The customer can buy NIO’s EVs without the battery

​In the previous article, we explored the possibility of taking NIO to international markets. Nio stocks have been doing very well in the US stock market so presumably there must be strong NIO appeal outside of China. We spoke about the difficulty of taking NIO overseas due to the battery swapping commitment that is the hallmark of the brand. The situation is now even more tricky as NIO just launched its new offer of Battery as a Service (Baas), which is an extension of the battery swap system. With this innovative offer, the customer can buy NIO’s EVs without the battery. The price of the EV without the battery would be the sticker price less the price of the battery set. The customer then has the option of leasing the battery, or purchase the battery separately.

The Battery as a Service (BaaS) scheme enables customers to buy a Nio EV without the expensive battery pack element. They can then rent packs monthly, with the ability to swap between batteries of different sizes and range.

To be clear, this is not entirely new. In the days when I was selling electric forklifts, we provided such an option to the corporate clients as well. The appeal of the offer to the corporate client is that it relieved them of the burden of looking after the batteries, which was very challenging as the lead acid batteries required a lot of attention to support the forklifts well and to have a long battery life. Moreover, the batteries were also costly.

Selling a vehicle without batteries reduces the starting price of a Nio car by CNY70,000, which, Nio hopes, will encourage more take-up from customers put off by the initial higher costs of an EV over a combustion-engine car. There are also other advantages to the customer buying the car without the battery set.

Firstly, with the lower vehicle price, less tax is payable. The insurance premium is also lowered with the price reduction. Insurance of the battery is taken care of by the battery leasing service provider. Secondly, the customer no longer has to worry about the resale price of the EV being affected by the concern of battery deterioration. In addition, the customer can pay more to have a higher powered battery when needing long distance traveling.

This is not a radical change from the current business model of life time battery swapping, it is in fact an extension of the current service by offering customers more choices and overcoming objections other than just range anxiety.

To understand more on how this battery leasing works, you can also check out Gogoro electric bikes in Taiwan, they offer a similar concept for quite a while now and has gained much experience operating such infrastructure. The Chinese government is also pushing Battery as a Service and related battery swap schemes as a way of reducing the cost and improving the range of EVs in order to help boost sales from customers outside of major cities.

What are your thoughts? Feel free to share.