On August 20, Nio officially launched its Battery as a Service (BaaS), which provides a new way to purchase a vehicle with a separate body and battery, allowing users to purchase a Nio without purchasing a battery pack.
Nio chairman and CEO William Li Bin said that if users choose the BaaS model to purchase Nio models, the price of the vehicle will be reduced by RMB 70,000. The amount of the service fee is related to the chosen battery pack capacity, for example, the monthly service fee for the 70kWh battery pack is 980 RMB.
Under the BaaS model, the purchase cost of all Nio models will be reduced, with the starting price of the Nio ES8, ES6 and EC6 dropping to RMB 380,000, RMB 273,600 and RMB 280,000 respectively after subsidies, and William Li Bin stressed that the price of the cars has not been reduced, but Nio offers a better balance between purchase cost and car cost.
To some extent, Nio's BaaS is able to improve Nio's price competitiveness in a flexible way. The more important purpose of BaaS is that it is a key part of Nio's business model for separating body and battery.
The BaaS model will also systematically address battery degradation, the inability to upgrade batteries, and the high variability of vehicle warranties that have been affecting EV penetration.
"Nio is finally driving sales of battery swap-style electric vehicles, running through the entire process of buying a battery swap vehicle including registration, insurance and financial loans," William Li Bin said.
Meanwhile, on August 18, Weineng battery assets launched by Nio and partners such as Contemporary Amperex Technology (CATL), China's largest automotive lithium-ion battery maker Weineng will be an important support for Nio's BaaS operations, solving the problem of funding battery operations.
From a theoretical and logical point of view, Nio has worked out a complete business model of "separating body and battery".
However, fundamentally, battery swap is still a kind of asset-heavy operation, the high cost of battery, and the construction of battery swap station is still a problem to be faced.
Tesla once gave up the battery swap mode, under the BaaS model, Nio can succeed? How to generate more business value in the future is the next question Nio needs to think about.
BaaS business closed loop to be formed
Nio has a long history of developing battery swap technology and battery swap services. Since its founding, Nio has continued to develop battery swap technology and build the battery swap network.
"Separation of body and battery, battery rental, rechargeable and exchangeable and upgradeable, was Nio's thinking about the system back in 2015, the logic built from the ground up, the foundation for building products and services." William Li Bin said.
William Li Bin said, at present, Nio a battery swap station every day up to 96 cars battery swap. in some cities, Nio battery swap station full load operation, users need to queue. In the future, we will speed up the deployment of the battery swap station.
In fact, the construction of Nio battery swap station is not slow, but it is still lower than William Li Bin's previous optimistic estimate.
In January 2018, William Li Bin had said that he planned to build 1,100 battery swap stations by 2020.
However, as of August 20, Nio has only completed 143 battery swap stations in the country, far short of the target set two years ago.
However, William Li Bin said that after the BaaS model closed loop is formed, the goal of building 1100 battery swap stations will definitely be achieved in the future.
The slower than expected construction of battery swap stations is due to multiple factors.
On the one hand, the battery swap station construction needs to invest a lot of money, and Nio's capital chain is not very rich.
On the other hand, although Nio had already launched a battery rental business, the battery still belonged to the user, so only the technical separation of the body and the battery was achieved, but not the separation of the body and the battery in terms of property rights.
Also, at that time, Nio had to bear the heavy cost of batteries.
To a certain extent, Nio had to reduce its burden in order to run the battery swap mode smoothly. Otherwise, Nio will not have enough capital to push the battery swap business model forward.
According to William Li Bin, the battery rental service BaaS model is not easy to implement, he summed up to meet four prerequisites, one is the battery swapable vehicle design, two is the battery swap operation service system, three is the policy to support the separation of car and electricity property rights, four is an independent battery asset company.
These four conditions, Nio have been initially completed. Nio currently listed three models of cars support rechargeable and replaceable; Nio battery swap operation service system initially established, Nio battery swap station covering 64 cities in China, a total of more than 800,000 times for users to complete the battery swap service.
In terms of policy, a number of relevant departments have given battery swap policy support since this year. 2020 Government Work Report for the first time included battery swap stations into the new infrastructure construction.
