In an increasingly competitive electric car market, EV startup NIO believes it’s well-positioned to hit its goal of becoming profitable this year. NIO is set to launch two new brands, one of which will be aimed at VW in Europe with a starting price below 30,000 euros (about $33,165), but the EV startup has other plans to take on Tesla.

NIO to take on VW with affordable EVs in Europe

In a new interview with Germany’s Der Spiegel magazine, NIO’s CEO and founder, William Li, said he has great respect for German luxury automakers like Mercedes-Benz, BMW, and Audi.

However, he says when it comes to electric cars, Germany is lagging behind China regarding technology and software. To drive growth in the European market, which Li says initial feedback has been good, the company will be launching two other brands alongside the NIO name.

One of the new brands is designed to meet the growing need for small and compact electric cars with a target price below 30,000 euros (around $33,165). Specifically, the new brand aims to compete with mass suppliers like VW. Li explained:

As far as the price is concerned, we are attacking Volkswagen more than before.

The new brand will target European countries with mass-market cars, starting with France, Italy, and Spain.

Not afraid of losing market share to Tesla

Meanwhile, Der Spiegel questioned Li on the recent Tesla price cuts, a move that NIO will not participate in. Li has previously stated that Tesla can’t dictate prices in China with a market share below 10%, although many EV makers in the region have followed suit.

When asked if he was afraid of losing market share to Tesla, Li responded by saying:

No, our comparable models are already around $20,000 higher than Tesla prices, that’s not our core segment.

Li explains that the residual value of a car is also important and that anyone that lowers prices harms their existing customer, adding that “a good car has to have its price, especially in the premium segment.”

The response reiterates what Ford’s CEO Jim Farley warned Tesla last week about product freshness and its cars being commoditized.

NIO says its sticking to its goal of becoming profitable this year with the accelerated expansion of battery swapping stations and the launch of five new models to drive growth. The company believes its technology and software differentiate it from the competition.

The EV maker recently began deliveries of its flagship EC7 as one of the most aerodynamic SUVs on the market.

Li says China has a cost advantage of about 20% over the US and Europe regarding car production, a factor that will help it drive global growth going forward.