Within the electric two-wheeler market in China, NIU has recently embarked as a new disruptive competitor. The company has been able to swiftly expand its product line amidst an unprecedented increase in demand for efficient urban transportation solutions. It was also driven up by rising concerns about air quality and increased traffic congestion.
In this promising landscape for market expansion, NIU was established in 2014 by former Baidu chief technology officer, Li Yinan. His vision is to revolutionize urban mobility with smart and environmentally friendly solutions. Just a year later, in 2015, NIU introduced its inaugural electric scooter, the NQi, which quickly captured the market’s attention. The NQi model was launched through an online crowdfunding campaign. The campaign achieved remarkable success by selling over 16,000 units within a mere 15 days.
How to navigate the electric scooter market in China
China stands as the largest electric two-wheeler market globally. As such, Chinese brands produced approximately 45 million electric two-wheeler units in 2022 alone. The growth of electric two-wheelers in the Chinese market has witnessed an increasing amount of units sold each of year for over a decade.
Moreover, data from Bloomberg’s Electric Vehicle Business Yearly Report suggest this decade of constant rise of electric two-wheeler sales has propelled a very high level of ownership rate of electric two-wheelers. There was a peak in sales of two-wheelers in China during the COVID-19 outbreak period as people are avoiding public transport to prevent being infected. By 2023, the total ownership of two-wheeled electric vehicles in China had already reached 420 million units, translating to about one in every three people owning such a vehicle.
Several factors contribute to this growth, including favorable government policies, and advancements in the production costs of battery technology. Government subsidies and tax exemptions have incentivized consumers to adopt electric vehicles, with over 70% of Chinese consumers considering purchasing electric vehicles for future use. Meanwhile, advancements in battery technology, with an average annual improvement in battery energy density of 6-8%, have significantly enhanced the performance and affordability of electric scooters, according to a study led by McKinsey & Company.
From start-up to stardom: NIU’s rise in the electric scooter arena
Starting in 2018, NIU started achieving a wide level of global recognition. The company’s MQi scooter series received 7 top international design awards. But it was during the early 2020s that NIU solidified its image as a vector of sustainability. By 2024, the company announced that its user base had collectively ridden over 1.8 billion kilometers. This is a testament to the brand’s global impact and the durability of its products. Furthermore, the milestone is equivalent to traveling around the Earth 200,000 times, resulting in an average avoided carbon footprint of approximately 188 million kilograms of CO2 emissions worldwide.
A unique brand identity powering up streets with innovation and style
NIU’s brand philosophy is centered on “technology, style, and freedom.” Thus, the company is committed to transforming urban mobility and enhancing lifestyles with advanced technology. NIU’s product lineup in electric scooters has diversified extensively in the last 10 years. Its product offerings feature a diverse series of 7 high-performance smart electric scooters. Each model catered to different consumer needs: these are the NQi, MQi, UQi, NIU Aero, Gova, RQi, and TQi.
The company has been consistently praised for its commitment to combining style with functionality. It was awarded many international quality label recognitions. For instance, prestigious accolades such as the Red Dot and IF in Germany, IDEA in the United States, and G Mark in Japan.
The company has achieved various research breakthroughs in the Research and Development of its product offerings. At the core of NIU’s success is its pioneering NIU Energy™ lithium battery technology, now in its fourth generation. This technology provides electric two-wheelers with extended battery life, increased range, and enhanced safety, all while being more lightweight and powerful than previous iterations. This advancement has positioned NIU as a trailblazer in electric two-wheel vehicles, creating a whole distinguishable category within the industry.
Current performance in the electric two-wheeler market in China
An unexpected downturn in revenue sales
From 2017 to 2021, NIU witnessed a remarkable rise in sales volumes, going from 189,467 units in 2017 to surpassing over one million units in 2021. By that time the company seemed to be going on the right track towards solidifying its global presence with over 1.8 million scooters sold across 46 countries.
In 2022, the company encountered challenges. NIU’s performance declined due to a market slowdown in sales and rising lithium prices, which increased battery pack costs. This resulted in a drastic decline in net profit from RMB 91.8 million to a net loss of RMB 49.5 million over the year. NIU also fell short of its 1 million sales target in 2023, selling only 709,800 units. This represented a further 14.65% decline from the previous year.
However, the company reported a rebound in domestic and international sales volumes in the first quarter of 2024, with a 34% increase in stock price following the announcement. First-quarter sales in China grew by 35% year-over-year to 110,115 units, with international sales, primarily in Europe, increasing by 48% to 19,024 units.
Market share: A niche competitor in China’s electric scooter product offering
In 2023, it is estimated that sales within the electric two-wheeler market in China reached approximately 56 million units. Dominant brands like Tailg, Yadea, Aima, and Green Source collectively sell over 48 million units, comprising 85.7% of the market. However, NIU, alongside a dozen of other smaller competitors, is fighting to capture the remaining 15%. As such the company struggles to surpass its current 2% market share, ranking it only at 9th in the industry. Currently, AIMA and Yadea maintain the highest market shares at 15% and 12%, respectively. It was due to their ability to commercialize extremely low-cost options by cutting down production costs through their highly scalable manufacturing capabilities.
Despite its relatively small size, NIU holds its very own comparative advantages. The two-wheeler manufacturer has a unique leading position in China’s lithium-ion two-wheeled electric vehicle market. This market is a narrow subsection composing the overall electric motorcycle industry. In this high-end market segment, as of 2021, NIU captures an overwhelming 26.0% of sales volume, leading by over 7% over its second-placed competitor. Additionally, it accounts for 39.5% of its generated revenue.
These two-wheelers are powered by batteries, which are seen as more advantageous in terms of energy efficiency, lifespan, and rapid charging. By focusing its product offering strategy on lithium-ion technology, NIU can promote itself as a more reliable and sustainable brand. This ultimately allows it to generate a positive image that can justify its higher selling prices. And this strategy is already working extremely well. Despite NIU’s much smaller size in volume sales compared to its much more established competitors, the brand ranks 4th most mentioned brand among consumers, only trailing behind Yadea, AIMA, and Lvyuan. This indicates strong consumer interest in the brand, signaling potential growth in demand for the company’s sales.
In a nutshell: how to assess NIU’s Influence on the electric two-wheeler market in China
- The global electric scooter market is booming due to urban transportation needs and environmental concerns, presenting significant growth opportunities.
- NIU has swiftly grown since its founding in 2014, with a strong emphasis on sustainability, quality control, and constant product innovation.
- Despite challenges like regulatory fines and competition, NIU is strategically focusing on premium products and expanding its sales channels.
- The company’s commitment to technology and brand identity positions it well for future growth in both domestic and international markets.
- NIU’s strategic shift towards premiumization, evidenced by the introduction of high-end models like the NX electric scooter, reflects its dedication to innovation and meeting consumer demands.
