(Image credit: CnEVPost)
Nio's sub-brand codenamed ALPS has implemented an open battery sourcing strategy, securing battery supply partnerships with companies including CALB and BYD's battery business unit FinDreams Battery, according to a report today by local media outlet 36kr.
The ALPS brand will use CALB's ternary One-Stop battery solution, which is already in the pre-development stage, the report said, citing sources familiar with the matter.
Nio will also source FinDreams' battery products for use in ALPS-branded vehicles, 36kr said in a repeat of a previous report.
Unlike the Nio brand, ALPS has adopted an open cooperation stance, not only bringing in CALB and FinDreams, but also approaching suppliers including Eve Energy and Svolt Energy, today's report said.
ALPS is an independent mid-to-high-end electric vehicle (EV) brand launched by Nio that will target the RMB 200,000 ($29,160) -300,000 market and plans to release its first model in 2024, the report said.
With a current average sales price of more than RMB 400,000, the Nio brand has already gained an initial foothold in the premium EV market, but the capacity of that market is limited.
Nio plans to expand into a lower-priced market with new brands including ALPS and Firefly, the report said.
Nio's batteries are currently supplied exclusively by CATL, and it has multiple production lines at the power battery giant and has plans to double battery production, according to 36kr.
As Nio plans to enter the lower-priced market, new demands are being placed on cost control. Power batteries make up a major part of the cost of EVs, with a ratio of about 40 percent.
In China's power battery market, CATL, BYD and CALB are the top three suppliers, with shares of 47.19 percent, 25.23 percent and 6.07 percent respectively in July, according to data released earlier this month by the China Automotive Battery Innovation Alliance.
Notably, with CALB's rapid rise over the past few years, CATL appears to be feeling threatened and has launched a patent lawsuit against its smaller rival.
On July 21 of last year, CATL announced that it had formally sued CALB for patent infringement, claiming that the latter's allegedly infringing batteries were in tens of thousands of vehicles.
In May this year, CATL demanded more than RMB 510 million in damages from CALB, a 176 percent increase from the previous RMB 185 million, according to Jiemian's report.
However, it seems Nio's partnership with CALB will not face legal risks. CALB's patent dispute with CATL mainly involves earlier battery products, and the former's new battery solutions such as One-Stop should focus on risk avoidance, 36kr said in a report today, citing people familiar with the matter.
Notably, it's important for Nio to ensure adequate battery supply as it tries to enter the mass market with new brands. Battery supply was a bottleneck in the company's deliveries for many months last year.
On August 1, 36kr reported that Nio is planning to launch a third car brand to cover the low to mid-range market below RMB 200,000, in addition to the two brands Nio, and the one codenamed ALPS.
This third brand, like Nio and ALPS, is independently operated with a separate head and R&D system, and is currently recruiting a core team, according to the previous report.
Yicai also reported at the time that Nio was planning a third brand, and that the first product would be an entry-level electric sedan in the RMB 100,000 range, judging from the product definition and development.
Nio's third brand will have an independent R&D system and is currently recruiting an R&D team, and the team that has been assembled is pressing ahead with product development work, according to Yicai's report.
In addition to increasing its partners in battery supply, Nio is also planning to produce its own batteries.
In a conference call after announcing its first-quarter earnings on June 9, William Li, Nio's founder, chairman and CEO, confirmed that the company will develop batteries in-house.
Nio has a battery team of more than 400 people to research areas including battery materials, cells, and battery management systems to establish battery system development and industrialization capabilities, he said at the time.
One of the technical directions of Nio's battery R&D is LMFP batteries, and the technical route is similar to CATL's M3P batteries, local media LatePost reported on August 3.
The scale of Nio's in-house battery production line will not be large, and the initial plan is a medium-sized pilot production line in Hefei, which is expected to be built by 2023, 36kr's report today cited industry chain sources as saying.
As a result, Nio's near-term battery supply will still come mainly from third-party procurement, the report said.