Chinese electric vehicle manufacturer Nio Inc – ADR (NYSE:NIO), which has been sounding out its intention to offer a battery rental service, is close to unveiling the new business segment.
Nio's Battery Announcement: Nio will hold a press conference Thursday to make an announcement on battery-as-a-service, a company spokesperson confirmed to Benzinga Tuesday.
The company's newly established battery asset management company will also come into being around the same time, ChinaPEV.com reported.
BaaS is an innovative business model that allows customers buy a car without the battery, rendering the cost of an EV more affordable.
Nio has made "profound" progress with the innovative business model of BaaS, which serves to decouple the battery from the vehicle, CEO William Li said on the company's second-quarter earnings call earlier this month.
The product homologation and certification needed to qualify for selling vehicles and batteries separately have been completed, Li said.
The company also said the process for the first vehicle under the BaaS model has already been validated in insurance purchasing, loan application and license plate registration.
"Currently, we're still working on the final preparation for the official offering of our BaaS solution, which will be released publicly in the third quarter," Li said on the second-quarter call.
What It Means For Nio: The battery represents about 25% of the cost of an EV. From about $1,000 per kWh in 2010, the price of an EV pack has fallen to $150 per kWh in 2019.
The BaaS model could give a big push to EV sales.
The move is also facilitated by a new Chinese government regulation that has done away with the mandatory requirement of selling an EV along with a battery pack.
With the BaaS option, the cost of Nio's newly introduced EC6 model could be lowered by about 28% to 258,000 yuan ($37,281), according to Nio.
NIO Price Action: At last check, Nio shares were adding 1.25% to $14.22.
Photo courtesy of Nio.