Chinese electric automaker NIO has turned to larger rival BYD to secure battery supply for its upcoming mass-market sub-brand, Reuters reports, citing three sources with direct knowledge of the matter.
Onvo to utilize BYD’s batteries
NIO apparently plans to equip Onvo’s upcoming models with BYD’s LFP electric vehicle batteries, enabling the company to hit a lower price point.
The partnership will significantly aid BYD in boosting revenue beyond its electric vehicle sales. In return, the new Onvo brand will be able to deliver budget-friendly EVs amid the intensifying price war in the Chinese market.
As experts say, batteries account for about 40% of the overall value of an electric vehicle. Therefore, BYD’s batteries will play a crucial role in NIO’s ambition to penetrate the mass-market segment in China.
In hindsight, NIO originally planned to produce its own batteries. However, it ditched these plans due to cost-cutting efforts to reverse losses in December 2023.
NIO plans to introduce Onvo this month
NIO announced plans to officially introduce Onvo and its inaugural mass-market electric vehicle model, Onvo L60, by the end of this month.
After that, NIO aims to launch the Onvo L60 as early as next month to compete with the world’s top-selling vehicle, the Tesla Model Y.
Onvo primarily aims to compete in the European market, as noted by an NIO official.
“Nio is currently working on the launch of new car brands, that would be less premium, still obviously 100% electric, and more suited for the European market needs.”
Nicolas Vincelot, NIO France General Manager, said during a France-China business forum in Paris
The Onvo L60 is set for a global launch by the end of 2024.
Battery partners
NIO currently sources most of its electric vehicle batteries from Chinese battery giant CATL.
BYD will reportedly join CATL in supplying a smaller battery pack for one variant of the new Onvo L60, two of the unnamed sources claim.
Notably, Chinese customers tend to be more open to acquiring electric vehicles with lower-range batteries for cheaper costs, partly due to battery swapping stations’ availability in the country.
Since NIO is the pioneer in battery-swapping technology in China, its mass-market models will undoubtedly attract more local buyers. Despite the limited range of smaller battery packs, future owners will be able to access NIO’s enormous battery-swapping network to alleviate their range anxiety.
