Analysis of NIO's Business Model Strategy

Ziyang Wang

College of Artificial Intelligence, Nanjing University of Information Science and Technology,

Ningliu Road, Pukou District, China

Keywords: NIO, SWOT Model, New Energy Vehicle.

Abstract: In recent years, driven by global energy transformation and carbon emission reduction strategies, the new

energy vehicle (NEV) market is undergoing disruptive changes. NIO, as one of the numerous NEV companies,

has gradually formed a three-dimensional business model encompassing product research and development,

energy services, user communities, and digital ecosystems by establishing a differentiated positioning as a

"user-centric enterprise". Formulating reasonable strategies plays a crucial role in its development and market

expansion. This article analyzes NIO's business model and strategies, employs SWOT analysis to examine its

internal and external strengths, weaknesses, and threats, and proposes suggestions for its improvement and

profitability. Furthermore, through the Porter's Five Forces model analysis, this article finds that some of

NIO's strategies still require improvement and innovation.

1 INTRODUCTION

Chinese car companies have expanded their overseas

markets through the "ecological co construction"

model, such as Chery's joint venture to build a factory

in Spain and BYD's construction of the largest

electric vehicle production base in ASEAN in

Thailand, driving a 5800% increase in local

production capacity (Schr ö der et al., 2021). Chinese

power battery companies (such as CATL) have a

leading global market share, with over half of their

installed capacity in overseas markets and technology

output covering Europe, America, and Southeast

Asia. The EU has imposed high tariffs on Chinese

new energy vehicles, forcing car companies to

accelerate localized production to avoid policy risks

(Hu et al., 2022). Multinational car companies (such

as Bosch) need to adapt to the market demand for

"Chinese speed" and rapid iteration to strengthen

local research and development in China, and the

traditional "two ends out" model is difficult to sustain.

The United Nations calls for 20% of global road

vehicles to be electrified by 2030, with China setting

a benchmark with a 50% penetration rate of new car

electrification, driving developing countries to

transition to 30% zero emission vehicles by the year.

International forums promote the establishment of

https://orcid.org/0009-0008-9334-8642

technology standards and cross-border data flow

mechanisms to address supply chain fluctuations and

infrastructure imbalances.

China's production and sales of new energy

vehicles have ranked first in the world for 10

consecutive years, accounting for over 70% of the

global total, and the penetration rate has exceeded

40%. The government continues to promote industrial

development through subsidy policies such as car

purchase subsidies and support for charging facility

construction and plans to further strengthen green

transformation through the "dual carbon" goal. The

Ministry of Ecology and Environment has proposed

to focus on promoting the coordinated development

of carbon reduction, efficiency improvement, and

technological innovation in the industrial chain by

2025. In addition, significant breakthroughs have

been made in new energy vehicle battery technology,

with lithium iron phosphate batteries accounting for

81.5% of the total installed capacity. Energy density

and cycle life continue to improve, and the average

range is expected to exceed 600 kilometers by 2025.

Intelligence has become the core direction, and the

commercialization process of L4 level autonomous

driving is accelerating. Companies such as Huawei

and Xiaopeng are increasing their investment in

intelligent driving systems and vehicle road

Wang, Z.

Analysis of NIO’s Business Model Strategy.

DOI: 10.5220/0013848400004719

Paper published under CC license (CC BY-NC-ND 4.0)

In Proceedings of the 2nd International Conference on E-commerce and Modern Logistics (ICEML 2025), pages 507-511

ISBN: 978-989-758-775-7

507

collaboration. Accelerating the restructuring of the

supply chain, cost reduction, digitization, and

intelligence go hand in hand. For example, Huawei

collaborates with car companies to promote

ecological synergy, and car companies alleviate

production capacity bottlenecks by building factories

overseas (Chen, 2023). Leading companies such as

BYD and CATL dominate the market, with CATL's

power battery market accounting for nearly 40%.

Traditional car companies (such as SAIC and FAW)

collaborate with technology companies (such as

Huawei and Volkswagen) to build "ecological

synergy" barriers, while central enterprises'

restructuring plans further integrate resources to

enhance global competitiveness. Consumer

preferences are leaning towards intelligence and

personalization, with female car buyers and lower tier

markets (third-and fourth tier cities) becoming new

growth points. NIO, Ideal and other brands seize

segmented markets through differentiated products

such as battery swapping modes and home scenario

models.

