To step up its efforts to become a frontrunner in EV industry, China’s Nio has clinched a historic deal with its rival BYD, Reuters reported citing sources who are privy to the matter. The collaboration targets Nio’s upcoming EV brand that aspires to provide the customers with more affordable models. Nio, a newcomer on the automotive scene, set up just ten years ago, was going to produce batteries by itself at first, but changed its mind in December, aiming to contain losses by cutting costs.
The announcement of Nio’s new brand, named Onvo, coincided with its first model, the Onvo L60, which is positioned as one of the mid-range category challengers for Tesla’s Model Y. Unlike the premium-oriented market that Nio is usually competing against like Mercedes, Nio Onvo presents a shift in strategy towards broader appeal of the mass markets.
At present, Nio is using the batteries from the top industry player CATL. On the other hand, in accordance with the new contract, BYD will co-operate with CATL to supply Onvo with a smaller battery pack and at the same time, a well-known Chinese company, which is also a Nio supplier – CALB, will supply a bigger 85 kilowatt-hour battery pack.
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When asked for comment, Nio stated the reported paragraphs “incorrect”; giving no further specifics. CALB did not make any statement, while reaction of CATL and BYD were not provided.
Customers are still unwilling to pay premium for batteries in China as the high availability of battery swapping stations and charging infrastructure by companies such as Nio makes it economical for them to choose the lower range batteries.
Going beyond its collaboration with Nio, the BYD battery unit, FinDreams Battery also serves as a supplier for Tesla’s Berlin plant and several other state-run automakers in China, including FAW. Remarkably enough, 80% of the BYD’s battery supply is dedicated to its own passenger EV range and less than 5% is reserved for the external clients.
To meet the upsurge in demand caused by its partnership with Nio, BYD has commenced construction of the battery pack production lines at the Wuwei factory in eastern Anhui Province, disclosed sources involved in the matter.