Chinese Electric Vehicle Startup NIO is Offering a Battery Subscription Plan for its Vehicles
【Summary】Chinese electric vehicle startup NIO, which is often referred to as the Tesla of China, has come up with a novel idea for its electric models. The automaker is allowing drivers to subscribe to a battery plan instead of buying it with the vehicle. The company refers to it as a “Battery as a Service” (BaaS) plan, and it’s the first of its kind in the auto industry.
Automakers generally offer incentives to entice consumers to purchase a new vehicle. These incentives might include a cash back rebate at the time of sale or a prepaid gasoline card to help offset fuel costs.
For electric vehicles buyers, incentives might include free charging sessions, which is what German automaker Porsche offers for the electric Taycan sedan at one of Electrify America's public EV charging stations. Buyers of the electric Taycan receive three years of free charging with Electrify America as an incentive.
However, Chinese electric vehicle startup NIO has come up with a novel idea for its electric models. The automaker is allowing drivers to subscribe to a battery plan. The company refers to it as a "Battery as a Service" (BaaS) plan, and it's the first of its kind in the auto industry.
The subscription service is intended to make electric vehicles more affordable, by offsetting the cost of the battery pack, which is the most expensive component of an electric vehicle. An electric vehicle's battery pack and adds thousands of dollars to the sticker price.
Here's how it works. If a customer purchases a NIO electric vehicle and subscribes to the 70kWh battery pack under the BaaS model, they can enjoy a steep discount with a 70,000 yuan (US$10,114) deduction off the original sticker price. Then the buyer pays a monthly fee, which starts at 980 yuan ($142) for the 70 kWh battery pack.
Buyers can still take advantage of China's tax exemption on the purchase as well as government New Energy Vehicle (NEV) subsidies for switching to a zero-emissions EV.
"The BaaS model has long been planned with our unique battery swap technologies. 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," said NIO founder and chairman William Bin Li.
NIO's electric vehicles are uniquely designed. The entire battery pack is designed for easy removal from underneath the vehicle. The battery can be swapped out in under 10 minutes at one of NIO's many battery swap stations being built in China. The process is much quicker than conventional charging.
To date, NIO built 143 battery swapping stations across 64 cities in China. Mr. Li said the automaker already completed over 800,000 battery swaps for NIO drivers.
By being able to switch out the battery, the vehicle experiences no battery degradation as can result in a higher resale value, since a new battery can be installed quickly and easily at one of the company's "NIO Power" battery swap stations.
A "NIO Power" battery swap station in China.
To help manage the battery subscription services, NIO-led an investment in a new battery asset management company this week called Wuhan Weineng Battery Asset Co. Ltd., according to China's Gasgoo. Shen Fei, Vice President of Power Management at NIO, will serve as its legal representative.
The company has a registered capital of 800 million yuan (US$115,583,520) and is located at Wuhan East Lake High-tech Development Zone, which is home to 42 universities, 22 state laboratories, 24 national engineering technology centers.
Investors in Wuhan Weineng including NIO and Chinese battery giant CATL, a major supplier of batteries to the auto industry, including Tesla. CATL acquired a 25% of equity interest in Wuhan Weineng with an investment of 200 million yuan (US$28,895,880).
Wuhan Weineng's battery asset management business includes the planning, R&D and design of EV charging and battery swapping infrastructure, as well as the removal of electric vehicles batteries. It's business includes the rental, maintenance, sales and the recycling of decommissioned batteries and the development of cloud-based platforms and big data to manage the battery assets.
NIO is one of China's rising EV startups as is often referred to as the "Tesla of China." The company is backed by Chinese internet giant Tencent Holdings.
Founded in 2014 by William Bin Li, the company began deliveries of its first electric passenger vehicle the ES8 SUV in June 2018. NIO followed that up with the ES6 in June 2019, a smaller 5-passenger, high-performance, long-range SUV.
The ES6 shares the same EV architecture and underpinnings as the larger ES8 and is intended to be more of a mass-market EV like the Tesla Model 3. Buyers can choose between a 70 or a 84-kWh battery pack for a bit more range.
NIO's first car was the 1,360 horsepower EP9 electric supercar, which earned the title of the world's fastest battery-powered car at Germany's famed Nürburgring Nordschleife in 2017. The EP9 also has a removable battery pack, which takes around 8 minutes to remove.
NIO was also the first electric automaker in China to go public in the U.S., when it debuted on the New York Stock Exchange (NYSE) on Sept 12, 2018. NIO's stock is listed on the NYSE under the symbol "NIO." The automaker raised $1 billion with its U.S. IPO.
In April, NIO received a 7 billion yuan (US$1 billion) strategic investment to help the company support its operations.
resource from: Gasgoo
Originally hailing from New Jersey, Eric is a automotive & technology reporter covering the high-tech industry here in Silicon Valley. He has over 15 years of automotive experience and a bachelors degree in computer science. These skills, combined with technical writing and news reporting, allows him to fully understand and identify new and innovative technologies in the auto industry and beyond. He has worked at Uber on self-driving cars and as a technical writer, helping people to understand and work with technology.
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