Batteries Not Included: Nio Ready to Lease EV Power Packs
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.
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]
HotPotato on Aug 23, 2020
I think it's kinda smart in terms of overcoming buyer objections. 1) A lot of people are scared to buy an EV because they heard about Fred over on Maple who bought that 2011 Leaf that lost half its range by the time he'd paid it off. So just take that worry off the table. Lease the battery for a couple years. Then either lease another new one, or feel confident enough by that time to buy out the lease. 2) A lot of people like the idea of an EV but they're caught in a bind. Should they buy a cheap short range one that might not work for them if their job changes and they have a longer commute? Or should they spend MUCH more for extra battery capacity they might not even end up needing? If you just rent the battery monthly, you take the issue off the table. Rent a cheap small battery for now. If your needs change, rent a bigger one instead. Easy. 3) Others are convinced the next big battery breakthrough is around the corner and it's going to hose the resale value of the car if they buy now. No worries! Rent today's battery today. If that solid state battery or million mile battery or whatever comes out next year, rent or buy that one instead.
Latest Car ReviewsRead more
Latest Product ReviewsRead more
- Nrd515 I bought an '88 S10 Blazer with the 4.3. We had it 4 years and put just about 48K on it with a bunch of trips to Nebraska and S. Dakota to see relatives. It had a couple of minor issues when new, a piece of trim fell off the first day, and it had a seriously big oil leak soon after we got it. The amazinly tiny starter failed at about 40K, it was fixed under some sort of secret warranty and we got a new Silverado as a loaner. Other than that, and a couple of tires that blew when I ran over some junk on the road, it was a rock. I hated the dash instrumentation, and being built like a gorilla, it was about an inch and a half too narrow for my giant shoulders, but it drove fine, and was my second most trouble free vehicle ever, only beaten by my '82 K5 Blazer, which had zero issues for nearly 50K miles. We sold the S10 to a friend, who had it over 20 years and over 400,000 miles on the original short block! It had a couple of transmissions, a couple of valve jobs, a rear end rebuild at 300K, was stolen and vandalized twice, cut open like a tin can when a diabetic truck driver passed out(We were all impressed at the lack of rust inside the rear quarters at almost 10 years old, and it just went on and on. Ziebart did a good job on that Blazer. All three of his sons learned to drive in it, and it was only sent to the boneyard when the area above the windshield had rusted to the point it was like taking a shower when it rained. He now has a Jeep that he's put a ton of money into. He says he misses the S10's reliablity a lot these days, the Jeep is in the shop a lot.
- Jeff S Most densely populated areas have emission testing and removing catalytic converters and altering pollution devices will cause your vehicle to fail emission testing which could effect renewing license plates. In less populated areas where emission testing is not done there would probably not be any legal consequences and the converter could either be removed or gutted both without having to buy specific parts for bypassing emissions. Tampering with emission systems would make it harder to resell a vehicle but if you plan on keeping the vehicle and literally running it till the wheels fall off there is not much that can be done if there is no emission testing. I did have a cat removed on a car long before mandatory emission testing and it did get better mpgs and it ran better. Also had a cat gutted on my S-10 which was close to 20 years old which increased performance and efficiency but that was in a state that did not require emission testing just that reformulated gas be sold during the Summer months. I would probably not do it again because after market converters are not that expensive on older S-10s compared to many of the newer vehicles. On newer vehicles it can effect other systems that are related to the operating and the running of the vehicle. A little harder to defeat pollution devices on newer vehicles with all the systems run by microprocessors but if someone wants to do it they can. This law could be addressing the modified diesels that are made into coal rollers just as much as the gasoline powered vehicles with cats. You probably will still be able to buy equipment that would modify the performance of a vehicles as long as the emission equipment is not altered.
- ToolGuy I wonder if Vin Diesel requires DEF.(Does he have issues with Sulfur in concentrations above 15ppm?)
- ToolGuy Presented for discussion: https://xroads.virginia.edu/~Hyper2/thoreau/civil.html
- Kevin Ford can do what it's always done. Offer buyouts to retirement age employees, and transfers to operating facilities to those who aren't retirement age. Plus, the transition to electric isn't going to be a finger snap one time event. It's going to occur over a few model years. What's a more interesting question is: Where will today's youth find jobs in the auto industry given the lower employment levels?