The one thing holding many potential EV owners back is that EVs are simply too expensive. For things to turn around, the prices must come down, and Tesla is once again leading the way. While some automakers like NIO aren’t pleased with the idea, it is also making the choice to cut prices even though it previously said this was not an option.

Nio is officially cutting prices

CNBC has recently reported that Nio has made a difficult decision. It’s cutting prices on some of its vehicles by $4,200 effective immediately. This does come with a price, as owners can no longer swap out batteries if they are new buyers.

So why is this so newsworthy? Nio recently swore it would not do this.

In April, the company’s CEO William Li made it very clear that they were not going to be cutting prices. The thinking was that other EV automakers were using this as a method to draw in potential customers, and NIO wasn’t going to participate. Just two months later, Nio began slashing its prices.

It doesn’t stop there, however. Nio has also announced it is delaying its capital expenditure, as well as some research and development projects. The reason for this is an impact on cash flow due to fewer car deliveries.

The China Merchants Bank International believes that this is not a good sign for Nio, and stated, “It now also faces a dilemma between brand positioning and profitability, as it has started to cut service benefits, which could dent its brand image and thus sales more severely than expected.”

The company remains optimistic and believes that things will turn around in the fall of 2023. Slashing their prices may be a bid to do exactly this.

What role does Tesla play in this?

In the statement from CEO William Li, he made a reference to Tesla. In it, he stated that Tesla was cutting prices, and Nio was not going to get involved in a “price war.” This is because Tesla is a direct rival of NIO in China.

It has to do with falling sales numbers. We first reported on this in January, when Tesla began to cut prices on the Tesla Model Y and the Model 3. 

In the case of the Long Range Model Y, the prices were dropped $13,000, which was more than enough to get the attention of customers who were on the fence about buying an EV. While Tesla continues to face serious competition as other automakers try to go green, it’s still more than profitable.

What does this mean for the future of the EV market?

In order for the EV market to continue to grow and thrive, it has to bring more drivers to the green side. There are many people who want to drive EVs, but can’t do so because they can’t afford it.

Still others are taking the middle lane, and purchasing hybrids. These are the best of both worlds, and it remains to be seen if hybrids or EVs will eventually take the place of gasoline-powered vehicles. 

So does slashing prices really help? Yes, but it may not be enough. EV automakers are going to have to do more than just lower the sticker price for EVs if they want more green converts.

It means ramping up production on EV cars, continuing to expand charging stations to relieve range anxiety, addressing problems like lowered range due to changes in temperature, and developing more eco-friendly materials to build batteries. Until this happens, many people will stick with the tried and true gasoline-powered vehicles.