Nio Reportedly Planning Entry-Level Models With Cheaper Batteries From CATL

Nio Inc's – ADR NIO annual Nio Day is just around the corner, and the Chinese electric vehicle manufacturer expected to unveil a host of new product and service offerings.

Ahead of the event, speculation point toward the company dipping its heel into the entry-level EV market.

What Happened: Nio has entered into a contract with battery supplier CATL for procuring a production line of lithium iron phosphate batteries, Chinese media reported.

The batteries are being tested and prepared for delivery, the reports said.

Lithium iron phosphate batteries are cheaper, as they do not use more expensive nickel and cobalt, which allows a reduction in battery prices to below $80/kilowatt-hour, a CNBC report said.

Related Link: Nio Launches 'NIO Certified' Used Car Service in China Amid Competitive Pressure From Tesla

Why It's Important: Lithium iron phosphate batteries are used by EV pioneer Tesla Inc TSLA in its China-made Model 3 vehicles, allowing the company to price competitively.

Apart from easing cost pressure, the batteries also help to circumvent the safety concerns associated with ternary lithium batteries, cnTech Post reported.

What's Next: Nio is planning to launch entry-level models equipped with lithium iron phosphate batteries as soon as this year with the objective of meeting demands of price-sensitive consumers, local media reports said.

The reports also said Nio's premium positioning in the market is unlikely to be impacted by the proposed plan.

NIO Price Action: Nio shares were up 1.37% at $53.97 at last check Wednesday. 

Related Link: Nio's Sedan Launches Jan. 9: What We Know

Photo courtesy of Nio.