A smartphone specially made to use with EVs? China's Nio enters niche space

China's Nio Inc on Thursday unveiled a high-end smartphone designed to be used with its electric vehicles, touting a plethora of related functions such as using the phone to instruct the car to park itself.

The launch of the Nio Phone - the first car-specific phone to be sold by a Chinese firm, highlights the advanced state of EV technologies in the world's biggest auto market, where electric cars now account for more than a third of vehicle sales.

A Nio driver can also use the phone to notify their car to drive itself to their location (allowed in China in restricted spaces and at low speeds) and to unlock the car even when the phone is switched off.

Chief Executive William Li said the Nio Phone had more than 30 car-specific functions and had broken new ground with connection technologies. "I believe many of our competitors will learn from our smartphone innovations and I welcome them to do so," he said.

Three models are available, priced between 6,499 and 7,499 yuan ($890-$1,030). The phone will only be sold in China for now and deliveries will start from Sept. 28.

Photo of a demonstration by a Nio staff member showcasing the capabilities of the Nio smartphone for its EVs.

Li has pushed ahead with the smartphone project despite concern among some investors that the automaker, which has seen its losses widen amid a fierce price war in China, is taking on too much.

The automaker's primary interest in designing the phone is probably in collecting user data rather than seeking to make the phone a key contributor to revenue, according to IDC analyst Will Wong. "Smartphones will be a good platform to collect more data which is crucial in the current tech world and could potentially lead to better user experience and customer stickiness," he said.

Nio's foray marks the latest intermingling between the smartphone and automotive worlds. Meizu, taken over by a venture belonging to Zhejiang Geely Holding's founder, in March unveiled smartphones that can connect to Geely's Lynx & Co-branded cars but are also marketed more broadly to consumers.

Smartphone maker Xiaomi is also set to start making cars.

Nio, which ranks No.9 among manufacturers of electric and hybrid cars in China, has been doubling down on investment in self-developed technologies for key components such as chips and batteries. It has also built a fan base among its drivers in China by rolling out exclusive membership clubs and by offering products such as Nio-branded wine.

The company has a team of 11,000 engineers that work on key aspects of smart EV technologies from chips to batteries to autonomous driving and smart manufacturing, Li said at the event.

After sales slumped in the first half of the year, Nio has seen signs of recovery with August deliveries jumping 81% on the year thanks to the popularity of its revamped ES6 SUV.

It sold some 94,350 vehicles in the first eight months, an increase of 32% over the year-earlier period, outpacing the 20% growth rate for electric car sales in China.

($1 = 7.2999 Chinese yuan)