(Yes, I’m very pleased about coming up with “Rent Your Range”. Look, clever slogans and clever business models both excite me!)
We’ve talked about subscriptions in the world of new mobility in the past and Nio introduced a new subscription model this week - “Battery-as-a-service” (BaaS). Here’s the deal - the
Nio ES6 EV sedan costs
~$50k to buy outright. However, for customer who can’t pony up
$50k, the company will let you buy the car
without the battery for
$40k and let you lease the battery pack for ~
$140/month.
How is this technically possible? Nio has partnered with CATL to devise “swappable batteries” allowing consumers to take their EV into a swapping station and have their batteries replaced, just as you would change dead batteries in a flashlight. If your battery is showing signs of degradation, or you’re on a long road-trip and need more range, just drop by these swapping stations to get a fully charged pack and be on your way within minutes!
Now, some juicy tidbits - China recently dropped EV subsidies to
$3,500/car but made is so that these subsidies are applicable only to vehicles costing
<$42k. Is this why Nio sliced the battery out of the car’s selling price? Possible, but it is reported that EVs with battery-swap technology get the $3,500/car subsidy
regardless of cost! Local laws, it seems, are really trying to favor Nio’s technology.
Well then, recapping the two scenarios:
- Buy it all: pay $46.5k ($50k cost - $3.5k subsidies)
- Buy car, lease battery: pay $36.5k ($40k cost - $3.5k subsidies) + $140/month
According to official data, a middle class household in China earns as much as
$37k/year. It’s safe to say that coming up with even
$36.5k (math above) would be a stretch for a regular Chinese family and they’d have to take out an auto loan to get into a Nio ES6.
Assume the purchaser puts 20% down and takes out a loan for 80% of the value. Let’s assume a 3 year loan at 3% interest (not unreasonable, per this
amazing source). Monthly payments under two scenarios:
- Buy it all: $1082/month
- Buy car, lease battery: $850 (loan) + $140 (battery) = $990/month
The delta of $90/month might make the Nio die-hard fan take the latter deal vs the former. However, does this model lure away customers planning to buy non-Nio cars and expand Nio’s TAM? That’s very, very debatable.
Link
(
Technical side note #1: while CATL is developing swappable batteries with Nio as above, they’re also working on technology that sounds to me like the
exact opposite of swapping batteries. CATL is aiming to integrate the cells
into the vehicle’s chassis to give the cars longer range. You can swap out battery boxes, but can you nonchalantly swap out the chassis? No way. Right?? No way!)
(
Technical side note #2: Nio swapping stations would need to keep battery packs charged up to nearly 100%, ready to go. This is
bad for the battery’s health! It also doesn’t escape me that Nio would need to spend significant capex setting up swapping stations, hiring personnel, adding to their costs. But hey, if the Chinese government wants to promote swapping, who am I to complain?)