The Chinese electric car manufacturer Nio decouples the battery costs from the purchase price of its vehicles. Using the ‘Battery as a Service’ offer now introduced, customers can buy the Nio ES8, ES6 or EC6 models without a battery and rent one instead.
The service model enables Nio to reduce vehicle prices by 70,000 yuan (around 8,530 euros). Instead, buyers pay a monthly fee of 980 yuan (just under 120 euros) to lease the 70 kWh battery.
To implement the Battery-as-a-Service offer, Nio, together with CATL and two other partners, has founded the Battery Asset Company. The four participating companies will hold 25 per cent each with an investment of 200 million yuan. The new company will buy the batteries and lease them through the BaaS business model with CATL supplying the cells.
“We believe with BaaS, more customers of gasoline cars will consider electric vehicles,” Nio’s chief executive William Li told the press. The same assumption had been made by Renault when first introducing the Zoe and Kangoo electric vehicles. The French Group has since moved to battery ownership in most markets.
Nio, however, can tie in another proposition – according to the latest information, the young company operates 143 battery-swapping stations around China, where drivers can exchange spent battery packs for fully charged replacements. The BaaS now covers 64 cities in China, and Nio claims it completed over 800,000 battery swaps. Li added that Nio was building a new battery-swapping station in China every week and planned to build 300 new stations next year. This is a huge expansion given that Nio completed the first battery-swap corridor in January 2019 as reported.
Nio has been on the path of financial recovery, if only since July when the company managed to score credit lines with six domestic banks for a total of 10.4 billion yuan (around 1.3 billion euros). All of Nio’s new financiers are branches of state-owned commercial banks from the province. The connection to Anhui is crucial in this context: In February, Nio signed a framework agreement with the government of Hefei, the capital city of Anhui province. In this framework agreement, the company, which was under high pressure at the time, committed to building factories and research centres in the city. Originally, Nio’s plans envisaged a factory in Shanghai, later in Beijing. However, the cooperation with the city of Hefei also brought the company a financial commitment of ten billion yuan – which was then implemented in the form of said credit line with local banks.
The battery swap model may prove another smart move. The industry ministry of China has said it would promote the adoption of vehicles with batteries that can be swapped between different makes and models. Indeed Nio’s battery packs are the same shape and size across its lineup comprised of three SUVs.
Nio CEO Li also said the firm hoped to enter international markets from the second half of next year starting with select European countries with more markets to follow from 2022.
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