China headquartered electric vehicle group NIO Inc (NYSE:NIO) has launched a new ‘battery-as-a-service’ model aimed at making EVs more affordable.
The new commercial model will see customers lease or subscribe for the battery used in their EV.
As batteries are among the most expensive elements in the typical electric vehicle the move is expected to significantly reduce retail prices and therefore open up the EV market to a larger target market.
Customers taking up the BaaS would see a RMB70,000 (cUS$10,000) discount on the original purchase price and would pay a monthly RMB980 (cUS$140) fee for the battery, according to a pricing example shared by NIO.
NIO added that all customers purchasing its vehicles are now eligible to place orders within the BaaS model.
Moreover, battery leasing customers can use the company’s battery ‘swap stations’ where depleted EV battery can be traded out in exchange for a fully-charged replacement – already some 800,000 battery swaps have taken place across 143 stations in 64 Chinese cities.
“The BaaS model has long been planned with our unique battery swap technologies,” said William Bin Li, NIO chief executive.
— NIO (@NIOGlobal) August 7, 2020
“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.”
He added: “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.”
The BaaS launch follows the establishment of The Battery Asset Company, a company 25% owned by NIO.
NIO invested RMB200mln (cUS$29mln) into The Battery Asset Company alongside partners Contemporary Amperex Technology Co, Hubei Science Technology Investment Group and Guotai Junan International.
The Battery Asset Company exists to acquire, own and lease the battery packs used in the BaaS model.