Around the world, OEMs are innovating rapidly across a number of key technology domains. Over-the-air (OTA) platforms sit at the foundation of this movement as more automakers integrate OTA at different levels – ranging from the delivery of minor updates and improvements, through to the unlocking of dormant hardware and software features. While we recently highlighted the ways in which this innovation is progressing in Europe and the USA through our OEM OTA Capability Rankings, our rankings for the China region painted a different picture – one where many of its domestic OEMs outpaced those delivering vehicles globally.
In this Insight, we will explore our Q3 2024 OEM OTA Capability rankings for the China region, highlighting the similarities and differences between these rankings and those for the EU and the USA. We will then use the China rankings to take a deep dive into Nio, one of the highest-ranking domestic OEMs on the list, to understand how their key technologies and strategies excel beyond those offered in other regions, and what OEMs in those regions can ultimately learn from their success.
China Rankings V Europe and USA Rankings
As shown in the graphic below, the top five OEMs in our China OTA Rankings for Q3 2024 are Tesla, Li Auto, Nio, NETA, and Xpeng. Initially, one of the most immediate takeaways when comparing this top five against the top five highest-ranking OEMs in our lists for Europe and the USA is the positioning of Tesla. While in the China rankings it occupies the top spot, the American OEM came 4th in our EU rankings and 5th in our USA rankings. Within both lists, Tesla finds its place among legacy automakers, OEM brands, and new players – including Ford (which ranked 1st in the EU and the USA), Genesis, BMW, Polestar, Rivian, and Lucid Motors.
A closer look at the China rankings themselves, however, reveals that Tesla is the only international OEM in the top five – with the remaining four all being domestic OEMs. These OEMs also rank higher than many of the top five OEMs featured in both the EU and USA ranking lists, with Ford ranking 14th and BMW 19th for example. These observations together illustrate how, in terms of OTA and software updates alone, the Chinese automotive market is innovating at a much quicker pace than the European and American markets. To understand the scope of this innovation more closely, we will take a deep dive into Nio, one of the highest-ranking domestic OEMs in our China rankings lists. While analyzing their latest innovations, we will also uncover the lessons that western OEMs can learn from their success.
Analyzing Nio
Nio was founded as an EV-only automaker in November 2014 by William Li and was initially known as NextEV. After securing investments from Chinese technology giants Tencent and Xiaomi, alongside Chehejia and Baidu, the company gained international recognition when it sponsored the Formula E China Racing team, which it went onto acquire in 2016. The racing team supported the development of NextEV’s first road car, which featured four electric motors, a 1000-kW (1341 hp) power output, and a swappable battery. In November 2016, this car was unveiled as the EP9 while NextEV revealed its new commercial name – Nio.
Following this launch, Nio established design and technology subsidiaries in the U.S. and Germany, alongside its in-house technology supplier, XPT. The Nio brand made its full public debut in November 2017 at the opening of its first retail ‘Nio House’ in Shanghai, before unveiling its first production car a month later. Today, in China, its line-up consists of nine EVs across three categories, ET (ET5, ET7, ET9, ET5T), ES (ES6, ES8, ES7), and EC (EC6, EC7), offering both accessible and premium sedans and SUVs. In its European territories, Nio offers the ET5, ET7, ET5, ET5T and EL7 (a renamed ES7). While having expanded and innovated rapidly since its launch, one of the OEM’s most prominent features, and perhaps its biggest strength, is the swappable battery conceptualized in its first concept model as NextEV.
Available across Nio’s full EV lineup, these swappable batteries facilitated the development of its ‘battery swap’ stations. When their battery runs low, Nio customers can park in front of one of these stations, where the EV autonomously drives itself inside and onto a platform. Here, a robot obtains one of the station’s stored batteries – removing the depleted battery from underneath the EV and replacing it with a new fully-charged battery unit. As of October 2024, Nio has established 2,753 battery swap stations in China (860 of which are located along highways in the region) and 56 across Europe. The stations are gaining momentum in China, where Nio says more than 79,000 swaps are performed daily, on average. Its latest stations in the region, Nio claims, can complete a battery swap in 144 seconds and perform up to 480 swaps per day.
Having proved successful domestically, and now gaining foothold across its European territories, western OEMs can learn much from the success of Nio’s battery swapping infrastructure – particularly in how it closely it reflects Nio’s mission and company goals. Here, we see the OEM’s ‘Blue Sky Coming’ mission to ensure a sustainable future manifest in the design of its battery swap station, which takes up a third of the space occupied by traditional EV charging hubs, and its low power consumption – requiring a third of the energy typically needed to power these hubs. Nio’s goal to enhance and streamline the customer experience similarly manifests in the conveniency this infrastructure provides to its customers, most notably through the time customers can save when ‘swapping’ a battery rather than ‘recharging’ it at a busy charging station shared with other vehicle brands. In benefitting both the business and its customers, the lesson western OEMs can learn from Nio’s battery swapping infrastructure is the importance of prioritizing their core values, principles, and goals during the development of new technologies and innovations. This is especially true when considering the instances where OEMs received backlash from customers as a result of prioritizing less holistic qualities, such as profitability, within the development and launch of new innovations.
Next Steps
As illustrated above, Nio’s holistically developed battery swapping infrastructure strengthened the companies foundations and appeal to consumers as they continue to expand throughout Europe. On top of all of that as well, Nio represents just one of many Chinese OEMs who are expanding internationally following a period of domestic success.
While we have explored OTA within this article, it is just one of several domains where Chinese automakers are innovating rapidly, with unique innovations also presented in areas such as infotainment, battery, charging, and architecture all being offered under competitive vehicle price points. This coincides with governments in the west encouraging EV adoption through strict emissions targets for OEMs, and those OEMs in turn developing electrified vehicle lineups and offering an array of incentives for customers looking to purchase an EV. As Chinese automakers continue to expand internationally, having struck a balance between innovation and affordability in their home market, automakers operating across the western world must be well prepared for their arrival, equipping themselves with strengthened connectivity strategies that help them meet and excel beyond this new competition.
In the China version of our OTA and Software Updates Guide, our connectivity experts track the latest industry activities around OTA updates in the region to help you assess your OTA strategy against those presented by domestic OEMs, while mapping out the types of updates they are delivering today, and the technologies required to enable them. New for the 2024 edition, our OEM OTA Capability Rankings for the China region offer expert insights into how high-ranking Chinese OEMs excelled in the delivery of their OTA strategies, and how lower-ranking OEMs can strengthen their systems.
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