China's Ministry of Industry and Information Technology (MIIT) clearly proposed to encourage the separation of body and battery program, more than 300,000 support battery swap electric vehicles can get new energy subsidies.
Recently, Nio and BAIC New Energy led the drafting of GB/T "battery swap safety requirements for electric vehicles" recommended national standards through the review. The battery swap mode policy and standards are gradually formed.
Together with the independent battery asset company has been set up, William Li Bin's four prerequisites of BaaS closed loop business model have been realized. However, Nio still faces considerable challenges in getting through the battery swap mode.
Soon after the BaaS launch, Nio's "lifetime free battery swap" service will also come to an end.
On August 20, Nio announced in the APP, before October 12, pay 20,000 RMB deposit and normal pick up the car users, free battery swap rights and interests remain the same; October 12 onwards, free to use 6 times battery swap, from the 7th battery swap, will be fully charged battery swap fees! .
From a BaaS business perspective, it is clearly difficult to get through if you continue to free battery swap. However, according to Nio, 70% of Nio's customers have private charging stations installed.
Free of charge is the main attraction of Nio battery swap mode, but it's unknown how many users will choose battery swap over charging if they can't enjoy the "lifetime free battery swap" service.
From a purely user perspective, the BaaS model is more like providing a "financial solution" that reduces the cost of car ownership.
However, from the usage point of view, battery swap is still not dense enough, time and cost high difficulties.
It remains to be seen whether BaaS mode will make more people choose battery swap to realize the scale value of battery swap mode.
How will Weineng dig value
William Li Bin showed two separate car body and battery purchase invoices at the press conference, one is RMB 302,100 for vehicles without batteries, and the other is RMB 70,000 for batteries from an independent battery asset company.
As the owner of the battery assets, the battery asset management company is also an important part of BaaS - for Nio, an additional RMB 70,000 per vehicle will put more pressure on the company's financial management, and the battery asset company will purchase battery packs and entrust Nio to provide battery rental services for users.
Wuhan Weineng Battery Assets Company, a battery asset company established by and in cooperation with Nio, was incorporated on August 18 with a registered capital of RMB 800 million, jointly sponsored by CATL New Energy Technology Co.
From Weineng's current shareholders, it already covers the four major players involved in battery production and operation: the government, OEMs, battery factories and social capital.
"Each of the four companies has invested $200 million and holds 25 percent of the shares, with new investors to come. Battery Asset Management is an independent company with an independent team," William Li Bin said.
Nio BaaS service model has three main participants: Nio, the user and Weineng. Nio electric vehicles (including batteries) leave the factory, the vehicle without batteries sold to the user, the battery sold to Weineng.
The user pays the battery rent to Weineng, and Weineng commissions Nio to provide the user with battery swap operation, upgrade and other services. Thus forming a battery rental business closed loop.
"Weineng can't just be a financial service provider that makes money from battery rentals. The business prospects for this segment are great, but there is no clear business model that needs to be explored yet." 21jingji.com quoted an automotive power battery industry source as saying.
According to William Li Bin, Weineng is not only a $2 trillion revenue business in terms of battery rental fees, but also has many other value-added points that will reconfigure the battery industry to become a very large battery purchaser, asset owner and supplier of retired batteries, as well as a technology company for battery life enhancement.
In fact, exploring battery ladder utilization is a topic that battery manufacturers such as CATL have been facing. As the country's first EVs are gradually reaching the end of their useful life, the recycling of retired batteries is seen by the industry as a potential value point to be explored.
However, it is worth noting that the battery title for Nio's BaaS belongs to the battery asset company, and the consumer only owns the title of the vehicle without the battery.
However, in an objective use case, no EV can be left without a battery; the physical onboarding and battery are in one piece. This means that in the future, the process of circulating used cars may need to go the official route.
"The standard practice is that when a BaaS user sells a used car, the next owner buys the car in his hands and takes over the contract and obligation of the battery service fee in his hands," Nio President Qin Lihong said.
Nio will play a greater role in the middle of used cars, one is to grasp the state of the whole life cycle of the smart car, to buyers and sellers to provide detailed information to support, secondly, I hope Nio in the middle can gradually play the role of the platform, he said.
