China’s Nio teams up with BYD for new EV brand “Onvo”

Chinese electric vehicle (EV) maker Nio has partnered with competitor BYD to source batteries for its upcoming budget brand, Onvo, targeting competition with Tesla’s Model Y, as reported by Reuters on Tuesday.

This agreement signifies a win for BYD, seeking to diversify its revenue beyond solely selling its own EVs.

It also highlights the fierce price war within China’s booming EV market, where battery costs – the highest expense for an EV – are a key battleground.

Founded a decade ago, Nio originally aimed to produce batteries in-house. However, in December 2023, they abandoned those plans, prioritising cost-cutting measures to combat financial losses.

On Monday, Nio unveiled Onvo (Ledao in Chinese) alongside its official website. The new brand, targeting the affordable EV segment currently dominated by Tesla, will introduce the Onvo L60 to compete directly with the Model Y.

Currently, Nio relies primarily on industry leader CATL for its batteries. The new deal brings BYD on board to provide a smaller battery pack option for specific Onvo models.

Additionally, existing supplier CALB will furnish Onvo with a larger, 85-kilowatt-hour battery pack.

Nio declined to comment on the reported details, while CALB remained silent. CATL and BYD did not respond to requests for a statement.

However, Reuters could not verify the contract size between Nio and the battery suppliers or obtain information regarding projected sales or production figures.