Several electric vehicle startups have faded into history, including Lordstown, Arrival and Fisker. But one of the more interesting EV startups is made in China where automakers have big ambitions.

Founded 10 years ago, Nio unveiled its first volume entry three years later, the ES8 (a three-row, midsize luxury SUV similar to the Acura MDX or Volvo XC90). In the intervening years, Nio has expanded its portfolio to include two sedans, a wagon and a handful of SUVs. But the carmaker’s biggest challenge is pending with the launch of the ET9 flagship.

What is it?

Described as a “landjet” (a term Audi once used to describe a since-scrapped flagship) the ET9 is a tall, sleek, four-seat electric fastback with a conventional deck lid instead of a hatchback. It’s positioned between the Toyota Crown and BMW X6.

The specs are impressive: 697-horsepower, dual-motor all-wheel-drive, 120kWh battery and a 900-volt architecture (like the Lucid Air) and promising DC fast charge speeds of an industry-best 600kW.

While Nio hasn’t provided range or performance numbers, it’s claiming a 600kW charger will provide 158-mile range in five minutes; that’s likely on the optimistic CLTC (Chinese-market) cycle. It would translate to about 120 miles on the EPA cycle. It’s almost as fast as filling up a gas tank. If that’s not fast enough, you can swap out the battery in about three minutes at one of Nio’s over 2,700 swap stations in China.

Why this Matters

Nio sees itself competing with the current crop of global luxury brands—and there’s nothing like a flagship to show a carmaker at its best. But as a newcomer to the luxury segment, Nio decided to enter the market without a conventionally proportioned SUV or three-box sedan. It’s building both brand visibility and reputation. The technology is competitive with Europe, Japan or South Korea offerings, but how prospective buyers will respond to the unconventional proportions is unknown.

The bigger problem is that Nio remains an unprofitable enterprise, despite steady growth in deliveries. In Q3 2024, per its unaudited results released last month, Nio delivered almost 62,000 units (an 11.6 percent increase compared to Q3 2023). But it claimed a net loss of $721 million, an 11 percent increase from a year ago.

While Nio is entering its second generation, its relatively short life-cycles require more investment. The aforementioned swappable battery is supported by a network of stations expensive to build and likely expensive to maintain.

Who Should Care

The good news: Nio is still a small brand, currently largely confined to China, without the cache or familiarity of the legacy luxury brands — yet. Even Mercedes, whose performance in China has been suffering as the competitiveness of local Chinese brands has been improving, sold almost three times as many cars in China as Nio in Q3.

Nio is just now slowly ramping up in Europe (including the development of a battery swap network), but without any announced plans for European manufacturing that would circumvent the just-imposed 20.8 percent tariff.

In the United States, Nio is less of a threat. It established U.S. operations in 2022 (in San Jose, California) and announced plans to enter 25 global markets by 2025. But there’s no word of any plans for manufacturing in North America, and the recently imposed 100 percent tariffs on Chinese EVs will likely keep them out of this market for a while.

But there is a bigger story here—or perhaps two. The first is the increasing level of sophistication in Chinese vehicles (both EV and plain old internal combustion). I recall the first Chinese vehicles displayed at the Detroit Auto Show 15 years ago—a far cry in terms of design and engineering from what is currently available.

The second is that Nio has ambitions beyond competing with the legacy luxury brands. Earlier in 2024, the carmaker launched Onvo, a mainstream brand whose first model, the L60, directly targets the best-selling Tesla Model Y.

Also, Firefly will debut in 2025. It’s a value-oriented brand focusing on making affordable EVs to compete in China and Europe with the new wave of low-cost EVs being developed by Hyundai/Kia and European carmakers.

If these new lower-cost entries are as well-engineered as the current Nio products, then nearly every automaker should be concerned.