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Chinese automaker Nio is planning to allow customers to lease vehicle batteries independently from the cars themselves, and has involved Contemporary Amperex Technology (CATL) in the venture.
Considering EVs are useless without their battery, leasing an essential component seems to serve little purpose on its face. But Nio intends to sell its ES6 crossover for 273,600 yuan ($39,500) in China with the option to lease the battery for 980 yuan a month. Customers can also choose to purchase the entire vehicle outright for 343,600 yuan ($49,600) if they haven’t tricked themselves into believing a better battery is less than a year away.
This is a weird one, because the stated purpose is to lower the vehicle’s upfront costs. But it’s just a paperweight without an energy source, forcing customers to lease the power pack if they want to use the vehicle — and at no small cost. The companies announced the new program in Beijing on Thursday with Nio CEO William Li stating his company plans to enter Europe in the second half of 2021. Hopefully they’ll be dumb enough to accept the batteries-as-a-service premise.
The “as a service” suffix is one we’ve seen attached to numerous industries in the 21st century as technology and greed collide. Effectively, it means taking anything you could have paid for once and transforming it into an endless cycle of regular payments via a subscription service. While it makes sense in some instances (streaming services, cable), it’s often a predatory business tactic designed to weasel more money out of the customer — and it’s creeping into the automotive realm.
The video game industry is probably the best example of this doubled-edged sword, if only because it has had more time to develop there.
Games traditionally sold via physical retailers can now be downloaded online, often with routine (often mandatory) updates to change the software. This gives publishers the ability to offer new content in exchange for rolling fees. But the act has rubbed the gaming community the wrong way, as many AAA tiles now incorporate microtransactions and paywalls where none previously existed. As the car becomes more connected, we’re seeing the same happen within the automotive community. Companies are now examining ways to sell more features (sometimes entire vehicles) using the subscription model.
While we’ve seen other Chinese EV firms toying with ways to swap battery packs, like BAIC Motor Corp. Nio appears to be the only brand considering extending the service beyond commercial fleets. The new joint venture, titled Wuhan Weineng Battery Asset Management, will handle all aspects of handling batteries for customers once the cells leave CATL’s factories and will be working exclusively on Nio vehicles. Automotive News reports Wuhan Weineng is interested in taking on additional partners eventually, however.
From AN:
The new venture, which will handle leasing, charging, maintenance and upgrades of batteries separate from its cars, will be part owned by Nio and battery giant CATL. Other investors are Guotai Junan Financial Products Co. and the government-backed Hubei Provincial Science and Technology Investment Group.
The four owners will each invest an initial 200 million yuan ($28.9 million) into the venture, called Wuhan Weineng Battery Asset Management Co. More investors are in the process of participating, Li said.
Shanghai-based Nio, which this year received a municipal government cash injection and credit facilities from local banks, reported a positive gross margin for the first time in the second quarter. Its sleek ES8 and ES6 utility vehicles are attracting buyers as the coronavirus pandemic eases in China, helping Nio’s stock price more than triple this year.
Its sales have been weak, however. China’s battery market cratered after the nation withdrew subsidies. Nio didn’t even manage to reach 20,000 deliveries through the first half of 2020. But it’s assumed that EV sales will continue to rise, especially now that China has reintroduced new perks for those buying new-energy vehicles.
Currently, Nio only sells its products within the confines of China and believes volume will increase as it enters more markets. Europe is on the docket for next year, with an Asian expansion expected to follow in 2022. Ideally, Nio said it wanted to be seen as a global automaker before 2024.
[Images: Michael Vi/Shutterstock]