Batteries Not Included: Nio Ready to Lease EV Power Packs

Matt Posky
by Matt Posky

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]

Matt Posky
Matt Posky

A staunch consumer advocate tracking industry trends and regulation. Before joining TTAC, Matt spent a decade working for marketing and research firms based in NYC. Clients included several of the world’s largest automakers, global tire brands, and aftermarket part suppliers. Dissatisfied with the corporate world and resentful of having to wear suits everyday, he pivoted to writing about cars. Since then, that man has become an ardent supporter of the right-to-repair movement, been interviewed on the auto industry by national radio broadcasts, driven more rental cars than anyone ever should, participated in amateur rallying events, and received the requisite minimum training as sanctioned by the SCCA. Handy with a wrench, Matt grew up surrounded by Detroit auto workers and managed to get a pizza delivery job before he was legally eligible. He later found himself driving box trucks through Manhattan, guaranteeing future sympathy for actual truckers. He continues to conduct research pertaining to the automotive sector as an independent contractor and has since moved back to his native Michigan, closer to where the cars are born. A contrarian, Matt claims to prefer understeer — stating that front and all-wheel drive vehicles cater best to his driving style.

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  • ToolGuy ToolGuy on Aug 20, 2020

    My ICE pickup operates on a subscription model - every 25 years I have to replace the MAP sensor.

  • HotPotato 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.

    • Mcs Mcs on Aug 23, 2020

      "A lot of people are scared to buy an EV because they heard about Fred over on Maple who bought that 2011 Leaf" In my area, Tesla defines what people think about EVs and it seems to be positive. People have no idea what a Leaf is. I think the ratio of Leafs to Bentayga's in my area is about 5 Bentleys to 1 Leaf. Lots of Teslas. No one seems to know what the Leaf is. "Why is the gas door in the front?" It's an electric. "Is it a hybrid?" No, it's fully electric. Lots of car collectors in my area so people expect unusual vehicles and think it's some sort of obscure European or Japanese car. " Others are convinced the next big battery breakthrough is around the corner " Ha! That's me. It's just that I'm not worried about the old one being obsoleted. I want something super durable. I do have a deadline, although I do keep moving it.

  • V16 I'm sure you could copy and paste most of the "NO" responses to 1960's Japanese sourced vehicles.
  • Canam23 I believe the Chinese are entirely capable of building good cars, BYD has shown that they are very forward thinking and their battery technology is very good, BUT, I won't buy one because I don't believe in close to slave labor conditions, their animosity to the west, the lack of safety conditions for their workers and also the tremendous amount of pollution their factories produce. It's not an equal playing field and when I buy a car I want it made with as little pollution as possible in decent working conditions and paying a livable wage. I find it curious that people are taking swipes at the UAW in this thread because you can clearly see what horrific labor conditions exist in China, no union to protect them. I also don't own an iphone, I prefer my phones made where there aren't nets around to catch possible suicide jumpers. I am currently living in France, Citroen makes their top model in China, but you see very few. BYD has yet to make an impression here and the French government has recently imposed huge tariffs on Chinese autos. Currently the ones I see the most are the new MG's, mostly electric cars that remind me of early Korean cars, but they are progressing. In fact, the French buy very little Chinese goods, they are very protective of their industries.
  • Jerry Haan I have these same lights, and the light output, color, and coverage is amazing!Be aware, these lights interfere with AM and FM radio reception with the stereoreceiver I have in my garage. When the lights are on, I all the AM stations havelots of static, and there are only a couple of FM stations that are clear. When Iturn the lights off, all the radio stations work fine. I have tried magnetic cores on the power cords of the lights, that did not makeany change. The next thing I am going to try is mounting an antenna in my atticto get them away from the lights. I contacted the company for support, they never responded.
  • Lou_BC Are Hot Wheels cars made in China?
  • DS No for 2 reasons. 1-Every new car pipelines data back to the manufacturer; I don't like it with domestic, Japanese and Euro companies and won't put up with it going to Chinese companies that are part financed by their government. 2-People have already mentioned Vinfast, but there's also the case of Hyundai. Their cars were absolutely miserable for years before they learned enough about the US market