William Li Bin, founder, chairman, and CEO of Chinese electric vehicle (EV) maker NIO (NYSE: NIO), gave his response to previous media reports about NIO's plan to launch an entry-level model with lithium iron phosphate batteries.
Yuguancheshi reported on Wednesday that NIO has contracted a production line of lithium iron phosphate batteries from CATL, and the new batteries are being tested and prepared. There is no accurate information yet as to what model it will be mounted on, the report said.
On Thursday, Carcaijing quoted Li as saying that NIO is doing discussions about various possibilities, but there will be no mass production in the short term.
"Lithium iron phosphate still has some technical issues to break through, such as the consistency of the battery at low temperatures," Li said he has seen some car companies suffer a lot of losses on this, making NIO think there is room for further breakthroughs in technology.
The report also quoted an unnamed NIO source as saying that the consideration of lithium iron phosphate solution is related to improving battery range. "The possibility of discussing the use of lithium iron phosphate batteries is related to the 100kWh battery plan. We are not contracting for a whole production line; it is CATL that is using one of its lithium iron phosphate lines to produce our 100 kWh batteries."
On November 6, 2020, NIO released a 100 kWh battery to increase vehicle range. The NIO ES8 previously carried a maximum battery pack of 84kWh and had an NEDC range of 425 km. With the increase in battery capacity to 100 kWh, the ES8 is expected to have a range of 580 km.
Yuguancheshi's report mentioned that NIO models equipped with lithium iron phosphate batteries should be launched this year, with the main purpose of the entry-level model to meet the relatively price-sensitive consumers, as well as consumers who prefer lithium iron phosphate batteries.
"Positioning high-end this does not affect NIO to launch a version equipped with lithium iron phosphate batteries," the report said, citing people familiar with the matter.
Carcaijing's report said its sources confirmed the authenticity of the matter.
People were speculating that with the adoption of a lower-cost lithium iron phosphate battery, NIO will be like Tesla to reduce the price of its vehicles. However, Li was quoted by Carcaijing as saying, "We really have no room to reduce the price."
Lithium iron phosphate batteries were gradually replaced by ternary lithium batteries around 2015 because of their low energy density and policy reasons in China.
In recent years, however, lithium iron phosphate technology has improved, making the battery safer and cheaper.
And with the increase in the cost of ternary lithium batteries and frequent safety problems, the choice of two technical routes not only for car companies to ease the cost pressure, but also an important step in the battery strategy reserve.
In October 2020, the price of the China-made Tesla Model 3 standard range version was reduced from RMB 291,800 to RMB 249,900 due to the battery switch to lithium iron phosphate batteries.
The model has an NEDC range of 468 km and the battery is supplied by CATL, with the agreed delivery period from July 1, 2020, to June 30, 2022. Previously, China-made Tesla used ternary lithium batteries produced by LG of South Korea and Panasonic of Japan.
There is a view that NIO will also reduce the price after the introduction of lithium iron phosphate models. Li denied this because NIO has a different pricing approach than Tesla.
"Some car companies are pricing on cost, so the price will get lower and lower. But NIO has considered many factors for the future from the beginning, and we will not let the owners who buy first feel unbalanced in their hearts, which is why NIO's gross margin loss was relatively high in the first two years." He said.
Li mentioned at the recent used car business launch that Tesla wants to become a mass car, while NIO will stick to its position: the price is similar to the gasoline cars of Mercedes-Benz, BMW, and Audi, but NIO offers better service, performance, and intelligence than them.