China's Nio Unveils Battery-As-A-Service, Lowering EV Ownership Costs

Nio Inc – ADR NIO confirmed early Thursday two landmark developments that are intended to drive its electric vehicle sales.

Nio's Twin Announcements: Nio unveiled a battery-as-a-service, or BaaS, subscription model, and also announced the establishment of the Wuhan Weineng Battery Asset Co.

Nio's BaaS Economics: The BaaS subscription model will allow customers purchase EVs separately, and then subscribe to use a battery pack, Nio said in a statement.

The battery price will neither be included in the vehicle sales invoice nor in the down payment and installments of an auto loan.

This will shave off 70,000 yuan ($10,100) from the list price of a vehicle, Nio said. Customers will have the option to subscribe to battery packs with various capacities according to their needs.

The subscription fee for a 70 kWh battery pack works out to 980 yuan. An additional 80 yuan per month needs to be paid as a battery guarantee fee by customers who have not subscribed to Nio's Worry-Free Service Plan.

With the BaaS subscription model, customers can continue to take advantage of government incentives such as a purchase tax exemption and government subsidies for EVs.

The first vehicle under the BaaS model has already completed the process of license plate registration, insurance purchasing and auto financing, the Chinese automaker said. It's now available for all customers who purchase Nio vehicles.

"The successful launch of the BaaS model will enable NIO users to benefit from the lower initial purchase prices of our products, flexible battery upgrade options and assurance of battery performance," CEO William Li said in a statement. 

With BaaS, the cost of an EV and the subscription cost of the battery work are lower than those of internal combustion engine cars in the same segment, Nio said.

BaaS also represents a solution to long-existing challenges for EV penetration, including battery degradation, battery upgradability and lower resale value, according to the automaker.

Nio's Battery Asset Company: Nio said it has joined hands with CATL, Hubei Science Technology Invest Group and a subsidiary of Guotai Junan International Holdings to establish the Battery Asset Co. Each of the partners will invest 200 million yuan into the venture, holding a 25% stake in return.

The Battery Asset Co., according to Nio, will be responsible for purchasing and owning the battery assets and will lease battery packs to customers who subscribe to the BaaS model.

Nio said the BaaS model was previously contemplated with the company's unique battery swap technology. Nio has about 143 battery swap stations across 64 cities in China, and said it has completed over 800,000 battery swaps for its customers.

"The advantages of our chargeable, swappable and upgradable battery swap technologies will continue to enhance competitiveness of NIO products, promote conversion to our premium smart EVs and create more values for our users," Li said.

NIO Price Action: In premarket trading Thursday, Nio shares were up 0.43% to $14.12.

Related Links:

Tesla Vs. Nio Vs. Xpeng: A Look At The Chinese Electric Vehicle Market

Nio To Rollout Battery-As-A-Service This Week: What You Need To Know

Photo courtesy of Nio.