China's Nio turns to rival BYD to power new EV brand, sources say

CALB

07/05/2024 06:04

SHANGHAI, May 7 (Reuters) - China electric vehicle maker
Nio  9866.HK  has struck a deal with larger rival BYD  1211.HK 
to source batteries for an EV brand priced at a lower range that
aims to compete with Tesla  TSLA.O , three sources with direct
knowledge of the matter said. 
    The agreement marks a win for BYD, which has been looking to
expand its revenue beyond EV sales under its own brand. It also
shows the impact of unrelenting competition over the price of
new EVs in China's market, and batteries, the largest single
cost in a new vehicle.
    Nio, which launched as a start-up a decade ago, had intended
to produce batteries in-house but abandoned those plans in
December as it shifted its focus to cutting costs to reverse
losses.
    Nio on Monday confirmed its new brand would be named "Onvo"
in English and "Ledao" in Chinese as it unveiled a website for
the car. Nio, which has been aimed at the premium EV market in
competition with the likes of Mercedes  MBGn.DE , has said it
expects the new Onvo L60 to compete with the Tesla Model Y.
    Nio currently buys most of its batteries from
industry-leader CATL  300750.SZ . 
    BYD will join CATL to supply a smaller battery pack for one
version of the new Onvo EV, two of the people said. Another
Chinese battery maker, CALB  3931.HK , already a Nio supplier,
will supply the brand with a larger battery pack of 85 kilowatt
hours, one of the people said.
    When contacted by Reuters, Nio said the information was
"inaccurate" and did not elaborate. CALB declined to comment
while CATL and BYD did not respond to requests for comment.
    Reuters was not able to identify the size of Onvo battery
contracts between Nio and the battery suppliers or any details
related to expected sales or production.
    Chinese EV buyers have been more willing than car buyers in
other markets to opt for lower-range batteries in exchange for
lower cost, in part because of the availability of battery
swapping stations of the kind run by Nio and charging locations.
    BYD, through its battery unit FinDreams Battery, already
supplies some batteries to Tesla's  TSLA.O  Berlin plant and
state-owned Chinese automakers including FAW  SASAJC.UL .
    Most BYD batteries go to its own EVs. According to battery
industrial information provider Gaogong Industrial Institute,
BYD only sold 5% of the batteries it produced in 2023 to
external clients.
    BYD has been renovating production lines for battery packs
to supply Onvo at its plant in Wuwei in eastern Anhui province,
one of the people said. 
         
($1 = 7.2163 Chinese yuan)

 (Reporting by Zhuzhui Cui, Zhang Yan and Brenda Goh; Editing by
Jacqueline Wong)
 ((Zoey.Zhang@thomsonreuters.com;))