Tesla’s Chinese rival Nio is lowering the price for a new car from the Onvo brand

HEFEI, China – There’s another Chinese electric car looking to undercut the competition Teslawith a higher discount.

Onvo, the cheaper brand launched by the premium electric car company Nioannounced that its first car, the L60 SUV, would start at 149,900 Chinese yuan ($21,210) when purchasing battery services via a monthly subscription, starting at 599 yuan. That’s the equivalent of just over $1,000 per year to “rent” the battery.

A model with the battery and the car starts at 206,900 yuan. Deliveries start on September 28.

Nio shares briefly rose more than 3.5% in U.S. trading on Thursday following the launch of the Onvo L60.

The new price of the L60 is even lower than what the company previously announced. When Nio launched the Onvo brand in May, the company said the L60 would retail for 219,900 yuan, versus Tesla’s Model Y at 249,900 yuan.

Nio CEO William Li told CNBC in an exclusive interview on Thursday that he hoped to launch Onvo in Europe as soon as next year, but he had no specific time frame to share.

He said the cheaper brand would help the company better reach a global market, due to rising tariffs and other challenges for premium brand Nio to reach its target overseas markets of Europe and the US.

As for whether Onvo would cannibalize sales of the Nio brand, Li said the two brands target very different price segments. He noted that Nio’s deliveries have improved since the company announced its plans for Onvo.

The Chinese auto industry has become fiercely competitive in recent years, with Nio and other companies vying for a share of Tesla’s market share.

Geely-supported Zeekr will launch its first mid-size electric SUV, the Zeekr 7X, in China on September 20, starting from 239,900 yuan.

Xpeng in late August announced that mass-market brand Mona would begin selling its electric M03 coupe in China. The base version starts at 119,800 yuan, with a driving range of 515 kilometers (320 miles) and some parking assistance functions.

A version of the Mona M03 with the more advanced “Max” driver assistance features and a driving range of 580 kilometers will sell for 155,800 yuan.

By comparison, Tesla’s cheapest car – the Model 3 – costs 231,900 yuan in China, after a price cut in April.

Chinese electric car companies have gradually expanded abroad, often starting in Europe. However, the European Union is nearing the end of a process that would do just that increase tariffs on imported Chinese-made electric cars starts in early November. The bloc launched an investigation last year into the use of subsidies by Chinese EV manufacturers.

Nio cooperated with the EU investigation but was not sampled, meaning the cars would be subject to a 20.8% excise duty, as announced in July by the European Commission. That’s higher than the Tariffs of 19.9% ​​planned for Geely carsand 17.4% for BYDs.

In the fourth quarter, Nio plans to begin deliveries in the United Arab Emirates, Li told investors during a Sept. 5 earnings call.

“Because of the tariffs now in place in Europe, selling or exporting cars from China to Europe will become more expensive,” Li said, according to a FactSet transcript.

“So we will focus on the existing five European markets that we have already started. We also know that it will also take longer for NIO to establish such a premium brand in the European market, and we have a lot of patience with that.”

“But in the meantime, this does not mean that we have stopped our activities there,” Li said. “Earlier this year we just opened our NIO home in Amsterdam and we are still installing and deploying our energy exchange stations in Europe.”

He expects the L60 to reach 10,000 monthly deliveries in December, and 20,000 vehicle deliveries per month next year. He expects a vehicle margin of 15% on new cars from the Onvo brand.

The brand aims to have more than 200 stores in China by the end of this year and open more than 100 by early September.

Li said during the earnings call that Onvo and Firefly, an even cheaper brand that will begin deliveries next year, would like to release vehicles to the international market.

— CNBC’s Sonia Heng contributed to this report.