Chinese electric car maker Nio has launched an Android smartphone

SHANGHAI — Chinese electric vehicle brand Nio on Thursday launched an Android smartphone, which the company expects at least half of its users to purchase, CEO William Li told CNBC in an exclusive interview ahead of the launch.

The phone, which ranges in price from about $900 to $1,000, is an Android device and is about $150 cheaper than a similar Huawei phone, he told me in Mandarin.

Of the Nio users the company makes money from, more than half are iPhone users, while the other half use flagship Android phones from Huawei and other brands, he told CNBC.

“I think this segment of users is very likely to use this new model [of device] “When they change their phone,” Lee said, according to a CNBC translation, citing the phone’s overall performance and car connectivity.

Nio is the first Chinese high-end electric car brand to launch its own smartphone, which Li said the company developed in about a year. China’s electric car companies have sought to make in-car entertainment and mobile connectivity a selling point for their cars.

Delivery begins September 28, and orders begin immediately.

Swedish electric car maker Polestar, which sees China as a key market, told CNBC earlier this month that it plans to launch a phone in December.

Smartphone companies Apple and Xiaomi have reportedly been working on their own cars for a long time.

Less than two years ago, Huawei launched the Aito brand, which sells electric cars in China integrated with the smartphone company’s operating system. Huawei also sells its in-car software to other electric vehicle companies such as Avatr and BAIC’s Arcfox.

This connection allows drivers to sync their personal device settings – such as music – with the car. Nio also has a standalone mobile app.

While the new Nio device looks like a typical smartphone, it comes with a special button that doubles as a car key, Lee told CNBC on Wednesday.

He added that the Nio smartphone also allows users to connect more seamlessly to the car, such as when switching between the phone and the vehicle during online meetings.

The new device represents an opportunity for Nio to make more money per user.

“We pay more attention to the value each user brings to our entire brand, and connecting users has become more convenient. It is also more efficient than before,” Li said. “What we’re after is the in-car experience and the emotional experience we can deliver to our users.”

Lee added that the phone is available to all consumers in China, not just those who own Nio cars.

He pointed out that the Nio phone application includes 600,000 active users daily, about 1.5 times the number of car users.

Nio’s monthly deliveries rose to about 20,000 in August and July, after delivery volume declined in the previous three months.

In the second quarter ended June 30, Nio reported revenue from Category “Other sales”. This was mainly driven by increased sales of used cars, accessories and energy services, which more than doubled from a year ago to 1.59 billion yuan ($217.86 million) despite lower overall revenues.

The company attributed the increase in other sales year-on-year and quarter-on-quarter to “the continued growth of our users.”

However, Lee said Nio has no plans to launch the smartphone in Europe – at least not until the market grows further.

Lee said that Nio is present in five countries in Europe, including Germany, and the company needs time to focus on developing local car services, noting that these services are important for car products.

When asked about the EU’s anti-subsidy investigation into Chinese electric cars, Li said the company was still learning the details.

He added that it is important for the world to cooperate, especially in addressing climate issues.

“I don’t think anyone should prevent users from using good products through multiple methods” such as investigations, he said.

In China, the spread of new energy vehicles has expanded rapidly, but the general slowdown in economic growth has affected the market.

Li said that competition in the domestic electric vehicle market is “fierce,” noting the challenges facing their peers in the industry as well.

But he expects commercial investments will help Nio create barriers to entry. “We believe time is still on Nio’s side,” Lee said.

He pointed out that the company spends about $500 million on research and development every quarter. He said the company’s other key investment areas are battery charging and broad brand development.

Nio previously said it plans to launch a vehicle in the second half of next year under the ‘Alps’ mass market brand.

The company has faced financing challenges more than once since its founding in late 2014. Earlier this year, Nio said it was delaying some spending plans due to lackluster deliveries.

But the company then received nearly $740 million from a fund backed by Abu Dhabi. This week, Nio also announced a plan to refinance part of its debt.