BEIJING, August 23 (TMTPost)— Tesla’s Chinese rival Nio Inc. may launch a premium smartphone even as the market has not showcased signs of strong recovery yet.

Credit：Visual China

Nio vehicle owners in various Chinese provinces recently received an intention questionnaire to learn their intention to purchase a Nio-made smartphone, and any respondents can get a gift package for EP Club, a group consists of premium vehicle owners, if they make payment within 72 hours when the phone officially goes on sale, TMTPost reported. Nio was said to sell its smartphone for more than RMB5,000 apice, or even over RMB7,000. It seems not that consumers are reluctant to buy a new phone with such hefty price tag.

In a survey among more than 4,280 netizens made at Chinese Instagram-like social media Xiaohongshu, only 749 people, less than one fifth, said they wanted to place an order for a Nio smartphone, most of the rest felt it cost them too much to buy a phone. Some of resondents said they don’t want to be treated as a “guinea pig” because the quality and after service of Nio ‘s phone is highly uncertain since the phone is set to be more of a smart key of its vehicle than a mobile device, which means the delivery is limited.

While not offering any officially timetable, increasing signs this year suggested Nio is well on the track to become the first electric vehicle (EV) maker that produces smartphones.

Nio filed an application in January to register the NIO PHONE trademark, under the classification of scientific instruments of China National Intellectual Property Administration. Nio was close to complete development of its first smartphone, a high-end Android model, and will begin internal testing in the second quarter, Qin Lihong, the co-founder and president, said at an offline event with Nio vehicle owners and fans the same month. Qin stressed Nio will never have any advertising built in its phones, neither will make money with ads on the phone. Nio CEO William Li said in April that his company will launch Nio phone and start delivery in the third quarter of the year.

Nio phone obtained approval from the Ministry of Industry and Information Technology (MIIT) as a radio or wireless equipment on Monday. Document at MIIT website showed the phone model, named N2301, is poised to support 2G (GSM), China Unicom 3G (WCDMA), CDMA, China Mobile & China Unicom 4G (TD-LTE / LTE FDD), and 5G network standards, and also enable UWB (ultra-wideband) technology, signaling the phone is expected to function as a digital key for Nio vehicle, or even access to other intelligent devices through a short-range connection.

Nio’s effort to foray into mobile phone came as China, the world’s largest smartphone market struggled for recovery. 65.7 million smartphones shipped in China in the quarter ended June 30 of the year, estimated IDC in late July. The market intelligence firm on tech industry expected the discouraging sales results indicated the challenging environment will continue in the short term. It noted the sluggish consumer demand recovery offset the bigger discount efforts from smartphone vendors and e-commerce operators, leading to a more-than-5% drop in sales during 618, the second largest online shopping festival in China.

Huawei became the rare spotlight in China’s lackluster smartphone market in the second quarter. The telecom giant notched 13.0% of market share, reaching the top 5 again, due to a better product launching pace as well as the favorable sales performance of its P60 series and foldable Mate X3 model. “Gloomy consumer demand is not the only challenge now for the top tier vendors as Huawei made a comeback and potentially triggered more competition in the high-end segment,” said Will Wong, Senior Research Manager for Client Devices at IDC Asia/Pacific. Wong adds, “More intense rivalry is expected to be seen, especially during the product launch period and the Singles’ Day shopping festival.”

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