Nio has launched battery as a service (BaaS) under Nio-Power, offering charging and swapping of batteries for EV owners. BaaS users can buy a Nio car without the battery and enjoy more than $10,000 (CNY70,000) off on all NIO models. They can subscribe to a 70-kWh battery for $142 (CNY980) per month.
This blog discusses why this is a smart move by Nio and a perfect time to launch such service. Below are some of the strategic advantages Nio will get by launching this service:
Lowering of EV cost
High prices of EVs have been a major barrier for their sales, especially during the pandemic when people are saving on high-ticket items. A $10,000 price cut can reduce the price gap between Nio cars and the conventional ones. Nio can also improve its price competitiveness against new entrants (like Tesla) in the China luxury EV market.
In April, Chinese authorities enhanced the 2020 NEV policy, favouring battery swapping. EVs over CNY300,000 are eligible for subsidies only if they support battery swapping. Combining BaaS benefits with subsidies can considerably reduce the prices of Nio models.
Battery swapping is a great tool to get user feedback on battery performance and user preferences. Moreover, Nio can obtain critical user data, including frequency of battery change, and offer tailored services.
New revenue streams
With EV sales in China declining during H1 2020 due to the COVID-19 pandemic and reduction in subsidies, automakers are finding new ways to improve their bottom-line. The BaaS service is included in Nio’s common platform, which supports other services like home chargers and on-the-move charging. Moreover, this platform is fully integrated from app to cloud and supports EVs of other automakers. Such a solution can go a long way in opening new revenue streams for Nio. The company has obtained more than 1,200 patents related to battery swapping.
Brand value and popularity
Nio is still a small player in the global EV market with around 10,000 cars sold during Q2 2020. Nio-Power will give Nio much needed visibility and popularity, and enhance its brand image of being an innovator. Nio apps, charging stations, swappable batteries and mobile charging vans will not only give the company visibility but also a positive word-of-mouth like in Tesla’s case. As the platform supports EVs from other automakers, it is much easier to scale. Nio has already completed more than 800,000 battery swaps.
Choice of battery
Users can choose the best battery option based on their requirements. They can upgrade to a more powerful battery pack or incorporate a battery with the latest technology. The Nio scheme also helps users avoid any battery degradation cost, thus improving car’s resale value.