Electric mobility in China Battery-as-a-Service: NIO sells new electric car brand without battery

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Fancy an electric car without a battery? This offer has just been made by NIO founder William Li to the Chinese. His new budget brand Onvo, with which he aims to break out from the confines of premium manufacturers and establish himself in the volume market, is now also available without a battery.

With Onvo, NIO founder William Li is taking a different approach regarding pricing: car buyers pay less for the vehicle at the time of purchase. Instead, the battery is only rented, a model known as "Battery as a Service" or BAAS. New brand, new business model. "In short, the orders are going through the roof," the company founder happily states in a conversation with the professional portal 36kr shortly after the launch of the new electric car brand. Within the first 72 hours, there have reportedly been 30,000 pre-orders for the new electric SUV "Onvo L 60," according to auto bloggers.

Without the battery, the entry-level model of the new brand from NIO costs 57,000 yuan or approximately 7,260 euros or  7,915 USD less than with the battery—only 149,900 yuan instead of 206,900 yuan. Thus, the cheapest variant of the Onvo L60 with a 60-kW battery in China is available for approximately 19,100 euros. Additionally, there are monthly rental fees for the car battery of 599 yuan (just over 76 euros or about 83 USD). Other variants of the Onvo L60 with larger battery capacity have slightly higher rental costs and also higher purchase prices.

At least 20,000 vehicles by the end of the year

According to initial reports, the new car seems to be very popular among young families. The company has received so many orders for this year that NIO's two factories in Hefei must now operate double shifts, the company states. They aim to deliver at least 20,000 units, possibly more, by the end of the year, according to William Li.

According to his own statements, the enterprising NIO founder aims to compete primarily with Tesla and its Model Y with the new car and battery rental model. The Model Y is available in China starting at 249,900 yuan, which is roughly 31,900 euros or 34,781 USD. Thus, the simplest Onvo L60 with a rented battery would be about 40 percent cheaper than a Model Y. NIO has recruited former Bentley designer Raul Pires, and the new Onvo has its own modern look but is still “stylistically quite similar to the Model Y,” according to CarNewsChina.

Affordable monthly battery rental

As is customary in Chinese culture, no one is shy about launching a direct attack on the American competitor this time either. On the first test cars for the Onvo, which auto paparazzi were able to photograph, there were stickers with the inscription "Better than a Model Y." Tesla currently has a real hit on the market in China with its Model Y. The electric vehicle is the best-selling SUV, whether talking about electric or internal combustion engine vehicles. However, with a lot of technology inside its new Onvo coupled with new business models like BAAS, NIO is now poised to make life harder for the market leader, Tesla.

70 percent of customers who have already pre-ordered the Onvo L60 have opted for renting the battery. Just like with the better-known brand NIO, the batteries can either be exchanged for fully charged ones within minutes at battery swap stations or can be charged by the customers themselves at a charging station.

NIO is confident that they have launched a highly interesting offer on the market. According to company spokespersons, the monthly expenses for renting the battery are approximately equivalent to the cost of a single 60-liter tank fill for a combustion engine car. Further Onvo models with BAAS are planned to be introduced gradually. (se)

*Henrik Bork, long-time China correspondent for German 'Süddeutsche Zeitung' and 'Frankfurter Rundschau', is the Managing Director at Asia Waypoint, a consulting agency specializing in China, based in Beijing.

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