Nio, the Chinese electric vehicle manufacturer, has teamed up with its larger competitor, BYD, to procure batteries for its new electric vehicle brand, according to sources familiar with the situation. This collaboration represents a strategic shift for BYD, as it aims to expand its revenue beyond its existing EV brand. The partnership also highlights the intense competition in China’s electric vehicle market, particularly in terms of pricing, where batteries constitute a significant cost component.
In December, Nio revised its strategy and decided to prioritize cost reduction instead of manufacturing batteries internally. The company has officially announced the name of its new brand as ‘Onvo’ in English and ‘Ledao’ in Chinese, coinciding with the launch of a dedicated website for the vehicle. The upcoming Onvo L60 is expected to directly compete with Tesla’s Model Y. Currently, Nio primarily procures its batteries from CATL, a major player in the industry.
According to sources, BYD will collaborate with CATL to provide a smaller battery pack for a specific version of the new Onvo EV, while another Chinese battery manufacturer, CALB, will supply a larger 85-kilowatt-hour pack. When Reuters reached out for clarification, Nio disputed the information, labeling it as ‘inaccurate.’ CALB declined to comment, and requests for comment from CATL and BYD went unanswered.
Reuters was unable to determine the specific size of the battery contracts between Nio and its suppliers, nor were there any details available regarding projected sales or production figures. Chinese consumers, particularly those seeking cost savings, appreciate the availability of lower-range batteries and the convenience of battery swapping stations provided by companies like Nio, along with the charging infrastructure.
BYD’s battery subsidiary, FinDreams Battery, currently supplies batteries to Tesla’s Berlin facility and state-owned Chinese automakers like FAW. However, most of BYD’s batteries are used in its own electric vehicles. According to the Gaogong Industrial Institute, only about 5% of BYD’s batteries in 2023 were sold to external customers. Sources indicate that BYD is reconfiguring production lines for battery packs at its Wuwei plant in eastern Anhui province to cater to the needs of Onvo.