NIO, founded in 2014 and headquartered in

Shanghai, is a Chinese company specializing in high-

end intelligent electric vehicles. The company aims to

promote the popularization of electric vehicles

through technological innovation and user experience

improvement and has now become one of the leading

enterprises in China's electric vehicle industry (Xiao,

2017). At present, the competition in the new energy

vehicle field is becoming increasingly fierce - Tesla

continues to lower prices to squeeze market space,

traditional car companies are accelerating their

electrification transformation, and China's "dual

carbon" policy and the window period of global

energy transformation provide strategic opportunities

for technology driven enterprises. NIO has

demonstrated impressive development potential with

its unique business model and strategy. This article

provides reasonable profit recommendations by

analyzing the innovation of its business model and

strategy.

2 NIO'S BUSINESS MODEL AND

INNOVATION POINTS

2.1 User Driven Business Model

Innovation

NIO regards users as brand co builders and builds

online and offline communities through NIO App,

NIO Day, user trust funds, and other platforms. Users

can participate in product design (such as voting on

seat schemes), event planning (NIO Day proposed by

users), and even invest in NIO (a company owned by

a user trust). NIO House/NIO Space does not simply

sell cars, but provides lifestyle spaces such as cafes,

libraries, and children's areas. Sales consultants have

transformed into "user consultants," with assessment

indicators focusing on user satisfaction rather than

sales volume (Pan and Liang, 2021). Users do not

need to purchase batteries when purchasing a car, and

the ownership of the batteries belongs to NIO (BaaS

operator). Users pay monthly battery rent (such as

980 yuan per month for a 75kWh battery). Users can

upgrade the battery capacity according to their needs

(such as switching from 70kWh to 100kWh),

alleviate range anxiety, and extend the vehicle's

lifespan. BaaS lowers the threshold for purchasing

cars (reducing car prices by 70000 to 128000 yuan)

and increases sales; Weileng can retrieve funds

through asset securitization (ABS) to generate

sustainable cash flow. Services such as one click

power on, on-site maintenance, and customer

charging are paid on demand, with service revenue

accounting for over 10% in 2022. Self-operated

lifestyle brand, selling peripheral goods (clothing,

home furnishings), with a revenue of over 1 billion

yuan and a gross profit margin of over 60% in 2021,

enhancing user stickiness.

2.2 Technology Driven Product

Strategy

NIO has a fully self-developed modular platform that

supports high-level autonomous driving (LiDAR+4

NVIDIA Orin chips, computing power 1016TOPS)

and upgradable electronic and electrical architecture

(supporting FOTA). The only high-end electric

vehicle platform in the world that supports battery

swapping, which can be completed in 3 minutes. As

of 2023, there will be over 2000 battery swapping

stations worldwide, with a total of over 30 million

battery swaps. Navigation assisted driving based on

high-precision maps will launch a subscription

system (monthly fee of 680 yuan) in 2023 to achieve

software revenue growth. Invest in chip companies

such as Black Sesame Intelligence and plan to launch

self-developed AD chips. The algorithm team

accounts for over 40%, and the data loop is optimized

through real-time feedback from user vehicles. The

ET7 is equipped with a second-generation electric

drive, which improves efficiency by 5% and increases

the range by 50km. In 2022, a 150kWh semi-solid

state battery pack (energy density 360Wh/kg) will be

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released, and mass production is planned for 2024,

with a range exceeding 1000km.

2.3 Reconstruction of Energy Service

System

NIO's single station battery compartment has

increased to 13 units, with a daily service capacity of

312 times and support for automatic parking entry. As

a distributed energy storage node, the battery

swapping station participates in power grid peak

shaving (such as Shanghai battery swapping station

charging during low hours at night and reverse power

supply during peak hours during the day). NIO has

deployed over 1000 battery swapping stations in eight

northern provinces of China, addressing the pain

points of low temperature range and increasing

market penetration. In addition, NIO has partnered

with CATL to recycle materials such as nickel and

cobalt, from new cars to battery swapping stations to

energy storage and recycling, with a recovery rate of

over 99% (Chen et al., 2022).

2.4 Development Strategy

In terms of globalization and localization strategies,

NIO has launched vehicle subscription services

(including insurance and maintenance) in Germany

and Norway, with a monthly fee of approximately

1200-1500 euros, reducing the threshold for users to

try and quickly accumulating local user data (Pisano

et al., 2023). Norway's battery swapping stations are

adapted to European standards, with plans to build

120 stations in Europe by 2025 and collaborate with

local energy companies such as Norwegian National

Petroleum on charging networks.

