NIO (NYSE: NIO) Officially Launches Battery as a Service (BaaS) Subscription Model in a Bid To Make Its EVs More Affordable
NIO (NYSE:NIO), one of the largest EV manufacturers in China, officially launched its much-anticipated Battery as a Service (BaaS) subscription model today at a dedicated event in Shanghai.
We noted in our post on the 23rd of July that NIO has been working toward launching this BaaS facility for the better part of 6 months and that its formal launch was imminent. Today, the company delved into the modalities of the program in detail, noting in its press statement:
“The BaaS model allows users to purchase electric vehicles and subscribe [to] the usage of battery packs separately. If users opt to purchase an ES8, ES6, or EC6 model and subscribe to use the 70kWh battery pack under the BaaS model, they can enjoy the vehicle purchase price with an RMB70,000 deduction off the original price and pay a monthly subscription fee of RMB980 for the battery pack.”
This essentially means that users will be able to save RMB70,000 ($10,116) on the purchase of NIO’s ES8, ES6, and EC6 models if they choose to rent their EV’s entry-level 70KWh battery pack, paying only RMB980 ($141) per month as a subscription fee for the BaaS facility.
Apart from the reduced cost, NIO’s BaaS subscription model also allows its customers to keep upgrading their batteries periodically while retaining the rest of the EV construct. This effectively lengthens the useful life of a NIO EV.
At the same time, NIO is also expanding its battery swap service in China, whereby, a user does not have to endure a lengthy wait for the EV battery to recharge. Instead, the depleted battery can simply be exchanged with a fully charged one at one of the many designated battery swap stations.
At the launch event today, NIO’s founder William Bin Li disclosed that the company has already established 143 battery swap stations across 60 Chinese cities, bearing a cumulative capacity of over 800,000 battery swaps per day.
Finally, NIO also revealed further details of a dedicated battery asset management company:
“On August 18, 2020, NIO, Contemporary Amperex Technology Co., Limited (“CATL”), Hubei Science Technology Investment Group Co., Ltd. and a subsidiary of Guotai Junan International Holdings Limited (collectively the “Partners”) jointly established the Battery Asset Company. NIO and the Partners will each invest RMB200 million and hold 25% equity interest in the Battery Asset Company respectively. The Battery Asset Company is dedicated to purchase and own the battery assets, and lease the battery packs to users who subscribe to the BaaS model.”
NIO is steadily gaining strength in China. According to the Chinese National Passenger Car Information Exchange Association (CPCA), the top ten domestic EV manufacturers accounted for 14.1 percent of the total EV sales in China during H1 2020. NIO accounted for 31 percent of the sales volume generated by the top ten manufacturers, having sold 14,169 units during the period. The launch of a BaaS facility will likely further expand NIO’s footprint across China.