan, exceeding the same period last year. Considering that NIO delivered a total of 54,600 vehicles in the first half of the year, it means a loss of about 200,000 yuan for every car sold. Compared to its old rival, Ideal Auto, which has turned losses into profits for three consecutive quarters, NIO can be said to be sliding further away from profitability.

Therefore, Phoneauto believes that it is unlikely for NIO to enter the mobile phone market at this time. It should be noted that NIO itself has a relatively high debt ratio, so opening up a new battlefield at this time can be seen as a waste of money.

Moreover, the pricing of the NIO Phone is quite high. The 12GB+512GB version is priced at 6,499 yuan, the 12GB+1TB version is priced at 6,899 yuan, and the EPedition 16GB+1TB version is priced at 7,499 yuan. This price is comparable to mainstream flagship phones on the market and higher than some domestic brands. It is difficult to imagine attracting Apple and Huawei users to become NIO Phone users.

Li Bin himself also admitted this point, he said: “NIO Phone can sell hundreds of thousands of units, and half of the users buying it would already be very happy.” However, if the sales volume remains at hundreds of thousands of units, NIO’s mobile phone business may suffer huge losses. Is it worth it? This inevitably makes users worried about NIO Phone.

In addition, Li Bin has also said in previous media interviews: “We are not trying to compete with Xiaomi, Huawei in making phones. The logic is different. You can understand it as NIO Life of NIO. We are not trying to be a clothing company, a food company, but to meet the needs of users, based on our connection with the users, to satisfy their usage scenarios.”

It is understood that NIO Phone has the same hardware configuration as flagship phones on the market, targeting the high-end market. It also pioneered the “vehicle control key” and achieved 30 functions with one key. Its target users are those who already own or intend to buy NIO cars, in order to better manage their cars. NIO has a rich NIO Life ecosystem, and this phone is expected to facilitate the management and control of their cars, enjoy various value-added services provided by NIO cars, including appointment charging, battery swapping, maintenance services, as well as various convenient facilities provided by NIO houses on the road.

In the long run, when the era of autonomous driving comes, phones and cars can be more deeply integrated to create an ecosystem closed loop, further enhancing the loyalty and market share of the NIO brand. It has to be said that this phone made by NIO is very helpful for creating an ecosystem closed loop.

In other words, NIO’s foray into making smartphones is not for the purpose of opening up new battlegrounds or making profits. According to Li Bin, over 60% of NIO owners are iPhone users, but Apple’s iOS system has a closed-off issue. “For example, the NIO second-generation platform is equipped with UWB (digital key), but Apple does not open the interface, which puts us in a passive position.”

Similarly, NIO is not the only car company venturing into the smartphone industry. In September 2021, Li Shufu, the founder of Geely, established Hubei Xingji Era Technology Co., Ltd., announcing the creation of a high-end smartphone for the global market. In 2022, Geely officially acquired Meizu, becoming a domestic company that owns both the automotive and smartphone industries. In March of this year, the Meizu 20 series was officially released, and Xingji Meizu also introduced the Flyme Auto car operating system, which enables seamless connection with the Geely 08, allowing functions such as unlocking, navigation, and cross-platform applications.

In addition, in early September, Polestar also announced plans to launch a high-end smartphone with the same brand name in China by the end of this year, featuring the Polestar operating system developed based on the existing technology platform Flyme by Xingji Meizu.

Currently, with the booming sales of new energy vehicles, the interaction between smartphones and cars is becoming more frequent. As Li Bin mentioned, the compatibility issues of smartphone brands have always plagued many car owners. Some phones cannot connect to the vehicle’s system, resulting in the inability to achieve data synchronization and information interaction. Some phones have incomplete functionality, unable to achieve smart control, which brings many inconveniences to users.

If car companies develop their own car connectivity, it is possible to break down the barriers between smartphone resources and automotive resources, better collect road data, driving data, and user data, and improve the level of intelligent cabins.

Overall, the entry of car companies like NIO into the mobile phone field signifies that the automotive industry is gradually transitioning towards digitization and intelligence. For car companies, venturing into the mobile phone industry is not only a response to market demand, but also a repositioning of their innovation capabilities and core competitiveness.

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