In addition, NIO is committed to building a capital

and ecological synergy system. The Hefei Municipal

Government has made a strategic investment of 7

billion yuan, and the bet agreement requires a revenue

of 120 billion yuan by 2024 to drive the Hefei new

energy vehicle industry chain cluster (such as

introducing Volkswagen Anhui and Guoxuan High

tech). In 2023, NIO will open up battery swapping

technology to the industry and cooperate with

companies such as Changan and Geely to promote the

standardization of battery swapping standards and

expand its ecological discourse power.

NIO also promotes its sustainable development

strategy (Wang, 2024). NIO has committed to

achieving full supply chain carbon neutrality by 2025,

tracking the carbon footprint of its batteries using

blockchain technology, and providing 100% green

electricity to its factories (with a rooftop photovoltaic

coverage rate of 90% at its Hefei factory). The

interior of ES6 adopts the world's first bio-based

polyamide material (extracted from castor oil), with a

vehicle recycling rate of over 95%.

3 SWOT ANALYSIS AND

PORTER'S FIVE FORCES

MODEL ANALYSIS OF NIO

3.1 SWOT Analysis

In terms of advantages, NIO has established a high

level of user loyalty through a strong user community

culture, such as NIO House and NIO App. The

interaction between users and enterprises is frequent

and deep, forming a unique brand moat. NIO is the

only car company in the world that promotes battery

swapping on a large scale, with a network of 3140

battery swapping stations, providing 5-minute fast

energy replenishment services, solving range anxiety,

and becoming the core of differentiated competition.

Auto drive systems and NOMI are in the first echelon

of the industry, and investment in technology R&D

continues to increase, promoting product

competitiveness. In the initial stage, we entered the

high-end market with over 300000 yuan and created

a brand image that combines technology and luxury,

attracting high net worth users (Chen, 2024).

NIO's development also has disadvantages. NIO

has invested over 30 billion yuan in the construction

of battery swapping stations, with high operating

costs and long return cycles, especially in third - and

fourth tier cities where coverage is insufficient,

leading to increased pressure on the funding chain.

Overreliance on the high-end market and the trend of

consumer downgrading have led to a shrinking

audience of over 300000 car models, while the low-

priced sub brand "Ledao" has failed to open up the

market and fallen into the dilemma of "high cannot

achieve low". The financing model relies on debt

financing, with a low proportion of equity financing,

a single financing channel, and high financial risks.

In terms of opportunities, global environmental

policies have promoted the penetration rate of new

energy vehicles, and policies such as China's "New

Energy Vehicle Industry Development Plan"

continue to provide subsidies and technical support.

Breakthroughs in battery technology (such as solid-

state batteries) and autonomous driving technology

may further reduce production costs and improve

product cost-effectiveness. We have entered

European markets such as Norway, and in the future,

Analysis of NIO’s Business Model Strategy

509

we can diversify market risks and enhance brand

influence through overseas expansion.

At the same time, NIO's development is also

facing fierce competition. Top companies such as

Tesla and BYD dominate the market share, while new

forces such as Ideal and Xiaopeng accelerate product

iteration. Traditional car companies (such as

Volkswagen and Toyota) are transitioning to new

energy to intensify competition. The technology of

hydrogen fuel cell vehicles is gradually maturing, and

traditional fuel vehicles still have advantages in areas

with incomplete infrastructure. The shared travel

mode diverts short distance demand. Global

economic fluctuations affect demand in the high-end

market, and the reduction of government subsidies

may weaken price competitiveness.

3.2 Porter's Five Forces Model

Analysis

In terms of bargaining power among suppliers, it

shows a high characteristic. Battery suppliers (such as

CATL) have strong bargaining power due to

technological monopolies and resource concentration

(lithium, cobalt, etc.), and NIO needs to reduce

dependence through long-term cooperation or self-

developed technology. The key components such as

autonomous driving chips and motors rely on a few

suppliers, and the high technical threshold limits their

bargaining power.

In terms of the bargaining power of buyers, it

shows a moderate to high characteristic. The

competition in the new energy vehicle market is

fierce, and consumers can compare prices,

configurations, and services, forcing companies to

optimize cost-effectiveness. Major clients such as taxi

companies and logistics companies are using bidding

to lower prices and demand customized services and

cost control.

In terms of potential competitors' entry threats, it

exhibits moderate characteristics. Volkswagen,

Toyota, and others are accelerating their layout of

new energy by leveraging their manufacturing

experience and financial advantages, squeezing

market space. Xiaomi, Baidu, and others have entered

the automotive industry through intelligent

technology, but they need to overcome the

shortcomings in production qualifications and supply

chain management.

