Nio & Rival BYD Rumoured To Be Entering Battery Supply Partnership

In a significant shift in China's electric vehicle (EV) landscape, homegrown EV maker Nio (HKG: 9866) has been rumoured to have entered into an agreement with larger rival BYD (HKG: 1211) to source batteries for its new EV brand, poised to be priced at a more accessible range.

This strategic partnership would represent a clear move by Nio to expand its foothold in the competitive EV market, dominated in part by industry heavyweight Tesla.

According to insiders familiar with the matter, the deal represents an important step for BYD as well, as the company looks to diversify its revenue streams beyond just EV sales under its own marque. The collaboration could prove symbiotic, aiding BYD in expanding its battery business while simultaneously enabling Nio to position its upcoming brand strongly amidst fierce competition.

Nio's new brand, christened “Onvo” in English and “Ledao” in Chinese, is being crafted to directly challenge the Tesla Model Y's domination in China's vibrant EV market. The debut model, the Onvo L60, is expected to be a pivotal player in the segment, banking on its competitive pricing and tech-driven features.

The battery supply agreement stipulates that BYD will provide a smaller battery pack for one variant of the Onvo EV, while Contemporary Amperex Technology Co. Limited (HKG: 3931) another prominent Chinese battery manufacturer, will supply a more capacious pack for another version. This dual-supplier strategy could afford Nio the flexibility to cater to diverse customer preferences in terms of range and price points.

This intriguing development poises Nio to accelerate its new brand's launch with the added impetus from BYD's batteries. With this collaborative effort, both Nio and BYD are gearing up for an electrifying shake-up in the highly lucrative Chinese electric vehicle market.