In terms of the threat of substitutes, it exhibits

moderate characteristics. (Medium) traditional fuel

vehicles still dominate the mainstream market in the

short term, especially in areas with inadequate

charging facilities. Hydrogen fuel cell vehicles may

enter the pure electric market after the technology

matures but are currently constrained by costs and

infrastructure.

NIO is facing fierce industry competition. Tesla

and BYD, led by top companies, have gained

advantages through economies of scale and

technological leadership, while NIO needs to break

through with differentiated competition (such as

battery swapping services). Price war and technology

competition: Enterprises continue to launch high

range, low-priced models, and autonomous driving

and intelligent connectivity technologies have

become the focus of competition (Hao et al., 2025).

In summary, NIO's core competitiveness lies in

user operation and battery swapping technology, but

it needs to address the challenges of shrinking high-

end markets and high battery swapping costs. In

Porter's Five Forces model, with fierce industry

competition and high bargaining power of suppliers,

NIO needs to address risks through technology

research and development, optimization of battery

swapping models (such as introducing third-party

cooperation), and channel expansion (expanding to

third - and fourth tier cities). In the long run, the

globalization layout and the launch of models with a

volume of 150000 to 200000 yuan may become the

key to breaking the deadlock.

4 NIO'S PROFIT STRATEGY

4.1 Strengthen Technological

Innovation

The development of the new energy vehicle industry

requires continuous injection of innovative thinking

and technological breakthroughs. In the construction

of its R&D system, NIO should focus on introducing

high-end technical talents and strengthening its

independent innovation capabilities. The commonly

existing 8–15-year service life cycle of power

batteries, as well as the subsequent replacement costs

of tens of thousands of yuan, has become an

important technical bottleneck that restricts

consumers' purchasing decisions. In response to the

pain points in this industry, it is recommended that

NIO break through from the field of materials science

and focus on developing new electrode materials and

electrolyte formulations to extend the service life of

batteries. At the same time, NIO should establish a

battery lifecycle management system and develop

modular replaceable designs, establish technical

specifications for hierarchical utilization, so that

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retired batteries can be effectively applied to energy

storage systems and other scenarios, ultimately

forming a green closed loop from production, use to

recycling, and minimizing the risks of heavy metal

pollution and resource waste.

4.2 Adjust Financing Structure

NIO and CATL jointly build a battery swapping

network to attract more car companies to join the

ecosystem (such as Changan and Geely) and share

infrastructure costs. In addition, China's "dual

carbon" policy subsidies and the European Green

Transition Fund provide financial support. At the

level of capital operation strategy, NIO urgently

needs to build a composite financing ecosystem to

break through the limitations of traditional financing

models. Empirical studies have shown that the

endogenous financing model that overly relies on

retained earnings reinvestment exposes companies to

liquidity mismatch risk (with a current ratio lower

than the industry average of 15%). Suggest

implementing a "dual wheel drive" financing strategy.

On the one hand, deepen strategic credit cooperation

with commercial banks and explore the application of

mixed capital tools such as convertible bonds and

perpetual bonds; On the other hand, accelerate the

integration with multi-level capital markets and

optimize the balance sheet.

4.3 Reduce Costs and Expand Visibility

As a latecomer in the new energy vehicle industry,

NIO is facing significant market penetration

challenges. According to industry research data, new

energy brands generally face structural difficulties

with sales expense ratios exceeding 35% during the

introduction period. It is recommended that NIO

implement a precision marketing strategy by building

a digital integrated marketing communication system,

combining user community operations with scenario

based experiential marketing, to enhance brand value

perception. NIO can increase brand awareness

through advertising or collaborations with other well-

known companies, thereby reducing cost investment,

enhancing the company's profitability, and increasing

profits.

5 CONCLUSION

In today's fiercely competitive new energy market,

whether a new energy vehicle company can clearly

recognize its own advantages and positioning is the

key to its survival. This article uses SWOT and

Porter's Five Forces analysis methods to conduct a

comprehensive analysis of NIO's enterprise,

revealing its internal and external advantages and

disadvantages, and providing several reasonable

profit paths for NIO through the above analysis. At

present, how NIO can leverage its own advantages to

turn losses into profits is its top priority for achieving

sustainable development. Focus on strengthening

technological innovation, adjusting financing

structure, reducing costs, and expanding visibility.

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